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Mezzanine Loan Agreement

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Title:

Mezzanine Loan Agreement

Entities:

Greenwich Capital Financial Products, Inc.; KBS Real Estate Investment Trust, Inc.; McGraw-Hill Companies Inc.; National Westminster Bank plc; Wachovia Bank, NA

Date:

2006

Size:

230KB total

Price:

$95

ID:

#2552807

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MEZZANINE LOAN AGREEMENT

Dated as of September 18, 2006

Between

KBS REIT ACQUISITION I, LLC

as Borrower

And

GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.

as Lender

TABLE OF CONTENTS


				Page
1.	DEFINITIONS; PRINCIPLES OF CONSTRUCTION			1

	1.1	Specific Definitions		1

	1.2	Index of Other Definitions		11

	1.3	Principles of Construction		12

2.	GENERAL LOAN TERMS			12

	2.1	The Loan		12

	2.2	Interest; Monthly Payments		13
		2.2.1	Generally	13
		2.2.2	Default Rate	13
		2.2.3	Taxes	13
		2.2.4	Breakage Indemnity	13
		2.2.5	New Payment Date	14

	2.3	Loan Repayment		14
		2.3.1	Repayment	14
		2.3.2	Mandatory Prepayments	14
		2.3.3	Optional Prepayments	14

	2.4	Release of Collateral		15

	2.5	Payments and Computations		15
		2.5.1	Making of Payments	15
		2.5.2	Computations	15
		2.5.3	Late Payment Charge	15

	2.6	Fees		15
		2.6.1	Origination Fee	15
		2.6.2	Facility Fees	15

3.	CASH MANAGEMENT AND RESERVES			15

	3.1	Cash Management Arrangements		15

	3.2	[Intentionally deleted]		16

	3.3	Grant of Security Interest; Application of Funds		16

	3.4	Cash Flow Allocation		16

	3.5	Permitted REIT Distributions		17

4.	REPRESENTATIONS AND WARRANTIES			17

	4.1	Organization; Special Purpose		17

	4.2	Proceedings; Enforceability		17

(i)


				Page
	4.3	No Conflicts		17

	4.4	Litigation		18

	4.5	Agreements		18

	4.6	Title		18

	4.7	No Bankruptcy Filing		19

	4.8	Full and Accurate Disclosure		19

	4.9	Tax Filings		19

	4.10	No Plan Assets		19

	4.11	Compliance		20

	4.12	Contracts		20

	4.13	Federal Reserve Regulations; Investment Company Act		20

	4.14	Easements; Utilities and Public Access		20

	4.15	Physical Condition		21

	4.16	Leases		21

	4.17	Fraudulent Transfer		22

	4.18	Ownership of Borrower and Owner		22

	4.19	Purchase Options		22

	4.20	Management Agreement		22

	4.21	Hazardous Substances		22

	4.22	Name; Principal Place of Business		23

	4.23	Other Debt		23

	4.24	Pledged Collateral		23

	4.25	Senior Loan		24

	4.26	Perfection of Accounts		24

	4.27	No Contractual Obligations		24

5.	COVENANTS			25

	5.1	Existence		25

	5.2	Taxes and Other Charges		25

	5.3	Access to Property		26

	5.4	Repairs; Maintenance and Compliance; Alterations		26

		5.4.1	Repairs; Maintenance and Compliance	26
		5.4.2	Alterations	26

(ii)


			Page
5.5	Performance of Other Agreements		26

5.6	Cooperate in Legal Proceedings		27

5.7	Further Assurances		27

5.8	Environmental Matters		27
	5.8.1	Hazardous Substances	27
	5.8.2	Environmental Monitoring	27

5.9	Title to the Pledged Collateral		29

5.10	Leases		29
	5.10.1	Generally	29
	5.10.2	Leasing	29
	5.10.3	Lease Execution and Modification	30
	5.10.4	Additional Covenants with respect to Leases	30

5.11	Estoppel Statement		30

5.12	Property Management		31
	5.12.1	Management Agreement	31
	5.12.2	Termination of Manager	31

5.13	Special Purpose Bankruptcy Remote Entity		32

5.14	Assumption in Non-Consolidation Opinion		32

5.15	Change in Business or Operation of Property		32

5.16	Debt Cancellation		32

5.17	Affiliate Transactions		32

5.18	Zoning		32

5.19	No Joint Assessment		32

5.20	Principal Place of Business		33

5.21	Change of Name, Identity or Structure		33

5.22	Indebtedness		33

5.23	Licenses		33

5.24	Compliance with Restrictive Covenants, Etc		33

5.25	ERISA		33

5.26	Liens		34

5.27	Dissolution		34

5.28	Expenses		34

5.29	Indemnity		35

5.30	Limitation on Securities Issuances		36

(iii)


				Page
	5.31	Patriot Act Compliance		36

	5.32	Limitation on Distributions		37

	5.33	Contractual Obligations		37

6.	NOTICES AND REPORTING			37

	6.1	Notices		37

	6.2	Borrower Notices and Deliveries		38

	6.3	Financial Reporting		38
		6.3.1	Bookkeeping	38
		6.3.2	Annual Reports	38
		6.3.3	Monthly/Quarterly Reports	39
		6.3.4	Other Reports	40
		6.3.5	Annual Budget	40
		6.3.6	Senior Loan	40
		6.3.7	Inspection	41

7.	INSURANCE; CASUALTY; AND CONDEMNATION			42

	7.1	Insurance		42
		7.1.1	Coverage	42

	7.2	Policies		44

	7.3	Casualty		45
		7.3.1	Notice; Restoration	45
		7.3.2	Settlement of Proceeds	45

	7.4	Condemnation		45
		7.4.1	Notice; Restoration	45
		7.4.2	Collection of Award	46

	7.5	Application of Proceeds or Award		46

8.	DEFAULTS			46

	8.1	Events of Default		46

	8.2	Remedies		48
		8.2.1	Acceleration	48
		8.2.2	Remedies Cumulative	48
		8.2.3	[Intentionally Omitted]	49
		8.2.4	Delay	49
		8.2.5	Lenders Right to Perform	49

9.	SENIOR LOAN			49

	9.1	Compliance with Senior Loan Documents		49

	9.2	Senior Loan Defaults		50

(iv)


				Page
	9.3	Senior Loan Estoppels		51

	9.4	No Amendments to Senior Loan Documents		51

	9.5	Acquisition of the Senior Loan		51

	9.6	Deed in Lieu of Foreclosure		52

	9.7	Refinancing or Prepayment of the Senior Loan		52

	9.8	Intercreditor Agreement		52

10.	SPECIAL PROVISIONS			52

	10.1	Sale of Note and Secondary Market Transaction		52
		10.1.1	General; Borrower Cooperation	52
		10.1.2	Use of Information	53
		10.1.3	Borrowers Obligations Regarding Disclosure Documents	54
		10.1.4	Borrower Indemnity Regarding Filings	54
		10.1.5	Indemnification Procedure	55
		10.1.6	Contribution	55
		10.1.7	[Intentionally Omitted]	55
		10.1.8	Severance of Loan	55

11.	MISCELLANEOUS			56

	11.1	Exculpation		56

	11.2	Brokers and Financial Advisors		58

	11.3	Retention of Servicer		58

	11.4	Survival		58

	11.5	Lenders Discretion		58

	11.6	Governing Law		58

	11.7	Modification, Waiver in Writing		59

	11.8	Trial by Jury		59

	11.9	Headings/Exhibits		59

	11.10	Severability		59

	11.11	Preferences		59

	11.12	Waiver of Notice		60

	11.13	Remedies of Borrower		60

	11.14	Prior Agreements		60

	11.15	Offsets, Counterclaims and Defenses		60

	11.16	Publicity		60

	11.17	No Usury		61

(v)


		Page
11.18	Conflict; Construction of Documents	61

11.19	No Third Party Beneficiaries	61

11.20	Assignment	61

11.21	Proofs of Claim	62

11.22	Waiver of Stay	62

11.23	Certain Additional Rights of Lender	62

11.24	Set-Off	63

11.25	Counterparts	63


Schedule 1 -		Exceptions to Representations and Warranties
Schedule 2 -		Rent Roll
Schedule 3 -		Organization of Borrower
Schedule 4 -		Definition of Special Purpose Bankruptcy Remote Entity

(vi)

MEZZANINE LOAN AGREEMENT

THIS MEZZANINE LOAN AGREEMENT dated as of September 18, 2006 (as the same may be modified, supplemented, amended or otherwise changed, this Agreement) is made between KBS REIT ACQUISITION I, LLC, a Delaware limited liability company (together with its permitted successors and assigns, Borrower), and GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a Delaware corporation (together with its successors and assigns, Lender).

1. DEFINITIONS; PRINCIPLES OF CONSTRUCTION

1.1 Specific Definitions. The following terms have the meanings set forth below:

Affiliate: as to any Person, any other Person that, directly or indirectly, is in Control of, is Controlled by or is under common Control with such Person or is a director or officer of such Person or of an Affiliate of such Person.

Allocated Share: shall mean at any time and from time to time, an amount expressed as a percentage which is calculated by dividing the cost basis of the Property by the cost basis of all real property owned directly or indirectly by the REIT or the REIT Operating Partnership.

Approved Asset Manager: an entity Controlled by Peter M. Bren or Charles J. Schreiber, including KBS Capital Advisors LLC, or another asset manager reasonably acceptable to Lender.

Approved Capital Expenses: Capital Expenses incurred by Owner, provided that during a Cash Management Period, such Capital Expenses shall either be (i) included in the Approved Capital Budget for the current calendar month or (ii) approved by Lender.

Approved Operating Expenses: (a) during a Cash Management Period triggered by an Event of Default or by the event referenced in clause (v) appearing in the definition of Cash Management Period, operating expenses incurred by Owner which (i) are included in the Approved Operating Budget for the current calendar month, (ii) are for real estate taxes, insurance premiums, electric, gas, oil, water, sewer or other utility service to the Property or (iii) have been approved by Lender, which approval shall not be unreasonably withheld, and (b) during a Cash Management Period not triggered by an Event of Default or by the event referenced in clause (v) appearing in the definition of Cash Management Period, all operating expenses incurred by Owner.

Borrowers Knowledge: the knowledge of Borrower or Owner or any of its respective directors, officers, members or employees. Such Borrower or Owner or any of its respective directors, officers, members or employees shall be deemed to have knowledge of any applicable fact if (i) such Person has actual knowledge of such fact, or (ii) such Person has received a notification of such fact.

Business Day: any day other than a Saturday, Sunday or any day on which commercial banks in New York, New York are authorized or required to close.

Capital Expenses: expenses that are capital in nature or required under GAAP to be capitalized.

Cash Management Period: shall have the meaning set forth in the Senior Loan Agreement.

Code: the Internal Revenue Code of 1986, as amended and as it may be further amended from time to time, any successor statutes thereto, and applicable U.S. Department of Treasury regulations issued pursuant thereto in temporary or final form.

Collateral: all collateral securing or intended to secure the Debt, including the Pledged Collateral.

Contractual Obligation: as to any Person, any provision of any security issued by such Person or of any agreement, instrument or undertaking to which such Person is a party or by which it or any of its property is bound.

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