Document:

Advisory Agreement

 Exhibit 10.1 
  
 ADVISORY AGREEMENT 
  
 between 
  
 KBS REAL ESTATE INVESTMENT TRUST, INC. 
  
 and 
  
 KBS CAPITAL ADVISORS LLC

  
 November 8, 2005 

 TABLE OF CONTENTS 
  

			
	 	  	Page

	 ARTICLE 1 - DEFINITIONS
	  	1
	 ARTICLE 2 - APPOINTMENT
	  	8
	 ARTICLE 3 - DUTIES OF THE ADVISOR
	  	8
	 3.01 Organizational and Offering Services
	  	8
	 3.02 Acquisition Services
	  	8
	 3.03 Asset Management Services
	  	9
	 3.04 Stockholder Services
	  	12
	 3.05 Other Services
	  	12
	 ARTICLE 4 - AUTHORITY OF ADVISOR
	  	13
	 4.01 General
	  	13
	 4.02 Powers of the Advisor
	  	13
	 4.03 Approval by the Board of Directors
	  	13
	 4.04 Modification or Revocation of Authority of Advisor
	  	13
	 ARTICLE 5 - BANK ACCOUNTS
	  	14
	 ARTICLE 6 - RECORDS AND FINANCIAL STATEMENTS
	  	14
	 ARTICLE 7 - LIMITATION ON ACTIVITIES
	  	14
	 ARTICLE 8 - FEES
	  	14
	 8.01 Acquisition Fees
	  	14
	 8.02 Asset Management Fees
	  	15
	 8.03 Disposition Fees
	  	15
	 8.04 Subordinated Share of Net Sales Proceeds
	  	16
	 8.05 Subordinated Incentive Fee
	  	16
	 8.06 Changes to Fee Structure
	  	16
	 ARTICLE 9 - EXPENSES
	  	17
	 9.01 General
	  	17
	 9.02 Timing of and Limitations on Reimbursements
	  	18
	 ARTICLE 10 - VOTING AGREEMENT
	  	19
	 ARTICLE 11 - RELATIONSHIP OF ADVISOR AND COMPANY; OTHER ACTIVITIES OF THE ADVISOR
	  	19
	 11.01 Relationship
	  	19
	 11.02 Time Commitment
	  	20
	 11.03 Investment Opportunities and Allocation
	  	20
	 ARTICLE 12 - THE KBS NAME
	  	20
	 ARTICLE 13 - TERM AND TERMINATION OF THE AGREEMENT
	  	21
	 13.01 Term
	  	21
	 13.02 Termination by Either Party
	  	21
	 13.03 Payments on Termination and Survival of Certain Rights and Obligations
	  	21
	 ARTICLE 14 - ASSIGNMENT
	  	22
	 ARTICLE 15 - INDEMNIFICATION AND LIMITATION OF LIABILITY
	  	22
	 ARTICLE 16 - MISCELLANEOUS
	  	22
	 16.01 Notices
	  	22

  

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	 16.02 Modification
	  	23
	 16.03 Severability
	  	23
	 16.04 Construction
	  	23
	 16.05 Entire Agreement
	  	23
	 16.06 Waiver
	  	23
	 16.07 Gender
	  	23
	 16.08 Titles Not to Affect Interpretation
	  	23
	 16.09 Counterparts
	  	24

  

 ii 

 ADVISORY AGREEMENT 
  
 This Advisory Agreement, dated as of November 8, 2005 (the “Agreement”), is between KBS Real Estate
Investment Trust, Inc., a Maryland corporation (the “Company”), and KBS Capital Advisors LLC, a Delaware limited liability company (the “Advisor”). 
  
 W I T N E S S E T H 
  
 WHEREAS, the Company desires to avail itself of the knowledge, experience, sources of information, advice, assistance and certain facilities available to
the Advisor and to have the Advisor undertake the duties and responsibilities hereinafter set forth, on behalf of, and subject to the supervision of, the Board of Directors of the Company, all as provided herein; and 
  
 WHEREAS, the Advisor is willing to undertake to render such services, subject
to the supervision of the Board of Directors of the Company, on the terms and conditions hereinafter set forth. 
  
 NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, the parties hereto agree as follows:

  
 ARTICLE 1 
  
 DEFINITIONS 
  
 The following defined terms used in this Agreement shall have the meanings specified below: 
  
 “Acquisition Expenses” means any and all expenses, excluding the
fee payable to the Advisor pursuant to Section 8.01, incurred by the Company, the Advisor or any Affiliate of either in connection with the selection, acquisition or development of any property or other potential investment, whether or not
acquired, including, without limitation, legal fees and expenses, travel and communications expenses, costs of appraisals, nonrefundable option payments on properties or other investments not acquired, accounting fees and expenses, and title
insurance premiums. 
  
 “Acquisition Fees” means the fee
payable to the Advisor pursuant to Section 8.01 plus all other fees and commissions paid by any Person to any Person in connection with making or investing in any Property, Loan or other Permitted Investment or the purchase, development or
construction of Property by the Company. Included in the computation of such fees or commissions shall be any real estate commission, selection fee, 

  

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Development Fee, Construction Fee, nonrecurring management fee, loan fees or points or any fee of a similar nature, however designated. Excluded shall be
Development Fees and Construction Fees paid to Persons not Affiliated with the Advisor in connection with the actual development and construction of a Property. 
  

“Advisor” means (i) KBS Capital Advisors LLC, a Delaware limited liability company, or (ii) any successor advisor to the Company.

  
 “Affiliate or Affiliated.” An Affiliate of another
Person includes any of the following: (i) any Person directly or indirectly controlling, controlled by, or under common control with such other Person; (ii) any Person directly or indirectly owning, controlling, or holding with the power
to vote 10% or more of the outstanding voting securities of such other Person; (iii) any legal entity for which such Person acts as an executive officer, director, trustee, or general partner; (iv) any Person 10% or more of whose
outstanding voting securities are directly or indirectly owned, controlled, or held, with power to vote, by such other Person; and (v) any executive officer, director, trustee, or general partner of such other Person. An entity shall not be
deemed to control or be under common control with an Advisor-sponsored program unless (i) the entity owns 10% or more of the voting equity interests of such program or (ii) a majority of the board (or equivalent governing body) of such
program is comprised of Affiliates of the entity. 
  
 “Appraised Value” means the value according to an appraisal made by an Independent Appraiser. 
  
 “Articles of Incorporation” means the Articles of Incorporation of the Company under Title 2 of the Corporations and Associations Article of the
Annotated Code of Maryland, as amended from time to time. 
  
 “Asset Management Fee” shall have the meaning set forth in Section 8.02. 
  
 “Average Invested Assets” means, for a specified period, the average of the aggregate book value of the assets of the Company invested, directly
or indirectly, in Properties, Loans and other Permitted Investments secured by real estate before reserves for depreciation or bad debts or other similar non-cash reserves, computed by taking the average of such values at the end of each month
during such period. 
  
 “Board of Directors or Board”
means the persons holding such office, as of any particular time, under the Articles of Incorporation of the Company, whether they be the Directors named therein or additional or successor Directors. 
  
 “Bylaws” means the bylaws of the Company, as amended from time to
time. 
  
 “Cash from Financings” means the net cash
proceeds realized by the Company from the financing of Properties, Loans or other Permitted Investments or from the refinancing of any Company indebtedness (after deduction of all expenses incurred in connection therewith). 
  

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 “Cash from Sales” means the net cash proceeds realized by the Company from the sale, exchange
or other disposition of any of its assets after deduction of all expenses incurred in connection therewith. In the case of a transaction described in clause (i) (C) of the definition of Sale, Cash From Sales means the proceeds of any such
transaction actually distributed to the Company from the joint venture. Cash from Sales shall not include Cash from Financings. 
  
 “Cash from Sales and Financings” means the total sum of Cash from Sales and Cash from Financings. 
  
 “Code” means the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor provision thereto, as interpreted by any applicable
regulations as in effect from time to time. 
  
 “Company” means KBS Real Estate Investment Trust, Inc., a corporation organized under the laws of the State of Maryland. 
  
 “Competitive Real Estate Commission” means a real estate or brokerage commission for the purchase or sale of property that is reasonable,
customary, and competitive in light of the size, type, and location of the property. 
  
 “Conflicts Committee” shall have the meaning set forth in the Company’s Articles of Incorporation. 
  
 “Construction Fee” means a fee or other remuneration for acting as general contractor and/or construction manager to construct improvements,
supervise and coordinate projects or to provide major repairs or rehabilitation on a Property. 
  
 “Contract Sales Price” means the total consideration received by the Company for the sale of a Property. 
  
 “Cost of Real Estate Investments” means the sum of (i) with respect to Properties wholly owned by the Company, the amount actually paid or
allocated to the purchase, development, construction or improvement of Properties, inclusive of expenses related thereto, plus the amount of any outstanding debt attributable to such Properties and (ii) in the case of properties owned by any
Joint Venture or partnership in which the Company is a co-venturer or partner, the portion of the amount actually paid or allocated to the purchase, development, construction or improvement of properties, inclusive of expenses related thereto, plus
the amount of any outstanding debt associated with such properties that is attributable to the Company’s investment in the Joint Venture or partnership. 
  
 “Dealer Manager” means (i) KBS Capital Markets Group LLC, a Delaware limited liability company, or (ii) any successor dealer manager
to the Company. 
  

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 “Development Fee” means a fee for the packaging of a Property, including negotiating and
approving plans, and undertaking to assist in obtaining zoning and necessary variances and necessary financing for the Property, either initially or at a later date. 
  
 “Director” means a member of the Board of Directors of the Company. 
  
 “Disposition Fee” shall have the meaning set forth in
Section 8.03. 
  
 “Distributions” means any
distributions of money or other property by the Company to owners of Shares, including distributions that may constitute a return of capital for federal income tax purposes. 
  
 “GAAP” means accounting principals generally accepted in the United States. 
  
 “Gross Proceeds” means the aggregate purchase price of all Shares
sold for the account of the Company through an Offering, without deduction for Organization and Offering Expenses. 
  
 “Independent Appraiser” means a person or entity with no material current or prior business or personal relationship with the Advisor or the
Directors, who is engaged to a substantial extent in the business of rendering opinions regarding the value of assets of the type held by the Company, and who is a qualified appraiser of real estate as determined by the Board. Membership in a
nationally recognized appraisal society such as the American Institute of Real Estate Appraisers (“M.A.I.”) or the Society of Real Estate Appraisers (“S.R.E.A.”) shall be conclusive evidence of such qualification. 
  
 “Invested Capital” means the amount calculated by multiplying the
total number of Shares purchased by Stockholders by the issue price, reduced by any amounts paid by the Company to repurchase Shares pursuant to the Company’s plan for redemption of Shares. 
  
 “Joint Venture” means any joint venture, limited liability company
or other Affiliate of the Company that owns, in whole or in part, on behalf of the Company any Properties, Loans or other Permitted Investments. 
  
 “Listed” or “Listing” shall have the meaning set forth in the Company’s Articles of Incorporation. 
  
 “Loans” means mortgage loans and other types of debt financing
purchased by the Company. 
  
 “NASAA Guidelines” means
the NASAA Statement of Policy Regarding Real Estate Investment Trusts as in effect on the date hereof. 
  

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 “Net Income” means, for any period, the total revenues applicable to such period, less the
total expenses applicable to such period excluding additions to reserves for depreciation, bad debts or other similar non-cash reserves; provided, however, Net Income for purposes of calculating total allowable Operating Expenses (as defined herein)
shall exclude the gain from the sale of the Company’s assets. 
  
 “Offering” means any offering of Shares that is registered with the SEC, excluding Shares offered under any employee benefit plan. 
  
 “Operating Cash Flow” means Operating Revenue Cash Flows minus the sum of (i) Operating Expenses, (ii) all principal and interest
payments on indebtedness and other sums paid to lenders, (iii) the expenses of raising capital such as Organization and Offering Expenses, legal, audit, accounting, underwriting, brokerage, listing, registration, and other fees, printing and
other such expenses and tax incurred in connection with the issuance, distribution, transfer, registration and Listing of the Shares, (iv) taxes, (v) incentive fees paid in compliance with Section IV.F. of the NASAA Guidelines and
(vi) Acquisition Fees, Acquisition Expenses, real estate commissions on resale of property, and other expenses connected with the acquisition, disposition, and ownership of real estate interests, mortgage loans or other property (such as the
costs of foreclosure, insurance premiums, legal services, maintenance, repair and improvement of property). 
  
 “Operating Expenses” means all costs and expenses incurred by the Company, as determined under GAAP, which in any way are related to the
operation of the Company or to Company business, including fees paid to the Advisor, but excluding (i) the expenses of raising capital such as Organization and Offering Expenses, legal, audit, accounting, underwriting, brokerage, listing,
registration, and other fees, printing and other such expenses and tax incurred in connection with the issuance, distribution, transfer, registration and Listing of the Shares, (ii) interest payments, (iii) taxes, (iv) non-cash
expenditures such as depreciation, amortization and bad loan reserves, (v) incentive fees paid in compliance with Section IV.F. of the NASAA Guidelines and (vi) Acquisition Fees, Acquisition Expenses, real estate commissions on resale of
property, and other expenses connected with the acquisition, disposition, and ownership of real estate interests, mortgage loans or other property (such as the costs of foreclosure, insurance premiums, legal services, maintenance, repair and
improvement of property). 
  
 “Operating Revenue Cash
Flows” means the Company’s cash flow from ownership and operation of Properties, Loans, interests in properties owned by any Joint Venture or partnership in which the Company is a co-venturer or partner, Permitted Investments, and
short-term investments. 
  
 “Organization and Offering
Expenses” means all expenses incurred by or on behalf of the Company in connection with and in preparing the Company for registration of and subsequently offering and distributing its Shares to the public, whether incurred before or after the
date of this Agreement, which may include but are not limited to, total underwriting and brokerage discounts and commissions (including fees of the underwriters’ attorneys); any expense allowance granted by the Company to the 

  

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underwriter or any reimbursement of expenses of the underwriter by the Company; expenses for printing, engraving and mailing; salaries of employees while
engaged in sales activity; charges of transfer agents, registrars, trustees, escrow holders, depositaries and experts; and expenses of qualification of the sale of the securities under Federal and State laws, including taxes and fees,
accountants’ and attorneys’ fees. 
  
 “Partnership” means KBS Limited Partnership, a Delaware limited partnership formed to own and operate Properties, Loans and other Permitted Investments on behalf of the Company. 
  
 “Permitted Investments” means all investments (other than
Properties, Loans and interests in properties owned by any Joint Venture or partnership in which the Company is a co-venturer or partner) that the Company may acquire pursuant to its Articles of Incorporation, Bylaws and the investment objectives
and policies adopted by the Board of Directors of the Company from time to time, other than short-term investments acquired for purposes of cash management. 
  
 “Person” means an individual, corporation, partnership, estate, trust (including a trust qualified under Section 401(a) or 501(c)
(17) of the Code), a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code,
joint stock company or other entity, or any government or any agency or political subdivision thereof, and also includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.

  
 “Property or Properties” means any real property or
properties transferred or conveyed to the Company or the Partnership, either directly or indirectly. 
  
 “Property Manager” means an entity that has been retained to perform and carry out at one or more of the Properties property-management
services, excluding persons, entities or independent contractors retained or hired to perform facility management or other services or tasks at a particular Property, the costs for which are passed through to and ultimately paid by the tenant at
such Property. 
  
 “Registration Statement” means the
registration statement filed by the Company with the Securities and Exchange Commission on Form S-11 (Reg. No. 333-126087), as amended from time to time, in connection with the initial public offering of the Company’s Shares. 

 
 “REIT” means a “real estate investment trust” under
Sections 856 through 860 of the Code. 
  
 “Sale or
Sales” means (i) any transaction or series of transactions whereby: (A) the Company or the Partnership sells, grants, transfers, conveys, or relinquishes its ownership of any Property, Loan or other Permitted Investment or portion
thereof, including the transfer of any Property that is the subject of a ground lease, and including 

  

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any event with respect to any Property, Loan or other Permitted Investment that gives rise to a significant amount of insurance proceeds or condemnation
awards; (B) the Company or the Partnership sells, grants, transfers, conveys, or relinquishes its ownership of all or substantially all of the interest of the Company or the Partnership in any joint venture in which it is a co-venturer or
partner; or (C) any joint venture in which the Company or the Partnership as a co-venturer or partner sells, grants, transfers, conveys, or relinquishes its ownership of any Property, Loan or other Permitted Investment or portion thereof,
including any event with respect to any Property, Loan or other Permitted Investment that gives rise to insurance claims or condemnation awards but (ii) not including any transaction or series of transactions specified in clause (i) (A),
(i) (B), or (i) (C) above in which the proceeds of such transaction or series of transactions are reinvested in one or more Properties, Loans or other Permitted Investments within 180 days thereafter. 
  
 “Shares” means the shares of common stock of the Company, par value
$.01 per share. 
  
 “Stockholders” means the registered
holders of the Shares. 
  
 “Stockholders’ 8%
Return” means, as of any date, an aggregate amount equal to an 8% cumulative, non-compounded, annual return on Invested Capital (calculated like simple interest on a daily basis based on a three hundred sixty-five day year). For purposes of
calculating the Stockholders’ 8% Return, “Invested Capital” shall be determined for each day during the period for which the Stockholders’ 8% Return is being calculated and shall be calculated net of (1) Distributions of
Operating Cash Flow to the extent such Distributions of Operating Cash Flow provide a cumulative, non-compounded, annual return in excess of 8%, as such amounts are computed on a daily basis based on a three hundred sixty-five day year and
(2) Distributions of Cash from Sales and Financings, except to the extent such Distributions would be required to supplement Distributions of Operating Cash Flow in order to achieve a cumulative, non-compounded, annual return of 8%, as such
amounts are computed on a daily basis based on a three hundred sixty-five day year. 
  
 “Subordinated Incentive Fee” means the fee payable to the Advisor under certain circumstances if the Shares are Listed, as calculated in Section 8.05. 
  
 “Subordinated Performance Fee Due Upon Termination” means a fee
equal to (1) 15% of the amount, if any, by which (a) the Appraised Value of the Company’s Properties at the Termination Date, less amounts of all indebtedness secured by the Company’s Properties, plus the net asset value of all
other Loans and Permitted Investments of the Company plus total Distributions (excluding any stock dividend) through the Termination Date exceeds (b) the sum of Invested Capital plus total Distributions required to be made to the stockholders
in order to pay the Stockholders’ 8% Return from inception through the termination date less (2) any prior payment to the Advisor of a Subordinated Share of Cash Flows. 
  
 “Subordinated Share of Cash Flows” has the meaning set forth in Section 8.04. 
  

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 “Termination Date” means the date of termination of the Agreement. 
  
 “2%/25% Guidelines” means the requirement pursuant to the NASAA
Guidelines that, in any period of four consecutive fiscal quarters, total Operating Expenses not exceed the greater of 2% of the Company’s Average Invested Assets during such 12-month period or 25% of the Company’s Net Income over the same
12-month period. 
  
 ARTICLE 2 
  
 APPOINTMENT 
  
 The Company hereby appoints the Advisor to serve as its advisor and asset manager on the terms and conditions set forth in
this Agreement, and the Advisor hereby accepts such appointment. 
  
 ARTICLE 3 
  
 DUTIES OF THE ADVISOR 
  
 The Advisor is responsible for managing, operating, directing and supervising
the operations and administration of the Company and its assets. The Advisor undertakes to use its best efforts to present to the Company potential investment opportunities and to provide the Company with a continuing and suitable investment program
consistent with the investment objectives and policies of the Company as determined and adopted from time to time by the Board of Directors. Subject to the limitations set forth in this Agreement, including Article 4 hereof, and the continuing and
exclusive authority of the Board of Directors over the management of the Company, the Advisor shall, either directly or by engaging an Affiliate or third party, perform the following duties: 
  
 3.01 Organizational and Offering Services. The Advisor shall perform all
services related to the organization of the Company or any Offering or private sale of the Company’s securities other than services that (i) are to be performed by the Dealer Manager, (ii) the Company elects to perform directly or
(iii) would require the Advisor to register as a broker-dealer with the SEC or any state. 
  
 3.02 Acquisition Services. 
  
 (i) Serve as the Company’s investment and financial advisor and provide relevant market research and economic and statistical data in connection with the Company’s assets and investment objectives and
policies; 
  
 (ii) Subject to Section 4
hereof and the investment objectives and policies of the Company: (a) locate, analyze and select potential investments; (b) structure and negotiate the terms and conditions of transactions pursuant to which investments in Properties, Loans
and other Permitted Investments will be made; 

  

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(c) acquire Properties, Loans and other Permitted Investments on behalf of the Company; (d) arrange for financing and refinancing and make other changes
in the asset or capital structure of investments in Properties, Loans and other Permitted Investments; and (e) enter into leases, service contracts and other agreements for Properties; 
  
 (iii) Perform due diligence on prospective investments and
create due diligence reports summarizing the results of such work; 
  
 (iv) Prepare reports regarding prospective investments that include recommendations and supporting documentation necessary for the Directors to evaluate the proposed investments; 
  
 (v) Obtain reports (which may be prepared by the Advisor or
its Affiliates), where appropriate, concerning the value of contemplated investments of the Company; 
  
 (vi) Deliver to or maintain on behalf of the Company copies of all appraisals obtained in connection with the Company’s investments;
and 
  
 (vii) Negotiate and execute approved
investments and other transactions. 
  
 3.03 Asset Management
Services. 
  
 (i) Real Estate Services:

  
 (a) Investigate, select and, on behalf of the
Company, engage and conduct business with (including enter contracts with) such Persons as the Advisor deems necessary to the proper performance of its obligations as set forth in this Agreement, including but not limited to consultants,
accountants, lenders, technical advisors, attorneys, brokers, underwriters, corporate fiduciaries, escrow agents, depositaries, custodians, agents for collection, insurers, insurance agents, developers, construction companies, Property Managers and
any and all Persons acting in any other capacity deemed by the Advisor necessary or desirable for the performance of any of the foregoing services; 
  
 (b) Negotiate and service the Company’s debt facilities and other financings; 
  
 (c) Monitor applicable markets and obtain reports (which may
be prepared by the Advisor or its Affiliates) where appropriate, concerning the value of investments of the Company; 
  
 (d) Monitor and evaluate the performance of each asset of the Company and the Company’s overall portfolio assets, provide daily

  

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management services to the Company and perform and supervise the various management and operational functions related to the Company’s investments;

  
 (e) Formulate and oversee the implementation
of strategies for the administration, promotion, management, operation, maintenance, improvement, financing and refinancing, marketing, leasing and disposition of Properties, Loans and other Permitted Investments on an overall portfolio basis;

  
 (f) Consult with the officers and the Board
of Directors of the Company and assist the Board in the formulation and implementation of the Company’s financial policies, and, as necessary, furnish the Board with advice and recommendations with respect to the making of investments
consistent with the investment objectives and policies of the Company and in connection with any borrowings proposed to be undertaken by the Company; 
  
 (g) Oversee the performance by the Property Managers of their duties, including collection and proper deposits of rental payments and
payment of Property expenses and maintenance; 
  
 (h) Conduct periodic on-site property visits to some or all (as the Advisor deems reasonably necessary) of the Properties to inspect the physical condition of the Properties and to evaluate the performance of the Property Managers;

  
 (i) Review, analyze and comment upon the
operating budgets, capital budgets and leasing plans prepared and submitted by each Property Manager and aggregate these property budgets into the Company’s overall budget; 
  
 (j) Coordinate and manage relationships between the Company and any joint venture partners; and 

 
 (k) Consult with the officers and Board of Directors of
the Company and provide assistance with the evaluation and approval of potential asset dispositions, sales and refinancings. 
  
 (ii) Accounting and Other Administrative Services: 
  
 (a) Provide the day-to-day management of the Company and perform and supervise the various administrative
functions reasonably necessary for the management of the Company; 
  

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 (b) From time to time, or at any time reasonably requested by the Board, make reports to
the Board on the Advisor’s performance of services to the Company under this Agreement; 
  
 (c) Make reports to the Conflicts Committee each quarter of the investments that have been made by other programs sponsored by the Advisor
or any of its Affiliates, including KBS Realty Advisors LLC, as well as any investments that have been made by the Advisor or any of its Affiliates directly; 
  

(d) Provide or arrange for any administrative services and items, legal and other services, office space, office furnishings, personnel
and other overhead items necessary and incidental to the Company’s business and operations; 
  
 (e) Provide financial and operational planning services; 
  
 (f) Maintain accounting and other record-keeping functions at the Company level and the investment levels,
including information concerning the activities of the Company as shall be required to prepare and to file all periodic financial reports, tax returns and any other information required to be filed with the Securities and Exchange Commission, the
Internal Revenue Service and any other regulatory agency; 
  
 (g) Maintain and preserve all appropriate books and records of the Company; 
  
 (h) Provide tax and compliance services and coordinate with appropriate third parties, including the Company’s independent auditors
and other consultants, on related tax matters; 
  
 (i) Provide the Company with all necessary cash management services; 
  
 (j) Manage and coordinate with the transfer agent the quarterly dividend process and payments to Stockholders; 
  
 (k) Consult with the officers and Board of Directors of the Company and assist the Board in evaluating and obtaining adequate insurance
coverage based upon risk management determinations; 
  
 (l) Provide the officers and Board of Directors of the Company with timely updates related to the overall regulatory environment affecting the Company, as well as managing compliance with such matters, 

  

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including but not limited to compliance with the Sarbanes-Oxley Act of 2002; 
  
 (m) Consult with the officers and Board of Directors of the Company relating to the corporate governance
structure and appropriate policies and procedures related thereto; 
  
 (n) Perform all reporting, record keeping, internal controls and similar matters in a manner to allow the Company to comply with applicable law, including the Sarbanes-Oxley Act; 
  
 (o) Notify the Board of Directors of all proposed material
transactions before they are completed; and 
  
 (p) Do all things necessary to assure its ability to render the services described in this Agreement. 
  
 3.04 Stockholder Services. 
  
 (i) Manage communications with Stockholders, including answering phone calls, preparing and sending written and electronic reports and
other communications; 
  
 (ii) Oversee the
performance of the transfer agent and registrar; and 
  
 (iii) Establish technology infrastructure to assist in providing Stockholder support and service. 
  
 3.05 Other Services. Except as provided in Article 7, the Advisor shall perform any other services reasonably requested by the Company (acting through the
Conflicts Committee). 
  
 ARTICLE 4 
  
 AUTHORITY OF ADVISOR 
  
 4.01 General. All rights and powers to manage and control the day-to-day
business and affairs of the Company shall be vested in the Advisor. The Advisor shall have the power to delegate all or any part of its rights and powers to manage and control the business and affairs of the Company to such officers, employees,
Affiliates, agents and representatives of the Advisor or the Company as it may deem appropriate. Any authority delegated by the Advisor to any other Person shall be subject to the limitations on the rights and powers of the Advisor specifically set
forth in this Agreement or the Articles of Incorporation of the Company. 
  

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 4.02 Powers of the Advisor. Subject to the express limitations set forth in this Agreement and the
continuing and exclusive authority of the Board of Directors over the management of the Company, the power to direct the management, operation and policies of the Company shall be vested in the Advisor, which shall have the power by itself and shall
be authorized and empowered on behalf and in the name of the Company to carry out any and all of the objectives and purposes of the Company and to perform all acts and enter into and perform all contracts and other undertakings that it may in its
sole discretion deem necessary, advisable or incidental thereto to perform its obligations under this Agreement. 
  
 4.03 Approval by the Board of Directors. Notwithstanding the foregoing, the Advisor may not take any action on behalf of the Company without the prior
approval of the Board of Directors or duly authorized committees thereof if the Articles of Incorporation or Maryland General Corporation law require the prior approval of the Board of Directors. The Advisor will deliver to the Board of Directors
all documents required by it to evaluate a proposed investment (and any related financing). 
  
 4.04 Modification or Revocation of Authority of Advisor. The Board of Directors may, at any time upon the giving of notice to the Advisor, modify or revoke the authority or approvals set forth in Article 3 and this
Article 4 hereof; provided, however, that such modification or revocation shall be effective upon receipt by the Advisor and shall not be applicable to investment transactions to which the Advisor has committed the Company prior to the date of
receipt by the Advisor of such notification. 
  
 ARTICLE 5

  
 BANK ACCOUNTS 
  
 The Advisor may establish and maintain one or more bank accounts in its own
name for the account of the Company or in the name of the Company and may collect and deposit into any such account or accounts, and disburse from any such account or accounts, any money on behalf of the Company, under such terms and conditions as
the Board of Directors may approve, provided that no funds shall be commingled with the funds of the Advisor. The Advisor shall from time to time render appropriate accountings of such collections and payments to the Board and the auditors of the
Company. 
  
 ARTICLE 6 
  
 RECORDS AND FINANCIAL STATEMENTS 
  
 The Advisor, in the conduct of its responsibilities to the Company, shall
maintain adequate and separate books and records for the Company’s operations in accordance with GAAP, which shall be supported by sufficient documentation to ascertain that such books and records are properly and accurately recorded. Such
books and records shall be the property of the Company and shall be available for inspection by the Board and by 

  

 13 

 
counsel, auditors and other authorized agents of the Company, at any time or from time to time during normal business hours. Such books and records shall
include all information necessary to calculate and audit the fees or reimbursements paid under this Agreement. The Advisor shall utilize procedures to attempt to ensure such control over accounting and financial transactions as is reasonably
required to protect the Company’s assets from theft, error or fraudulent activity. All financial statements that the Advisor delivers to the Company shall be prepared on an accrual basis in accordance with GAAP, except for special financial
reports that by their nature require a deviation from GAAP. The Advisor shall liaise with the Company’s officers and independent auditors and shall provide such officers and auditors with the reports and other information that the Company so
requests. 
  
 ARTICLE 7 
  
 LIMITATION ON ACTIVITIES 
  
 Notwithstanding any provision in this Agreement to the contrary, the Advisor
shall not take any action that, in its sole judgment made in good faith, would (i) adversely affect the ability of the Company to qualify or continue to qualify as a REIT under the Code, (ii) subject the Company to regulation under the
Investment Company Act of 1940, as amended, (iii) violate any law, rule, regulation or statement of policy of any governmental body or agency having jurisdiction over the Company, its Shares or its other securities, (iv) require the
Advisor to register as a broker-dealer with the U.S. Securities and Exchange Commission or any state, or (v) violate the Articles of Incorporation or Bylaws. In the event an action that would violate (i) through (v) of the preceding
sentence but such action has been ordered by the Board of Directors of the Company, the Advisor shall notify the Board of Directors of the Advisor’s judgment of the potential impact of such action and shall refrain from taking such action until
it receives further clarification or instructions from the Board of Directors. In such event, the Advisor shall have no liability for acting in accordance with the specific instructions of the Board of Directors so given. 
  
 ARTICLE 8 
  
 FEES 
  
 8.01 Acquisition Fees. As compensation for the investigation, selection and acquisition (by purchase, investment or exchange) of Properties, Loans and
other Permitted Investments, the Company shall pay Acquisition Fees to the Advisor for each such investment. With respect to the acquisition of a Property to be wholly owned by the Company, the Acquisition Fee payable to the Advisor shall equal
0.75% of the sum of the amount actually paid or allocated to the purchase, development, construction or improvement of such Property, inclusive of the Acquisition Expenses associated with such Property, and the amount of any debt attributable to
such Property. With respect to the acquisition of real property through any Joint Venture or partnership in which the Company is a co-venturer or partner, the Acquisition Fee payable to the Advisor shall 

  

 14 

 
equal 0.75% of the portion of the amount actually paid or allocated to the purchase, development, construction or improvement of the property, inclusive of
the Acquisition Expenses associated with such property, plus the amount of any outstanding debt associated with such property that is attributable to the Company’s investment in the Joint Venture or partnership. With respect to Loans and other
Permitted Investments, the Acquisition Fee payable to the Advisor shall equal 0.75% of the cost of such investment, inclusive of Acquisition Expenses associated with such investment. Notwithstanding anything herein to the contrary, the payment of
Acquisition Fees by the Company shall be subject to the limitations contained in the Company’s Articles of Incorporation. The Advisor shall submit an invoice to the Company following the closing or closings of each acquisition, accompanied by a
computation of the Acquisition Fee. The Acquisition Fee payable to the Advisor shall be paid at the closing of the acquisition upon receipt of the invoice by the Company. 
  
 8.02 Asset Management Fees. The Company shall pay the Advisor as compensation for the services described in Article 3 hereof
a monthly fee (the “Asset Management Fee”) in an amount equal to one-twelfth of 0.75% of the sum of the Cost of Real Estate Investments and the outstanding principal amount of the Loans and other Permitted Investments, as of the end of the
preceding month. The Advisor shall submit a monthly invoice to the Company, accompanied by a computation of the Asset Management Fee for the applicable period. The Asset Management Fee shall be payable on the last day of such month, or the first
business day following the last day of such month. The Asset Management Fee may or may not be taken, in whole or in part, as to any year in the sole discretion of the Advisor. All or any portion of the Asset Management Fee not taken as to any fiscal
year shall be deferred without interest and may be taken in such other fiscal year as the Advisor shall determine. 
  
 8.03 Disposition Fees. If the Advisor or any of its Affiliates provide a substantial amount of services (as determined by the Conflicts Committee) in
connection with the Sale of one or more Properties, Loans or other Permitted Investments, the Advisor or such Affiliate shall receive a fee at the closing (the “Disposition Fee”) equal to 1.0% of the Contract Sales Price; provided,
however, that no Disposition Fee shall be payable to the Advisor for any Sale if such Sale involves the Company selling all or substantially all of its Properties in one or more transactions designed to effectuate a business combination transaction
(as opposed to a Company liquidation, in which case the Disposition Fee would be payable if the Advisor or an Affiliate provides a substantial amount of services as provided above). Any Disposition Fee payable under this Section 8.03 may be
paid in addition to real estate commissions paid to non-Affiliates, provided that the total real estate commissions (including such Disposition Fee) paid to all Persons by the Company for each Property shall not exceed an amount equal to the lesser
of (i) 6.0% of the aggregate Contract Sales Price of each Property or (ii) the Competitive Real Estate Commission for each Property. Substantial assistance in connection with the sale of a property includes the Advisor’s preparation
of an investment package for the property (including a new investment analysis, rent rolls, tenant information regarding credit, a property title report, an environmental report, a structural report and exhibits) or such other substantial services
performed by the Advisor in connection with a sale. 
  

 15 

 8.04 Subordinated Share of Cash Flows. The Subordinated Share of Cash Flows shall be payable to the
Advisor in an amount equal to 15% of Operating Cash Flow and Cash from Sales and Financings remaining after the Stockholders have received Distributions of Operating Cash Flow and of Cash from Sales and Financings such that the owners of all
outstanding Shares have received Distributions in an aggregate amount equal to the sum of: 
  

	 	a.	the Stockholders’ 8% Return and 

  

	 	b.	Invested Capital. 

  
 When determining whether the above threshold has been met: 
  

	 	(A)	Any stock dividend shall not be included as a Distribution; 

  

	 	(B)	Distributions paid on Shares redeemed by the Company (and thus no longer included in the determination of Invested Capital), shall not be included as a Distribution.

  
 Following Listing, no Subordinated Share of Cash Flows will be
paid to the Advisor. 
  
 8.05 Subordinated Incentive Fee. Upon
Listing, the Advisor shall be entitled to the Subordinated Incentive Fee in an amount equal to 15.0% of the amount by which (i) the market value of the outstanding Shares of the Company, measured by taking the average closing price or the
average of the bid and asked price, as the case may be, over a period of 30 days during which the Shares are traded, with such period beginning 180 days after Listing (the “Market Value”), plus the total of all Distributions paid to
Stockholders (excluding any stock dividends) from the Company’s inception until the date that Market Value is determined, exceeds (ii) the sum of (A) 100% of Invested Capital and (B) the total Distributions required to be paid to
the Stockholders in order to pay the Stockholders’ 8% Return from inception through the date Market Value is determined. The Company shall have the option to pay such fee in the form of cash, Shares, a promissory note or any combination of the
foregoing. The Subordinated Incentive Fee will be reduced by the amount of any prior payment to the Advisor of a Subordinated Share of Cash Flows. In the event the Subordinated Incentive Fee is paid to the Advisor following Listing, no other
performance fee will be paid to the Advisor. 
  
 8.06 Changes to
Fee Structure. In the event of Listing, the Company and the Advisor shall negotiate in good faith to establish a fee structure appropriate for a perpetual-life entity. 
  

 16 

 ARTICLE 9 
  
 EXPENSES 
  
 9.01 General. In addition to the compensation paid to the Advisor pursuant to Article 8 hereof, the Company shall pay directly or reimburse the Advisor
for all of the expenses paid or incurred by the Advisor or its Affiliates on behalf of the Company or in connection with the services provided to the Company pursuant to this Agreement, including, but not limited to: 
  
 (i) All Organization and Offering Expenses; provided,
however, that the Company shall not reimburse the Advisor to the extent such reimbursement would cause the total amount spent by the Company on Organization and Offering Expenses to exceed 15% of the Gross Proceeds raised as of the date of the
reimbursement and provided further that within 60 days after the end of the month in which an Offering terminates, the Advisor shall reimburse the Company to the extent the Company incurred Organization and Offering Expenses exceeding 15% of the
Gross Proceeds raised in the completed Offering; the Company shall not reimburse the Advisor for any Organization and Offering Expenses that the Conflicts Committee decides are not fair and commercially reasonable to the Company. 
  
 (ii) Acquisition Fees and Acquisition Expenses incurred in
connection with the selection and acquisition of Properties, Loans and other Permitted Investments, including such expenses incurred related to assets pursued or considered but not ultimately acquired by the Company, provided that, notwithstanding
anything herein to the contrary, the payment of Acquisition Fees and Acquisition Expenses by the Company shall be subject to the limitations contained in the Company’s Articles of Incorporation; 
  
 (iii) The actual out-of-pocket cost of goods and services
used by the Company and obtained from entities not Affiliated with the Advisor; 
  
 (iv) Interest and other costs for borrowed money, including discounts, points and other similar fees; 
  
 (v) Taxes and assessments on income or Properties, taxes as
an expense of doing business and any other taxes otherwise imposed on the Company and its business, assets or income; 
  
 (vi) Out-of-pocket costs associated with insurance required in connection with the business of the Company or by its officers and
Directors; 
  
 (vii) Expenses of managing,
improving, developing, operating and selling Properties owned by the Company; 
  

 17 

 (viii) All out-of-pocket expenses in connection with payments to the Board of Directors
and meetings of the Board of Directors and Stockholders; 
  
 (ix) Personnel and related employment costs incurred by the Advisor or its Affiliates in performing the services described in Article 3 hereof, including but not limited to reasonable salaries and wages, benefits and
overhead of all employees directly involved in the performance of such services, provided that no reimbursement shall be made for costs of such employees of the Advisor or its Affiliates to the extent that such employees perform services for which
the Advisor receives Acquisition Fees or Disposition Fees; 
  
 (x) Out-of-pocket expenses of maintaining communications with Stockholders, including the cost of preparation, printing, and mailing annual reports and other Stockholder reports, proxy statements and other reports
required by governmental entities; 
  
 (xi)
Audit, accounting and legal fees, and other fees for professional services relating to the operations of the Company and all such fees incurred at the request, or on behalf of, the Conflicts Committee or any committee of the Board of Directors;

  
 (xii) Out-of-pocket costs for the Company to
comply with all applicable laws, regulations and ordinances; 
  
 (xiii) Expenses connected with payments of Distributions made or caused to be made by the Company to the Stockholders; 
  
 (xiv) Expenses of organizing, redomesticating, merging, liquidating or dissolving the Company or of amending the Articles of Incorporation
or the Bylaws; and 
  
 (xv) All other
out-of-pocket costs incurred by the Advisor in performing its duties hereunder. 
  
 9.02 Timing of and Additional Limitations on Reimbursements. 
  
 (i) Expenses incurred by the Advisor on behalf of the Company and reimbursable pursuant to this Article 9 shall be reimbursed no less than
monthly to the Advisor. The Advisor shall prepare a statement documenting the expenses of the Company during each quarter and shall deliver such statement to the Company within 45 days after the end of each quarter. 
  
 (ii) Notwithstanding anything else in this Article 9 to the
contrary, the expenses enumerated in this Article 9 shall not become reimbursable to the Advisor unless and until the Company has raised $2.5 million in its initial public offering. 
  

 18 

 (iii) The Company shall not reimburse the Advisor at the end of any fiscal quarter for
Operating Expenses that in the four consecutive fiscal quarters then ended (the “Expense Year”) exceed (the “Excess Amount”) the greater of 2% of Average Invested Assets or 25% of Net Income (the “2%/25% Guidelines”)
for such year unless the Conflicts Committee determines that such excess was justified, based on unusual and nonrecurring factors that the Conflicts Committee deems sufficient. If the Conflicts Committee does not approve such excess as being so
justified, any Excess Amount paid to the Advisor during a fiscal quarter shall be repaid to the Company. If the Conflicts Committee determines such excess was justified, then, within 60 days after the end of any fiscal quarter of the Company for
which total reimbursed Operating Expenses for the Expense Year exceed the 2%/25% Guidelines, the Advisor, at the direction of the Conflicts Committee, shall send to the Stockholders a written disclosure of such fact, together with an explanation of
the factors the Conflicts Committee considered in determining that such excess expenses were justified. The Company will ensure that such determination will be reflected in the minutes of the meetings of the Board of Directors. All figures used in
the foregoing computation shall be determined in accordance with GAAP applied on a consistent basis. 
  
 ARTICLE 10 
  
 VOTING AGREEMENT 
  
 The Advisor agrees that, with
respect to any Shares now or hereinafter owned by it, the Advisor will not vote or consent on matters submitted to the stockholders of the Company regarding (i) the removal of the Advisor or any Affiliate of the Advisor or (ii) any
transaction between the Company and the Advisor or any of its Affiliates. This voting restriction shall survive until such time that the Advisor is both no longer serving as such and is no longer an Affiliate of the Company. 
  
 ARTICLE 11 
  
 RELATIONSHIP OF ADVISOR AND COMPANY; 
 OTHER ACTIVITIES OF THE ADVISOR 
  
 11.01 Relationship. The Company and the Advisor are not partners or joint venturers with each other, and nothing in this Agreement shall be construed to make them such partners or joint venturers. Nothing herein contained shall prevent the
Advisor from engaging in other activities, including, without limitation, the rendering of advice to other Persons (including other REITs) and the management of other programs advised, sponsored or organized by the Advisor or its Affiliates. Nor
shall this Agreement limit or restrict the right of any manager, director, officer, employee or equityholder of the Advisor or its Affiliates to engage in any other business or to render services of any kind to any other Person. The Advisor may,
with respect to any investment in which the 

  

 19 

 
Company is a participant, also render advice and service to each and every other participant therein. The Advisor shall promptly disclose to the Board of
Directors the existence of any condition or circumstance, existing or anticipated, of which it has knowledge, that creates or could create a conflict of interest between the Advisor’s obligations to the Company and its obligations to or its
interest in any other Person. 
  
 11.02 Time Commitment. The
Advisor shall, and shall cause its Affiliates and their respective employees, officers and agents to, devote to the Company such time as shall be reasonably necessary to conduct the business and affairs of the Company in an appropriate manner
consistent with the terms of this Agreement. The Company acknowledges that the Advisor and its Affiliates and their respective employees, officers and agents may also engage in activities unrelated to the Company and may provide services to Persons
other than the Company or any of its Affiliates. 
  
 11.03
Investment Opportunities and Allocation. The Advisor shall be required to use commercially reasonable efforts to present a continuing and suitable investment program to the Company that is consistent with the investment policies and objectives of
the Company, but neither the Advisor nor any Affiliate of the Advisor shall be obligated generally to present any particular investment opportunity to the Company even if the opportunity is of character that, if presented to the Company, could be
taken by the Company. In the event an investment opportunity is located, the allocation procedure set forth under the caption “Conflicts of Interest – Certain Conflict Resolution Procedures – Allocation of Investment
Opportunities” in the Registration Statement shall govern the allocation of the opportunity among the Company and Affiliates of the Advisor. 
  
 ARTICLE 12 
  
 THE KBS NAME 
  
 The Advisor and its Affiliates have a proprietary interest in the name “KBS.” The Advisor hereby grants to the Company a non-transferable, non-assignable, non-exclusive royalty-free right and license to use the name
“KBS” during the term of this Agreement. Accordingly, and in recognition of this right, if at any time the Company ceases to retain the Advisor or one of its Affiliates to perform advisory services for the Company, the Company will,
promptly after receipt of written request from the Advisor, cease to conduct business under or use the name “KBS” or any derivative thereof and the Company shall change its name and the names of any of its subsidiaries to a name that does
not contain the name “KBS” or any other word or words that might, in the reasonable discretion of the Advisor, be susceptible of indication of some form of relationship between the Company and the Advisor or any its Affiliates. At such
time, the Company will also make any changes to any trademarks, servicemarks or other marks necessary to remove any references to the word “KBS.” Consistent with the foregoing, it is specifically recognized that the Advisor or one or more
of its Affiliates has in the past and may in the future organize, sponsor or otherwise permit to exist other investment vehicles (including vehicles for investment in real estate) and financial and service 

  

 20 

 
organizations having “KBS” as a part of their name, all without the need for any consent (and without the right to object thereto) by the Company.

  
 ARTICLE 13 
  
 TERM AND TERMINATION OF THE AGREEMENT 
  
 13.01 Term. This Agreement shall have an initial term of one year from the
date hereof and may be renewed for an unlimited number of successive one-year terms upon mutual consent of the parties. The Company (acting through the Conflicts Committee) will evaluate the performance of the Advisor annually before renewing this
Agreement, and each such renewal shall be for a term of no more than one year. Any such renewal must be approved by the Conflicts Committee. 
  
 13.02 Termination by Either Party. This Agreement may be terminated upon 60 days written notice without cause or penalty by either the Company (acting
through the Conflicts Committee) or the Advisor. The provisions of Articles 1, 10, 12, 13, 15 and 16 shall survive termination of this Agreement. 
  
 13.03 Payments on Termination and Survival of Certain Rights and Obligations. Payments to the Advisor pursuant to this Section 13.03 shall be subject
to the 2%/25% Guidelines to the extent applicable. 
  
 (i) After the Termination Date, the Advisor shall not be entitled to compensation for further services hereunder except it shall be entitled to receive from the Company within 30 days after the effective date of such termination
(A) all unpaid reimbursements of expenses and all earned but unpaid fees payable to the Advisor prior to termination of this Agreement and (B) the Subordinated Performance Fee Due Upon Termination, provided that no Subordinated Performance
Fee Due Upon Termination will be paid if the Company has paid or is obligated to pay the Subordinated Incentive Fee. 
  
 (ii) The Advisor shall promptly upon termination: 
  
 (a) pay over to the Company all money collected pursuant to this Agreement, if any, after deducting any
accrued compensation and reimbursement for its expenses to which it is then entitled; 
  
 (b) deliver to the Board of Directors a full accounting, including a statement showing all payments collected by it and a statement of all
money held by it, covering the period following the date of the last accounting furnished to the Board; 
  
 (c) deliver to the Board of Directors all assets and documents of the Company then in the custody of the Advisor; and 
  

 21 

 (d) cooperate with the Company to provide an orderly transition of advisory functions.

  
 ARTICLE 14 
  
 ASSIGNMENT 
  
 This Agreement may be assigned by the Advisor to an Affiliate with the consent of the Conflicts Committee. The Advisor may
assign any rights to receive fees or other payments under this Agreement without obtaining the approval of the Board of Directors. This Agreement shall not be assigned by the Company without the consent of the Advisor, except in the case of an
assignment by the Company to a corporation or other organization that is a successor to all of the assets, rights and obligations of the Company, in which case such successor organization shall be bound hereunder and by the terms of said assignment
in the same manner as the Company is bound by this Agreement. 
  
 ARTICLE 15 
  
 INDEMNIFICATION AND LIMITATION OF LIABILITY

  
 The Company shall indemnify, defend and hold harmless the
Advisor and its Affiliates, including their respective officers, directors, equity holders, partners and employees, from all liability, claims, damages or losses arising in the performance of their duties hereunder, and related expenses, including
reasonable attorneys’ fees, to the extent such liability, claims, damages or losses and related expenses are not fully reimbursed by insurance, subject to any limitations imposed by the Company’s the Articles of Incorporation. Any
indemnification of the Advisor may be made only out of the net assets of the Company and not from Stockholders. 
  
 ARTICLE 16 
  
 MISCELLANEOUS 
  
 16.01 Notices. Any notice, report or
other communication required or permitted to be given hereunder shall be in writing unless some other method of giving such notice, report or other communication is required by the Articles of Incorporation, the Bylaws or is accepted by the party to
whom it is given, and shall be given by being delivered by hand or by overnight mail or other overnight delivery service to the addresses set forth herein: 
  
 To the Company or the Board of Directors: 
  
 KBS Real Estate Investment Trust, Inc. 
 620
Newport Center Drive, Suite 1300 
 Newport Beach, California 92660 
  

 22 

 To the Advisor: 
  
 KBS Capital Advisors LLC 
 620 Newport Center Drive, Suite 1300 
 Newport Beach, California 92660 
  
 Either party may at any time give notice in writing to the other party of a
change in its address for the purposes of this Section 16.01. 
  
 16.02 Modification. This Agreement shall not be changed, modified, terminated or discharged, in whole or in part, except by an instrument in writing signed by both parties hereto, or their respective successors or permitted assigns.

  
 16.03 Severability. The provisions of this Agreement are
independent of and severable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.

  
 16.04 Construction. The provisions of this Agreement shall be
construed and interpreted in accordance with the laws of the State of Delaware. 
  
 16.05 Entire Agreement. This Agreement contains the entire agreement and understanding between the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing. 
  
 16.06 Waiver. Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right,
remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party
asserted to have granted such waiver. 
  
 16.07 Gender. Words used
herein regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context requires. 
  
 16.08 Titles Not to Affect Interpretation. The titles of Articles and
Sections contained in this Agreement are for convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation hereof. 
  

 23 

 16.09 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of all of the parties reflected hereon as the signatories. 
  
 [The remainder of this page is intentionally left blank. 
 Signature page follows.] 
  

 24 

 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above
written. 
  

													
	 KBS REAL ESTATE INVESTMENT TRUST, INC.

			
	 	 	By:	 	/s/ Charles J. Schreiber
	 	 	 	 	 Charles J. Schreiber, Jr., Chief Executive Officer

	
	 KBS CAPITAL ADVISORS LLC

			
	 	 	By:	 	KBS Holdings LLC, its sole Manager
				
	 	 	 	 	By:	 	 PBren Investments, L.P., a Manager

					
	 	 	 	 	 	 	By:	 	PBren Investments, LLC, as general partner
						
	 	 	 	 	 	 	 	 	 By:
	 	 /s/ Peter M. Bren

	 	 	 	 	 	 	 	 	 	 	 Peter M. Bren, Manager

				
	 	 	 	 	By:	 	Schreiber Real Estate Investments, L.P., a Manager
					
	 	 	 	 	 	 	By:	 	Schreiber Investments, LLC, as general partner
						
	 	 	 	 	 	 	 	 	 By:
	 	 /s/ Charles J. Schreiber

	 	 	 	 	 	 	 	 	 	 	 Charles J. Schreiber, Jr., Manager

				
	 	 	 	 	By:	 	 GKP Holdings LLC, a Manager

				
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 Peter McMillan III, Manager

				
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 Keith David Hall, Manager

  

 25Employee and Independent Director Incentive Stock Plan

 Exhibit 10.2 
  
 KBS REAL ESTATE INVESTMENT TRUST, INC. 
 EMPLOYEE AND INDEPENDENT DIRECTOR INCENTIVE STOCK PLAN 
  

	1.	Establishment, Purpose and Types of Awards 

  
 KBS Real Estate Investment Trust, Inc., a Maryland corporation (the “Company”), hereby establishes the KBS Real Estate Investment Trust,
Inc. Employee and Independent Director Incentive Stock Plan (the “Plan”). The purposes of the Plan are to promote the long-term growth and profitability of the Company by: 
  
 (a) furnishing incentives to individuals chosen to receive share-based
awards because the Company considers them capable of improving the Company’s operations and increasing its profits; 
  
 (b) encouraging selected persons to accept or continue employment with the Company or any Advisor or an Affiliate of the Company or the Advisor; and

  
 (c) increasing the interest of the Company’s independent
directors in the Company’s welfare through their participation in the growth in the value of the Company’s shares of common stock. 
  
 The Plan permits the granting of stock options (including incentive stock options qualifying under Code section 422 and nonstatutory stock options), stock
appreciation rights, restricted or unrestricted stock awards, phantom stock, performance awards, other stock-based awards, or any combination of the foregoing. 
  

	2.	Definitions 

  
 Under this Plan, except where the context otherwise indicates, the following definitions apply: 
  
 (a) “Administrator” means the Board or the committee or
officer(s) appointed by the Board that have authority to administer the Plan as provided in Section 3 hereof. 
  
 (b) “Advisor” means the person or persons, if any, appointed, employed or contracted with by the Company from time to time and
responsible for directing or performing day-to-day business affairs or operations of the Company, including any person or persons to whom the Advisor subcontracts any of such functions. The initial Advisor is KBS Capital Advisors LLC. 
  
 (c) “Affiliate” means any person that controls, is
controlled by, or is under common control with another person. For this purpose, “control” shall be deemed to include ownership of 50% or more of the total combined voting power or value of al classes of stock or interests of an entity.

  
 (d) “Award” means any stock option, stock
appreciation right, stock award, phantom stock award, performance award, or other stock-based award. 
  
 (d) “Board” means the Board of Directors of the Company. 
  
 (e) “Change in Control” means: (i) the acquisition (other than from the Company) in one or more
transactions by any Person, as defined in this Section 2(e), of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of 50% or more of (A) the then outstanding shares
of the securities of the Company, or (B) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the “Company Voting Stock”); (ii) the closing of
a sale or other conveyance of all or substantially all of the assets of the Company; or (iii) the effective time of any merger, share exchange, consolidation, or other business combination involving the Company if immediately after such
transaction persons who hold a majority of the outstanding voting securities entitled to vote generally in the election of directors of the surviving entity (or the entity owning 100% of such surviving entity) are not persons who, immediately prior
to such transaction, held the Company Voting Stock; provided, however, that for purposes of any Award or subplan that constitutes a “nonqualified deferred compensation plan,” within the meaning of Code section 409A, the
Administrator, in 

  

 A-1 

 
its discretion, may specify a different definition of Change in Control in order to comply with the provisions of Code section 409A. 
  
 For purposes of this Section 2(e) only, a “Person”
means any individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended, other than: employee benefit plans sponsored or maintained by the Company and by entities controlled by
the Company or an underwriter of the Common Stock in a registered public offering. 
  
 (f) “Code” means the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder. 
  
 (g) “Common Stock” means shares of common stock of the Company, par value $0.01 per share. 
  
 (h) “Fair Market Value” means, with respect to a share of
the Company’s Common Stock for any purpose on a particular date, the value determined by the Administrator in good faith. However, if the Common Stock is registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as
amended, and listed for trading on a national exchange or market, “Fair Market Value” means, as applicable, (i) either the closing price or the average of the high and low sale price on the relevant date, as determined in the
Administrator’s discretion, quoted on the New York Stock Exchange, the American Stock Exchange, or the Nasdaq National Market; (ii) the last sale price on the relevant date quoted on the Nasdaq SmallCap Market; (iii) the average of
the high bid and low asked prices on the relevant date quoted on the Nasdaq OTC Bulletin Board Service or by the National Quotation Bureau, Inc. or a comparable service as determined in the Administrator’s discretion; or (iv) if the Common
Stock is not quoted by any of the above, the average of the closing bid and asked prices on the relevant date furnished by a professional market maker for the Common Stock, or by such other source, selected by the Administrator. If no public trading
of the Common Stock occurs on the relevant date but the shares are so listed, then Fair Market Value shall be determined as of the next preceding date on which trading of the Common Stock does occur. For all purposes under this Plan, the term
“relevant date” as used in this Section 2(h) means either the date as of which Fair Market Value is to be determined or the next preceding date on which public trading of the Common Stock occurs, as determined in the
Administrator’s discretion. 
  
 (i) “Grant
Agreement” means a written document memorializing the terms and conditions of an Award granted pursuant to the Plan, which document shall incorporate the terms of the Plan. 
  

	3.	Administration 

  
 (a) Administration of the Plan. The Plan shall be administered by the Board or by such committee or committees as may be appointed by the Board
from time to time. To the extent allowed by applicable state law, the Board by resolution may authorize an officer or officers to grant Awards (other than Stock Awards) to other persons, and, to the extent of such authorization, such officer or
officers shall be the Administrator. 
  
 (b) Powers of the
Administrator. The Administrator shall have all the powers vested in it by the terms of the Plan, such powers to include authority, in its sole and absolute discretion, to grant Awards under the Plan, prescribe Grant Agreements evidencing such
Awards and establish programs for granting Awards. 
  
 The
Administrator shall have full power and authority to take all other actions necessary to carry out the purpose and intent of the Plan, including, but not limited to, the authority to: (i) determine the eligible persons to whom, and the time or
times at which Awards shall be granted; (ii) determine the types of Awards to be granted; (iii) determine the number of shares to be covered by or used for reference purposes for each Award; (iv) impose such terms, limitations,
restrictions and conditions upon any such Award as the Administrator shall deem appropriate; (v) modify, amend, extend or renew outstanding Awards, or accept the surrender of outstanding Awards and substitute new Awards (provided however, that,
except as provided in Section 6 or 7(d) of the Plan, any modification that would 

  

 A-2 

 
materially adversely affect any outstanding Award shall not be made without the consent of the holder); (vi) accelerate or otherwise change the time in
which an Award may be exercised or becomes payable and waive or accelerate the lapse, in whole or in part, of any restriction or condition with respect to such Award, including, but not limited to, any restriction or condition with respect to the
vesting or exercisability of an Award following termination of any grantee’s employment or other relationship with the Company; (vii) establish objectives and conditions, if any, for earning Awards and determining whether Awards will be
paid with respect to a performance period; and (viii) for any purpose, including but not limited to, qualifying for preferred tax treatment under foreign tax laws or otherwise complying with the regulatory requirements of local or foreign
jurisdictions, to establish, amend, modify, administer or terminate sub-plans, and prescribe, amend and rescind rules and regulations relating to such sub-plans. 
  
 The Administrator shall have full power and authority, in its sole and absolute discretion, to administer, construe and
interpret the Plan, Grant Agreements and all other documents relevant to the Plan and Awards issued thereunder, to establish, amend, rescind and interpret such rules, regulations, agreements, guidelines and instruments for the administration of the
Plan and for the conduct of its business as the Administrator deems necessary or advisable, and to correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award in the manner and to the extent the Administrator
shall deem it desirable to carry it into effect. 
  
 (c)
Non-Uniform Determinations. The Administrator’s determinations under the Plan (including without limitation, determinations of the persons to receive Awards, the form, amount and timing of such Awards, the terms and provisions of such
Awards and the Grant Agreements evidencing such Awards) need not be uniform and may be made by the Administrator selectively among persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly
situated. 
  
 (d) Limited Liability. To the maximum extent
permitted by law, no member of the Administrator shall be liable for any action taken or decision made in good faith relating to the Plan or any Award thereunder. 
  
 (e) Indemnification. To the maximum extent permitted by law and by the Company’s charter and by-laws, the
members of the Administrator shall be indemnified by the Company in respect of all their activities under the Plan. 
  
 (f) Effect of Administrator’s Decision. All actions taken and decisions and determinations made by the Administrator on all matters relating
to the Plan pursuant to the powers vested in it hereunder shall be in the Administrator’s sole and absolute discretion and shall be conclusive and binding on all parties concerned, including but not limited to the Company, its stockholders, any
participants in the Plan, and their respective successors in interest. 
  

	4.	Shares Available for the Plan; Maximum Awards 

  
 On any given date, the maximum number of shares of Common Stock with respect to which Awards may be made pursuant to the Plan shall be equal to the number
of shares of Common Stock which, when added to the number of shares of Common Stock subject to other Awards outstanding as of such date and the number of shares of Common Stock previously issued with respect to Awards granted under the Plan, shall
be equal to 5% of the Company’s outstanding shares of Common Stock on a fully diluted basis as of such date; provided, however, that such number of shares may not exceed 10,000,000 shares of Common Stock, subject to adjustments as provided in
Section 7(d) of the Plan; and provided further, that no more than an aggregate of 10,000,000 shares of Common Stock may be issued pursuant to incentive stock options intended to qualify under Code section 422. The Company shall reserve such
number of shares for Awards under the Plan, subject to adjustments as provided in Section 7(d) of the Plan. If any Award, or portion of an Award, under the Plan expires or terminates unexercised, becomes unexercisable, is settled in cash
without delivery of shares of Common Stock, or is forfeited or otherwise terminated, surrendered or canceled as to any shares, or if any shares of Common Stock are repurchased by or surrendered to the Company in connection with any Award (whether or
not such surrendered shares were acquired pursuant to any Award), or if any shares are withheld by the Company, the shares subject to such Award and the repurchased, surrendered and withheld shares shall 

  

 A-3 

 
thereafter be available for further Awards under the Plan; provided, however, that any such shares that are surrendered to or repurchased or withheld by the
Company in connection with any Award or that are otherwise forfeited after issuance shall not be available for purchase pursuant to incentive stock options intended to qualify under Code section 422. 
  
 Subject to adjustments as provided in Section 7(d) of the Plan, the
maximum number of shares of Common Stock subject to Awards of any combination that may be granted during any one fiscal year of the Company to any one individual under this Plan shall be limited to 1,000,000 shares; provided, however,
that such maximum number shall be 2,000,000 shares with respect to any individual during the first fiscal year that the individual is employed with the Company, the Advisor or an Affiliate or either. Such per-individual limit shall not be adjusted
to effect a restoration of shares of Common Stock with respect to which the related Award is terminated, surrendered or canceled. 
  

	5.	Participation 

  
 The Administrator, in its sole discretion, may grant Awards under the Plan to (a) full-time employees of the Company, the Advisor, any
Affiliate of the Company or the Advisor, or any entity that provides services to the Company, (b) managers or directors of the Advisor or of entities that provide services to the Company or any Affiliate of the Company, (c) persons who
perform bona fide consulting or advisory services for the Company, the Advisor, any Affiliate or the Company, and (d) the Company’s Independent Directors (as defined in the Company’s charter). The Administrator may also grant Awards
to a person in connection with hiring, retention or otherwise, prior to the date the person first becomes eligible to participate in the Plan, provided that such Awards shall not become vested or exercisable, and no shares shall be issued to such
person, prior to the date the person first becomes eligible to participate in the Plan.  
  

	6.	Awards 

  
 The Administrator, in its sole discretion, establishes the terms of all Awards granted under the Plan. Awards may be granted individually or in tandem
with other types of Awards, concurrently with or with respect to outstanding Awards. All Awards are subject to the terms and conditions provided in the Grant Agreement. The Administrator may permit or require a recipient of an Award to defer such
individual’s receipt of the payment of cash or the delivery of Common Stock that would otherwise be due to such individual by virtue of the exercise of, payment of, or lapse or waiver of restrictions respecting, any Award. If any such payment
deferral is required or permitted, the Administrator shall, in its sole discretion, establish rules and procedures for such payment deferrals. 
  
 (a) Stock Options. The Administrator may from time to time grant to eligible participants Awards of incentive stock options as that term is defined
in Code section 422 or nonstatutory stock options; provided, however, that Awards of incentive stock options shall be limited to employees of the Company or of any current or hereafter existing “parent
corporation” or “subsidiary corporation,” as defined in Code sections 424(e) and (f), respectively, of the Company and any other individuals who are eligible to receive incentive stock options under the provisions of Code
section 422. Options intended to qualify as incentive stock options under Code section 422 must have an exercise price at least equal to Fair Market Value as of the date of grant, but nonstatutory stock options may be granted with an
exercise price less than Fair Market Value. No stock option shall be an incentive stock option unless so designated by the Administrator at the time of grant or in the Grant Agreement evidencing such stock option. 
  
 (b) Stock Appreciation Rights. The Administrator may from time to
time grant to eligible participants Awards of Stock Appreciation Rights (“SAR”). A SAR entitles the grantee to receive, subject to the provisions of the Plan and the Grant Agreement, a payment having an aggregate value equal to the
product of (i) the excess of (A) the Fair Market Value on the exercise date of one share of Common Stock over (B) the base price per share specified in the Grant Agreement, times (ii) the number of shares specified by the SAR, or
portion thereof, which is exercised. The base price per share specified in the Grant Agreement shall not be less than the lower of the Fair Market Value on the grant date or the exercise price of any tandem stock option Award to which the SAR is
related. Payment by the Company of the amount receivable upon any exercise of a SAR may be made by the delivery of Common Stock or cash, or any combination of Common Stock and cash, as determined in the sole discretion of the 

  

 A-4 

 
Administrator. If upon settlement of the exercise of a SAR a grantee is to receive a portion of such payment in shares of Common Stock, the number of shares
shall be determined by dividing such portion by the Fair Market Value of a share of Common Stock on the exercise date. No fractional shares shall be used for such payment and the Administrator shall determine whether cash shall be given in lieu of
such fractional shares or whether such fractional shares shall be eliminated. 
  
 (c) Stock Awards. The Administrator may from time to time grant restricted or unrestricted stock Awards to eligible participants in such amounts, on such terms and conditions, and for such consideration,
including no consideration or such minimum consideration as may be required by law, as it shall determine. A stock Award may be paid in Common Stock, in cash, or in a combination of Common Stock and cash, as determined in the sole discretion of the
Administrator. 
  
 (d) Phantom Stock. The Administrator
may from time to time grant Awards to eligible participants denominated in stock-equivalent units (“phantom stock”) in such amounts and on such terms and conditions as it shall determine. Phantom stock units granted to a participant
shall be credited to a bookkeeping reserve account solely for accounting purposes and shall not require a segregation of any of the Company’s assets. An Award of phantom stock may be settled in Common Stock, in cash, or in a combination of
Common Stock and cash, as determined in the sole discretion of the Administrator. Except as otherwise provided in the applicable Grant Agreement, the grantee shall not have the rights of a stockholder with respect to any shares of Common Stock
represented by a phantom stock unit solely as a result of the grant of a phantom stock unit to the grantee. 
  
 (e) Performance Awards. The Administrator may, in its discretion, grant performance awards which become payable on account of attainment of one or
more performance goals established by the Administrator. Performance awards may be paid by the delivery of Common Stock or cash, or any combination of Common Stock and cash, as determined in the sole discretion of the Administrator. Performance
goals established by the Administrator may be based on the Company’s operating income or one or more other business criteria selected by the Administrator that apply to an individual or group of individuals, a business unit, or the Company as a
whole, over such performance period as the Administrator may designate. 
  
 (f) Profits Interest Units. The Administrator may from time to time grant an award of an interest in the profits and gains of KBS Limited Partnership, the Company’s operating partnership (such awards,
“Profits Interest Units”), to eligible participants in such amount and subject to such terms and conditions as may be determined by the Administrator; provided, however, that Profits Interest Units may only be issued to a
participant for the performance of services to or for the benefit of KBS Limited Partnership in the participant’s capacity as a partner of KBS Limited Partnership or in anticipation of such participant’s becoming a partner of KBS Limited
Partnership. 
  
 (g) Other Stock-Based Awards. The
Administrator may from time to time grant other stock-based awards to eligible participants in such amounts, on such terms and conditions, and for such consideration, including no consideration or such minimum consideration as may be required by
law, as it shall determine. Other stock-based awards may be denominated in cash, in Common Stock or other securities, in stock-equivalent units, in stock appreciation units, in securities or debentures convertible into Common Stock, or in any
combination of the foregoing and may be paid in Common Stock or other securities, in cash, or in a combination of Common Stock or other securities and cash, all as determined in the sole discretion of the Administrator. 
  

	7.	Miscellaneous 

  
 (a) Withholding of Taxes. Grantees and holders of Awards shall pay to the Company, the Advisor or an Affiliate or either, or make provision
satisfactory to the Administrator for payment of, any taxes required to be withheld in respect of Awards under the Plan no later than the date of the event creating the tax liability. The Company, the Advisor or an Affiliate of either may, to the
extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to the grantee or holder of an Award. In the event that payment to the Company, the Advisor or an Affiliate of such tax obligations is made in shares
of Common Stock, such shares shall be valued at Fair Market Value on 

  

 A-5 

 
the applicable date for such purposes and shall not exceed in amount the minimum statutory tax withholding obligation. 
  
 (b) Loans. To the extent otherwise permitted by law, the Company, the
Advisor or an Affiliate of either may make or guarantee loans to grantees to assist grantees in exercising Awards and satisfying any withholding tax obligations. 
  
 (c) Transferability. Except as otherwise determined by the Administrator, and in any event in the case of an
incentive stock option or a stock appreciation right granted with respect to an incentive stock option, no Award granted under the Plan shall be transferable by a grantee otherwise than by will or the laws of descent and distribution. Unless
otherwise determined by the Administrator in accord with the provisions of the immediately preceding sentence, an Award may be exercised during the lifetime of the grantee, only by the grantee or, during the period the grantee is under a legal
disability, by the grantee’s guardian or legal representative. 
  
 (d) Adjustments for Corporate Transactions and Other Events. 
  

	 	(i)	Stock Dividend, Stock Split and Reverse Stock Split. In the event of a stock dividend of, or stock split or reverse stock split affecting, the Common Stock, (A) the
maximum number of shares of such Common Stock as to which Awards may be granted under this Plan and the maximum number of shares with respect to which Awards may be granted during any one fiscal year of the Company to any individual, as provided in
Section 4 of the Plan, and (B) the number of shares covered by and the exercise price and other terms of outstanding Awards, shall, without further action of the Board, be adjusted to reflect such event. The Administrator may make
adjustments, in its discretion, to address the treatment of fractional shares and fractional cents that arise with respect to outstanding Awards as a result of the stock dividend, stock split or reverse stock split. 

  

	 	(ii)	Non-Change in Control Transactions. Except with respect to the transactions set forth in Section 7(d)(i), in the event of any change affecting the Common Stock, the
Company or its capitalization, by reason of a spin-off, split-up, dividend, recapitalization, merger, consolidation or share exchange, other than any such change that is part of a transaction resulting in a Change in Control of the Company, the
Administrator, in its discretion and without the consent of the holders of the Awards, may make (A) appropriate adjustments to the maximum number and kind of shares reserved for issuance or with respect to which Awards may be granted under the
Plan, in the aggregate and with respect to any individual during any one fiscal year of the Company, as provided in Section 4 of the Plan; and (B) any adjustments in outstanding Awards, including but not limited to modifying the number,
kind and price of securities subject to Awards. 

  

	 	(iii)	 Change in Control Transactions. In the event of any transaction resulting in a Change in Control of the Company, outstanding stock options and other Awards
that are payable in or convertible into Common Stock under this Plan will terminate upon the effective time of such Change in Control unless provision is made in connection with the transaction for the continuation or assumption of such Awards by,
or for the substitution of the equivalent awards of, the surviving or successor entity or a parent thereof. In the event of such termination, (A) the outstanding stock options and other Awards that will terminate upon the effective time of the
Change in Control shall become fully vested immediately before the effective time of the Change in Control, and (B) the holders of stock options and other Awards under the Plan will be permitted, immediately before the Change in Control, to
exercise or convert all portions of such stock options or other Awards under the Plan that are then exercisable or convertible or which become exercisable or convertible upon or prior to the effective time of the 

  

 A-6 

	 	 
Change in Control. If, immediately before the Change in Control, no stock of the Company is readily tradeable on an established securities market or
otherwise, and the vesting of an Award or Awards pursuant to this Section 7(d)(iii) would be treated as a “parachute payment” (as defined in section 280G of the Code), then such Award or Awards shall not vest unless the
requirements of the shareholder approval exemption of section 280G(b)(5) of the Code have been satisfied with respect to such Award or Awards. 

  

	 	(iv)	Unusual or Nonrecurring Events. The Administrator is authorized to make, in its discretion and without the consent of holders of Awards, adjustments in the terms and conditions of,
and the criteria included in, Awards in recognition of unusual or nonrecurring events affecting the Company, or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the
Administrator determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. 

  
 (e) Substitution of Awards in Mergers and Acquisitions. Awards may be
granted under the Plan from time to time in substitution for awards held by employees, officers, consultants, directors, managers or general partners of entities who become or are about to become employees, officers, consultants or directors of the
Company or an Affiliate of the Company as the result of a merger or consolidation of the employing entity with the Company or an Affiliate of the Company , or the acquisition by the Company or an Affiliate of the Company of the assets or stock of
the employing entity. The terms and conditions of any substitute Awards so granted may vary from the terms and conditions set forth herein to the extent that the Administrator deems appropriate at the time of grant to conform the substitute Awards
to the provisions of the awards for which they are substituted. 
  
 (f) Termination, Amendment and Modification of the Plan. The Board may terminate, amend or modify the Plan or any portion thereof at any time. Except as otherwise determined by the Board, termination of the Plan shall not affect the
Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination. 
  
 (g) Non-Guarantee of Employment or Service. Nothing in the Plan or in any Grant Agreement thereunder shall confer any
right on an individual to continue in the service of the Company or shall interfere in any way with the right of the Company to terminate such service at any time with or without cause or notice and whether or not such termination results in
(i) the failure of any Award to vest; (ii) the forfeiture of any unvested or vested portion of any Award; and/or (iii) any other adverse effect on the individual’s interests under the Plan. 
  
 (h) No Trust or Fund Created. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company and a grantee or any other person. To the extent that any grantee or other person acquires a right to receive payments from the
Company pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company. 
  
 (i) Governing Law. The validity, construction and effect of the Plan, of Grant Agreements entered into pursuant to the Plan, and of any rules,
regulations, determinations or decisions made by the Administrator relating to the Plan or such Grant Agreements, and the rights of any and all persons having or claiming to have any interest therein or thereunder, shall be determined exclusively in
accordance with applicable federal laws and the laws of the State of Maryland, without regard to its conflict of laws principles. 
  
 (j) Effective Date; Termination Date. The Plan is effective as of the date on which the Plan is adopted by the Board, subject to approval of the
stockholders within twelve months before or after such date. No Award shall be granted under the Plan after the close of business on the day immediately preceding the tenth anniversary of the effective date of the Plan, or if earlier, the tenth
anniversary of the date this Plan is approved by the stockholders. Subject to other applicable provisions of the Plan, all 

  

 A-7 

 
Awards made under the Plan prior to such termination of the Plan shall remain in effect until such Awards have been satisfied or terminated in accordance
with the Plan and the terms of such Awards. 
  
 PLAN APPROVAL

  
 Date Approved by the Board:
10/31/05 
  
 Date Approved by the
Stockholders: 10/31/05 
  

 A-8

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