Exhibit 10.12

EXECUTION VERSION

PARENT GUARANTY AND INDEMNITY

 This PARENT GUARANTY AND INDEMNITY, dated as of August 22, 2008 (this
“Guaranty”), is made and entered into by KBS REAL ESTATE INVESTMENT TRUST, INC.,
a Maryland corporation that has elected to be taxed as a real estate investment
trust (“Guarantor”), whose address is c/o KBS Capital Advisors, LLC, 620 Newport
Center Drive, Suite 1300, Newport Beach, CA 92660 for the benefit of CITIGROUP
FINANCIAL PRODUCTS INC., a Delaware corporation (“Buyer”), whose address is 388
Greenwich Street, New York, New York 10013.

RECITALS:

 

A.

Buyer is considering entering into a repurchase transaction (the “Repurchase
Transaction”) with KBS GKK PARTICIPATION HOLDINGS II, LLC, a Delaware limited
liability company (“Seller”), whose address is 620 Newport Center Drive, Suite
1300 Newport Beach, CA 92660 in the principal amount of One Hundred Thirty
Million Two Hundred Ten Thousand Two Hundred Thirty-Seven and 50/100 Dollars
($130,210,237.50).

 

B.

In connection with the Repurchase Transaction, Seller and Buyer are entering
into that certain Master Repurchase Agreement between Seller and Buyer dated as
of the date hereof (the “Repurchase Agreement”; and together with this Guaranty
and any other documents evidencing, securing, or otherwise relating to the
Repurchase Transaction or this Guaranty, the “Repurchase Documents,” which term
is more fully defined below).

 

C.

Buyer has examined, among other things, both Seller’s and Guarantor’s
creditworthiness and ability to pay and perform Seller’s obligations under the
Repurchase Documents.

 

D.

Buyer has requested, as a condition of entering into the Repurchase Agreement,
that the obligations of Seller under the Repurchase Agreement be guaranteed by
Guarantor.

 

E.

Guarantor is the indirect owner of 100% of the beneficial interests of Seller.

 

F.

Guarantor expects to benefit if Buyer enters into the Repurchase Agreement with
Seller, and desire that Buyer enter into the Repurchase Agreement with Seller.

 

G.

Buyer would not enter into, and would not be obligated to enter into, the
Repurchase Agreement with Seller unless Guarantor executed this Guaranty. This
Guaranty is therefore delivered to Buyer to induce Buyer to enter into the
Repurchase Agreement.

 NOW, THEREFORE, in exchange for good, adequate, and valuable consideration, the
receipt of which Guarantor acknowledges, and to induce Buyer to enter into the
Repurchase Agreement and accept the Repurchase Documents, Guarantor agrees as
follows:

1.          Definitions. For purposes of this Guaranty, the following terms
shall be defined as set forth below. In addition, any capitalized term defined
in the Repurchase Agreement and used but not defined in this Guaranty shall have
the same meaning in this Guaranty as in the Repurchase Agreement.

(a)          “Buyer Entity” means, as designated by Buyer from time to time,
Buyer or Buyer’s permitted assignee, designee, nominee, servicer, or wholly
owned subsidiary.

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(b)          “Guaranteed Obligations” means Seller’s obligation to pay to Buyer
under the Repurchase Documents the Repurchase Price with respect to the
Transaction Assets (whether any such Transaction Asset is purchased by Buyer
before, on or after the date of this Guaranty) on the Repurchase Date and all
amounts in respect of all obligations (including, without limitation, Legal
Costs) and indemnities provided for in the Repurchase Documents but excluding
this Guaranty.

(c)          “Guarantor Litigation” means any litigation, arbitration,
investigation, or administrative proceeding of or before any court, arbitrator,
or governmental authority, bureau or agency that relates to or affects any
asset(s) or property(ies) of Guarantor.

(d)          “Insolvency Proceeding” means any case under Title 11 of the United
States Code or any successor statute or any other insolvency, bankruptcy,
reorganization, liquidation, or like proceeding, or other statute or body of law
relating to creditors’ rights, whether brought under state, federal, or foreign
law.

(e)          “Legal Costs” means all reasonable costs and expenses incurred by
Buyer in any Proceeding or in obtaining legal advice and assistance in
connection with any Proceeding, any Guarantor Litigation (except a Guarantor
Litigation arising from any failure of Buyer to comply with its obligations
under the Repurchase Documents or from any gross negligence or willful
misconduct of Buyer), or any default by Seller under the Repurchase Documents or
by Guarantor under this Guaranty (including any breach of a representation or
warranty contained in this Guaranty), including reasonable attorneys’ fees,
disbursements, and other charges incurred by Buyer’s attorneys, court costs and
reasonable expenses, and charges for the services of paralegals, law clerks, and
all other personnel whose services are charged to Buyer in connection with
Buyer’s receipt of legal services.

(f)           “Proceeding” means any action, suit, arbitration, or other
proceeding arising out of, or relating to the interpretation or enforcement of,
this Guaranty or the Repurchase Documents, including, without limitation, (a) an
Insolvency Proceeding; (b) any proceeding in which Buyer endeavors to realize
upon any Security or to enforce any Repurchase Document(s) (including this
Guaranty) against Seller or Guarantor, whether or not Buyer prevails; and
(c) any proceeding commenced by Seller or Guarantor against Buyer.

(g)          “Repurchase Documents” means: (a) the Repurchase Documents, as
defined in the recitals; (b) any other documents or instruments relating to any
such documents executed by Seller and/or Guarantor; and (c) any modifications,
extensions, renewals, restatements, or replacements of any of the foregoing,
whether or not consented to by Guarantor. If the Repurchase Documents, as so
defined, are modified pursuant to any Insolvency Proceeding, then (whether or
not such modification was made with Buyer’s consent or agreement) Buyer may, at
Buyer’s option, deem the definition of Repurchase Documents either (1) to have
been modified to reflect any such modification, or (2) to continue as it was,
without regard to any such modification.

(h)          “Security” means any security or collateral held by or for Buyer
for the Repurchase Transaction or the Guaranteed Obligations, whether real or
personal property, including any mortgage, deed of trust, financing statement,
security agreement, and other security document or instrument of any kind
securing the Repurchase Transaction in whole or in part. “Security” shall
include all assets and property of any kind whatsoever pledged or mortgaged to
Buyer pursuant to the Repurchase Documents.

(i)           “Seller” means: (a) Seller as defined above, acting on its own
behalf; (b) any estate created by the commencement of an Insolvency Proceeding
affecting Seller; (c) any trustee, liquidator, sequestrator, or receiver of
Seller or Seller’s property; and (d) any similar Person duly appointed pursuant
to any law governing any Insolvency Proceeding of Seller.

 

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2.          Absolute Guaranty of all Guaranteed Obligations. Guarantor
unconditionally and irrevocably guarantees Seller’s prompt and complete payment,
observance, fulfillment, and performance of all Guaranteed Obligations.
Guarantor shall be personally liable for, and personally obligated to pay and
perform, all Guaranteed Obligations. All assets and property of Guarantor shall
be subject to recourse if Guarantor fails to pay and perform any Guaranteed
Obligation(s) when and as required to be paid and performed pursuant to the
Repurchase Documents.

3.          Nature and Scope of Liability. Guarantor’s liability under this
Guaranty is primary and not secondary. Guarantor’s liability under this Guaranty
shall be in the full amount of all Guaranteed Obligations, including any
interest, default interest, costs, and reasonable fees (including Legal Costs)
payable by Seller under the Repurchase Documents, including any of the foregoing
that would have accrued under the Repurchase Documents but for any Insolvency
Proceeding.

4.          Changes in Repurchase Documents. Without notice to, or consent by,
Guarantor, and in Buyer’s sole and absolute discretion and without prejudice to
Buyer or in any way limiting or reducing Guarantor’s liability under this
Guaranty, Buyer may: (a) grant extensions of time, renewals or other indulgences
or modifications to Seller or any other party under any of the Repurchase
Document(s), (b) change, amend, or modify any Repurchase Document(s),
(c) authorize the sale, exchange, release or subordination of any Security,
(d) accept or reject additional Security, (e) discharge or release any party or
parties liable under the Repurchase Documents, (f) foreclose or otherwise
realize on any Security, or attempt to foreclose or otherwise realize on any
Security, whether such attempt is successful or unsuccessful, (g) accept or make
compositions or other arrangements or file or refrain from filing a claim in any
Insolvency Proceeding, (h) make loans to Seller in such amount(s) and at such
time(s) as Buyer may determine, (i) credit payments in such manner and order of
priority as Buyer may determine in its discretion, and (j) otherwise deal with
Seller and any other party related to the Repurchase Transaction or any Security
as Buyer may determine in its sole and absolute discretion. Without limiting the
generality of the foregoing, Guarantor’s liability under this Guaranty shall
continue even if Buyer alters any obligations under the Repurchase Documents in
any respect or Buyer’s or Guarantor’s remedies or rights against Seller are in
any way impaired or suspended without Guarantor’s consent. If Buyer performs any
of the actions described in this paragraph, then Guarantor’s liability shall
continue in full force and effect even if Buyer’s actions impair, diminish or
eliminate Guarantor’s subrogation, contribution, or reimbursement rights (if
any) against Seller or otherwise adversely affect Guarantor or expand
Guarantor’s liability hereunder.

5.          Covenants.

(a)          General Covenants. Guarantor shall not without the prior written
consent of Buyer, permit or allow:

(i)          admission of any Person (other than any direct or indirect
subsidiary of Guarantor) as a holder of membership interests in Seller;
provided, however, the foregoing shall not preclude the merger of Guarantor or
its successor which does not effect a Change of Control;

(ii)         itself or Seller, as applicable, to seek (1) Seller’s dissolution,
liquidation or winding up, in whole or in part, or any Change of Control, or
(2) any consolidation or merger of Seller, except as permitted by Section 8.04
of the Repurchase Agreement; or

(iii)        itself or Seller, as applicable, to take any of the following
actions: (i) dissolve or liquidate, in whole or in part, except in connection
with a merger or consolidation where Guarantor is not the surviving entity if
such transaction will not effect a Change of Control; (ii) consolidate or merge
with or into any other entity or convey or transfer all or substantially all of
its properties and assets to any

 

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entity if such action would result in a Change of Control; (iii) institute any
proceeding to be adjudicated as bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against it, or file a
petition or answer or consent seeking reorganization or relief under the
Bankruptcy Code or consent to the filing of any such petition or to the
appointment of a receiver, rehabilitator, conservator, liquidator, assignee,
trustee or sequestrator (or other similar official) of Guarantor or Seller or of
any substantial part of its respective property, or ordering the winding up or
liquidation of its affairs, or make an assignment for the benefit of creditors,
or admit in writing its inability to pay its debts generally as they become due,
or take any action in furtherance of any of the foregoing; (iv) amend or
terminate the memorandum and articles of association of Seller; or (v) permit
KBS Debt Holdings, LLC to transfer its membership interests in Seller to any
person other than Guarantor or an indirect or direct Subsidiary of Guarantor.

(b)          Financial Covenants. Guarantor covenants and agrees with Lender
that, until payment in full of all Guaranteed Obligations:

(i)          Maintenance of Tangible Net Worth. Guarantor shall not have a
Tangible Net Worth at any time (A) prior to the first anniversary of the date
hereof, of less than $1,080,400,000 and (B) on or after the first anniversary of
the date hereof, of less than 200% of the sum of (x) the Aggregate Repurchase
Price and (y) the Aggregate Goldman Repurchase Price.

(ii)         Maintenance of Ratio of Total Indebtedness to Tangible Net Worth.
Guarantor shall not at any time after the date hereof to have a ratio of Total
Indebtedness to Tangible Net Worth at any time greater than 2.50 to 1.00.

(iii)        Interest Coverage Ratio. Guarantor shall not permit the ratio of
(a) Consolidated EBITDA of Guarantor to (b) Consolidated Interest Expenses of
Guarantor, to be less than 1.50: 1.00.

(c)          DYT Asset Covenants. Except with respect to Liens in favor of
Goldman Sachs Mortgage Company pursuant to the Goldman MRA and Liens disclosed
on Schedule 8 to the Repurchase Agreement, Guarantor covenants and agrees with
Lender that, until payment in full of all Guaranteed Obligations, neither
Guarantor nor any of Guarantor’s Subsidiaries shall create, incur, assume or
permit to exist any Lien on any DYT Asset, nor assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof to
secure any of its Indebtedness (or any Indebtedness of such Subsidiary) or any
guarantee, indemnity or other surety obligation in respect of Indebtedness of
any other Person.

6.          Nature of Guaranty. Guarantor’s liability under this Guaranty is a
guaranty of payment and performance of the Guaranteed Obligations, and is not a
guaranty of collection or collectibility. Guarantor’s liability under this
Guaranty is not conditioned or contingent upon the genuineness, validity,
regularity or enforceability of any of the Repurchase Documents. Guarantor’s
liability under this Guaranty is a continuing, absolute, and unconditional
obligation under any and all circumstances whatsoever (except as expressly
stated, if at all, in this Guaranty), without regard to the validity, regularity
or enforceability of any of the Guaranteed Obligations. Guarantor acknowledges
that Guarantor is fully obligated under this Guaranty even if Seller had no
liability at the time of execution of the Repurchase Documents or later ceases
to be liable under any Repurchase Document, whether pursuant to Insolvency
Proceedings or otherwise. Guarantor shall not be entitled to claim, and
irrevocably covenant not to raise or assert, any defense, counterclaim, set-off
or deduction against the Guaranteed Obligations that would or might be available
to Seller, other than actual payment and performance of all Guaranteed
Obligations in full in accordance with their terms. Guarantor waives any right
to compel Buyer to proceed first against Seller or any Security before
proceeding against Guarantor. Guarantor agrees that if any of the Guaranteed
Obligations are or become void or unenforceable (because of

 

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inadequate consideration, lack of capacity, Insolvency Proceedings, or for any
other reason), then Guarantor’s liability under this Guaranty shall continue in
full force with respect to all Guaranteed Obligations as if they were and
continued to be legally enforceable, all in accordance with their terms before
giving effect to the Insolvency Proceedings. Guarantor also recognizes and
acknowledges that its liability under this Guaranty may be more extensive in
amount and more burdensome than that of Seller. Guarantor waives any defense
that might otherwise be available to Guarantor based on the proposition that a
Guarantor’s liability cannot exceed the liability of the principal. Guarantor
intends to be fully liable under the Guaranteed Obligations regardless of the
scope of Seller’s liability thereunder. Without limiting the generality of the
foregoing, if the Guaranteed Obligations are “nonrecourse” as to Seller or
Seller’s liability for the Guaranteed Obligations is otherwise limited in some
way, Guarantor nevertheless intends to be fully liable, to the full extent of
Guarantor’s assets with respect to all the Guaranteed Obligations, even though
Seller’s liability for the Guaranteed Obligations may be less limited in scope
or less burdensome. Guarantor waives any defenses to this Guaranty arising or
purportedly arising from the manner in which Buyer disburses the Repurchase
Transaction to Seller or otherwise, or any waiver of the terms of any Repurchase
Document by Buyer or other failure of Buyer to require full compliance with the
Repurchase Documents. Guarantor’s liability under this Guaranty shall continue
until all sums due under the Repurchase Documents have been paid in full and all
other performance required under the Repurchase Documents has been rendered in
full, except as expressly provided otherwise (if at all) in this Guaranty.
Guarantor’s liability under this Guaranty shall not be limited or affected in
any way by any impairment or any diminution or loss of value of any Security
whether caused by (a) hazardous substances, (b) Buyer’s failure to perfect a
security interest in any Security, (c) any disability or other defense(s) of
Seller, (d) any acts or omissions of Buyer, or (e) any breach by Seller of any
representation or warranty contained in any Repurchase Document.

7.          Waivers of Rights and Defenses. Guarantor waives any right to
require Buyer to (a) proceed against Seller, (b) proceed against or exhaust any
Security, or (c) pursue any other right or remedy for Guarantor’s benefit.
Guarantor agrees that Buyer may proceed against Guarantor with respect to the
Guaranteed Obligations without taking any actions against Seller and without
proceeding against or exhausting any Security. Guarantor agrees that Buyer may
unqualifiedly exercise in its sole discretion (or may waive or release,
intentionally or unintentionally) any or all rights and remedies available to it
against Seller without impairing Buyer’s rights and remedies in enforcing this
Guaranty, under which Guarantor’s liabilities shall remain independent and
unconditional. Guarantor agrees and acknowledges that Buyer’s exercise (or
waiver or release) of certain of such rights or remedies may affect or eliminate
Guarantor’s right of subrogation or recovery against Seller (if any) and that
Guarantor may incur a partially or totally nonreimbursible liability in
performing under this Guaranty. Guarantor has assumed the risk of any such loss
of subrogation rights, even if caused by Buyer’s acts or omissions. If Buyer’s
enforcement of rights and remedies, or the manner thereof, limits or precludes
Guarantor from exercising any right of subrogation that might otherwise exist,
then the foregoing shall not in any way limit Buyer’s rights to enforce this
Guaranty. Without limiting the generality of any other waivers in this Guaranty,
Guarantor expressly waives any statutory or other right that Guarantor might
otherwise have to: (i) limit Guarantor’s liability after a nonjudicial
foreclosure sale to the difference between the Guaranteed Obligations and the
fair market value of the property or interests sold at such nonjudicial
foreclosure sale or to any other extent, (ii) otherwise limit Buyer’s right to
recover a deficiency judgment after any foreclosure sale, or (iii) require Buyer
to exhaust its Security before Buyer may obtain a personal judgment for any
deficiency. Any proceeds of a foreclosure or similar sale may be applied first
to any obligations of Seller that do not also constitute Guaranteed Obligations
within the meaning of this Guaranty. Guarantor acknowledges and agrees that any
nonrecourse or exculpation provided for in any Repurchase Document, or any other
provision of a Repurchase Document limiting Buyer’s recourse to specific
Security or limiting Buyer’s right to enforce a deficiency judgment against
Seller or any other Person, shall have absolutely no application to Guarantor’s
liability under this Guaranty. To the extent that Buyer collects or receives any
sums or payments from Seller, Buyer shall have the right, but not the

 

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obligation, to apply such amounts first to that portion of Seller’s indebtedness
and obligations to Buyer (if any) that is not covered by this Guaranty,
regardless of the manner in which any such payments and/or amounts are
characterized by the Person making payment.

8.          Additional Waivers. Guarantor waives diligence and all demands,
protests, presentments and notices of every kind or nature, including notices of
protest, dishonor, nonpayment, acceptance of this Guaranty and the creation,
renewal, extension, modification or accrual of any of the Guaranteed
Obligations. Guarantor further waives the right to plead any and all statutes of
limitations as a defense to Guarantor’s liability under this Guaranty or the
enforcement of this Guaranty. No failure or delay on Buyer’s part in exercising
any power, right or privilege under this Guaranty shall impair or waive any such
power, right or privilege.

9.          No Duty to Prove Loss. To the extent that Guarantor at any time
incurs any liability under this Guaranty, Guarantor shall immediately pay Buyer
(to be applied on account of the Guaranteed Obligations) the amount provided for
in this Guaranty, without any requirement that Buyer demonstrate that Buyer has
currently suffered any loss or that Buyer has otherwise exercised (to any
degree) or exhausted any of Buyer’s rights or remedies with respect to Seller or
any Security.

10.        Full Knowledge. Guarantor acknowledges, represents, and warrants that
it has had a full and adequate opportunity to review the Repurchase Documents,
the transaction contemplated by the Repurchase Documents, and all underlying
facts relating to such transaction. Guarantor represents and warrants that it
fully understands: (a) the remedies Buyer may pursue against Seller and/or
Guarantor in the event of a default under the Repurchase Documents, (b) the
value (if any) and character of any Security, and (c) Seller’s financial
condition and ability to perform under the Repurchase Documents. Guarantor
agrees to keep itself fully informed regarding all aspects of the foregoing and
the performance of Seller’s obligations to Buyer. Buyer has no duty, whether now
or in the future, to disclose to Guarantor any information pertaining to Seller,
the Repurchase Transaction or any Security. If at any time provided for in the
Repurchase Documents, then Guarantor agrees and acknowledges that an Insolvency
Proceeding affecting Guarantor, or other actions or events relating to Guarantor
(including Guarantor’s change in financial position), as set forth in the
Repurchase Documents, may be event(s) of default under the Repurchase Documents.

11.        Representations and Warranties. Guarantor acknowledges, represents,
and warrants as follows, and acknowledges that Buyer is relying upon the
following acknowledgments, representations, and warranties by Guarantor in
making the Repurchase Transaction:

(a)          Repurchase Documents. This Guaranty has been duly authorized,
executed, and delivered by Guarantor, and is fully valid, binding, and
enforceable against Guarantor, in accordance with its terms, subject to the
effect of bankruptcy, insolvency, reorganization, moratorium or other similar
laws now and hereafter in effect relating to or affecting the rights and
remedies of creditors and the effect of general principles of equity, whether
enforcement is considered in a proceeding or equity or at law.

(b)          No Conflict. The execution, delivery, and performance of this
Guaranty will not violate any provision of any law, regulation, judgment, order,
decree, determination, or award of any court, arbitrator or governmental
authority, or of any mortgage, indenture, loan, or security agreement, lease,
contract or other agreement, instrument or undertaking to which Guarantor is a
party, in any material respect, or that purports to bind Guarantor or any of
Guarantor’s property or assets.

(c)          No Third Party Consent Required. No consent of any Person
(including creditors or partners, members, stockholders, or other owners of
Guarantor) is required in connection with Guarantor’s execution of this Guaranty
or performance of Guarantor’s obligations under this Guaranty.

 

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Guarantor’s execution of, and obligations under, this Guaranty are not
contingent upon any consent, license, permit, approval, or authorization of,
exemption by, notice or report to, or registration, filing, or declaration with,
any governmental authority, bureau, or agency, whether local, state, federal, or
foreign.

(d)          Authority and Execution. Guarantor is a corporation duly organized
and validly existing under the laws of the State of Maryland. Guarantor is
qualified to do business, validly existing and is, to the extent determinable,
in good standing, in all other jurisdictions in which the nature of the business
conducted by it makes such qualification necessary, except where failure so to
qualify would not have a material effect on its property, business or financial
condition or prospects. Guarantor has full power, authority, and legal right to
execute, deliver and perform its obligations under this Guaranty. Guarantor has
taken all necessary corporate and legal action to authorize this Guaranty, which
has been duly executed and delivered and is a legal, valid, and binding
obligation of Guarantor, enforceable in accordance with its terms.

(e)          No Representations by Buyer. Guarantor delivers this Guaranty based
solely upon its own independent investigation and based in no part upon any
representation, statement, or assurance by Buyer.

12.        Reimbursement and Subrogation Rights. Except to the extent that Buyer
notifies Guarantor to the contrary in writing from time to time:

(a)          General Deferral of Reimbursement. Guarantor waives any right to be
reimbursed by Seller for any payment(s) made by Guarantor on account of the
Guaranteed Obligations, unless and until all amounts under the Repurchase
Documents have been paid in full and all periods within which such payments may
be set aside or invalidated have expired. Guarantor acknowledges that it has
received adequate consideration for execution of this Guaranty by virtue of
Buyer’s entering into the Repurchase Transaction (which benefits Guarantor, as
an indirect beneficial owner of Seller) and Guarantor does not require or
expect, and is not entitled to, any other right of reimbursement against Seller
as consideration for this Guaranty.

(b)          Deferral of Subrogation and Contribution. Guarantor agrees it shall
not assert any right of subrogation against Seller or Buyer, or right of
subrogation against any Security unless and until in Buyer’s reasonable
determination (a) all amounts due under the Repurchase Documents have been paid
in full and all other performance required under the Repurchase Documents has
been rendered in full to Buyer; and (b) all periods within which such payment
and performance may be set aside or invalidated have expired (such deferral of
Guarantor’s subrogation and contribution rights, the “Subrogation Deferral”). If
any amounts shall be paid to Guarantor in violation of subsections (a) or (b) of
this Section 12, such amount shall be held in trust for the benefit of Buyer and
shall forthwith be paid to Buyer to be credited and applied to the payment of
the Guaranteed Obligations, whether matured or unmatured; provided, however,
nothing contained herein shall prohibit Seller from making a dividend to
Guarantor at any time. Immediately upon the occurrence of such payment by
Guarantor to Buyer, any and all duties owed by Guarantor to Buyer with respect
to Guarantor’s holding of such amounts for Buyer shall be satisfied and
discharged.

(c)          Effect of Invalidation. To the extent that a court of competent
jurisdiction determines that Guarantor’s Subrogation Deferral is void or
voidable for any reason, Guarantor agrees, notwithstanding any acts or omissions
by Buyer, that Guarantor’s rights of subrogation against Seller or Buyer and
Guarantor’s right of subrogation against any Security shall at all times be
junior and subordinate to Buyer’s rights against Seller and to Buyer’s right,
title, and interest in such Security.

 

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13.        Claims in Insolvency Proceeding. Guarantor shall not file any claim
in any Insolvency Proceeding affecting Seller unless Guarantor simultaneously
assigns and transfers such claim to Buyer, without consideration, pursuant to
documentation fully satisfactory to Buyer. Guarantor shall automatically be
deemed to have assigned and transferred such claim to Buyer whether or not
Guarantor executes documentation to such effect. By executing this Guaranty,
Guarantor hereby authorizes Buyer (and grants Buyer a power of attorney coupled
with an interest, and hence irrevocable) to execute and file such assignment and
transfer documentation on Guarantor’s behalf, which power of attorney may only
be exercised by Buyer following the occurrence and continuance of an Event of
Default. Buyer shall have the sole right to vote, receive distributions, and
exercise all other rights with respect to any such claim, provided, however,
that if and when the Guaranteed Obligations have been paid in full Buyer shall,
subject to Section 14 below, relinquish all such rights, reassign such claim to
Guarantor and release to Guarantor any further payments received on account of
any such claim.

14.        Buyer’s Disgorgement of Payments. Upon payment of all or any portion
of the Guaranteed Obligations, Guarantor’s obligations under this Guaranty shall
continue and remain in full force and effect if all or any part of such payment
is, pursuant to any Insolvency Proceeding or otherwise, avoided or recovered
directly or indirectly from Buyer as a preference, fraudulent transfer, or
otherwise irrespective of (a) any notice of revocation given by Guarantor prior
to such avoidance or recovery, or (b) payment in full of the Repurchase
Transaction. Guarantor’s liability under this Guaranty shall continue until all
periods have expired within which Buyer could (on account of Insolvency
Proceedings, whether or not then pending, affecting Seller, or any other Person)
be required to return, repay, or disgorge any amount paid at any time on account
of the Guaranteed Obligations.

15.        Financial Information. Guarantor shall provide Buyer with the
following financial and reporting information:

(a)          as soon as available and in any event within forty-five (45) days
after the end of each of the first three quarterly fiscal periods of each fiscal
year of Guarantor and its consolidated Subsidiaries, the unaudited, consolidated
balance sheets of Guarantor and its consolidated Subsidiaries as at the end of
such period and the related unaudited, consolidated statements of income and
retained earnings and of cash flows of Guarantor and its consolidated
Subsidiaries for such period and the portion of the fiscal year through the end
of such period, setting forth in each case in comparative form the figures for
the corresponding periods in the previous fiscal year, accompanied by a
certificate of a Responsible Officer of Guarantor, which certificate shall state
that said consolidated financial statements fairly present the consolidated
financial condition and results of operations of Guarantor and its consolidated
Subsidiaries in accordance with GAAP, consistently applied, as at the end of,
and for, such period (subject to normal year-end audit adjustments);

(b)          as soon as available and in any event within ninety (90) days after
the end of each fiscal year of Guarantor commencing with the fiscal year ending
December 31, 2007, the consolidated financial statement of Guarantor and its
consolidated Subsidiaries as at the end of such fiscal year, prepared in
accordance with GAAP, including the consolidated balance sheets and related
consolidated statements of income and retained earnings and of cash flows for
Guarantor and its consolidated Subsidiaries for such year, setting forth in each
case in comparative form the figures for the previous fiscal year, accompanied
by an opinion thereon of independent certified public accountants of recognized
national standing, which opinion shall not be qualified as to scope of audit or
going concern, and shall state that said annual consolidated financial
statements fairly present the consolidated financial condition and results of
operations of Guarantor and its consolidated Subsidiaries as at the end of, and
for, such fiscal year in accordance with GAAP; and

 

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(c)          Within five (5) business days after Buyer’s request made at any
time or from time to time, such other reports and financial information relating
to Guarantor that is in the possession of Guarantor as Buyer may reasonably
request.

16.        Servicing. Guarantor acknowledges that neither it nor the has any
rights to service the Transaction Assets but only has rights, if any, as a party
to the Servicing Agreement. Without limiting the generality of the foregoing and
in the event that Seller or the Guarantor is deemed to retain any residual
rights under the Servicing Agreement, and for the avoidance of doubt, Guarantor
grants, assigns and pledges hereby to Buyer a security interest in its
respective rights under the Servicing Agreement and proceeds related thereto and
in all instances, whether now owned or hereafter acquired, now existing or
hereafter created. The foregoing provision is intended to constitute a “security
agreement or arrangement or other credit enhancement” (as defined under
Sections 101(47)(v) and 741(7)(xi) of the Bankruptcy Code) related to the
Repurchase Agreement and the Transactions thereunder.

17.        Merger; No Conditions; Amendments. This Guaranty and documents
referred to herein contain the entire agreement among the parties with respect
to the matters set forth in this Guaranty. This Guaranty supersedes all prior
agreements among the parties with respect to the matters set forth in this
Guaranty. No course of prior dealings among the parties, no usage of trade, and
no parol or extrinsic evidence of any nature shall be used to supplement,
modify, or vary any terms of this Guaranty. This Guaranty is unconditional.
There are no unsatisfied conditions to the full effectiveness of this Guaranty.
No terms or provisions of this Guaranty may be changed, waived, revoked, or
amended without Guarantor’s and Buyer’s prior written consent. If any provision
of this Guaranty is determined to be unenforceable, then all other provisions of
this Guaranty shall remain fully effective.

18.        Governing Law; Enforcement. This Guaranty shall be governed solely by
New York State internal law (disregarding such state’s law on conflict of laws)
notwithstanding the location of any Security. Guarantor acknowledges that any
restrictions, limitations, and prohibitions set forth in New York Real Property
Actions and Proceedings Law Sections 1301 and 1371 that would or might otherwise
limit or establish conditions to Buyer’s recovery of a judgment against
Guarantor if the Security were located in New York State shall have absolutely
no application to Buyer’s enforcement of this Guaranty as against Guarantor,
except to the extent that real property Security is located within the State of
New York. Guarantor acknowledges that this Guaranty is an “instrument for the
payment of money only,” within the meaning of New York Civil Practice Law and
Rules Section 3213. In the event of any Proceeding between Seller or Guarantor
and Buyer, including any Proceeding in which Buyer enforces or attempts to
enforce this Guaranty or the Repurchase Transaction against Seller or Guarantor,
or in the event of Guarantor Litigation, Guarantor shall reimburse Buyer for all
Legal Costs of such Proceeding.

19.        Fundamental Changes. Guarantor shall not wind up, liquidate, or
dissolve its affairs or enter into any transaction of merger or consolidation,
or sell, lease, or otherwise dispose of (or agree to do any of the foregoing)
all or substantially all of its property or assets, or change its state of
formation or entity status unless Guarantor consummates any such fundamental
change in accordance with the Repurchase Documents.

20.        Further Assurances. Guarantor shall execute and deliver such further
documents, and perform such further acts, as Buyer may reasonably request to
achieve the intent of the parties as expressed in this Guaranty, provided in
each case that any such documentation is consistent with this Guaranty and with
the Repurchase Documents.

21.        Supplemental Provisions.

 

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(a)          Other Guaranties. This Guaranty is in addition to and independent
of any other guaranty(ies) of Seller’s obligations executed by Guarantor in
favor of Buyer. This Guaranty shall in no way limit or lessen any other
liability, arising in any way, that Guarantor may have for the payment of any
indebtedness of Seller to Buyer.

(b)          Certain Entities. If Seller or Guarantor is a partnership, limited
liability company, or other unincorporated association, then: (a) Guarantor’s
liability shall not be impaired by changes in the name or composition of Seller
or Guarantor; and (b) the withdrawal or removal of any partner(s) or member(s)
of Seller or Guarantor shall not diminish Guarantor’s liability or (if Guarantor
is a partnership) the liability of any withdrawing general partner of Guarantor.

(c)          Status of Seller. If this Guaranty defines more than one Person as
Seller, then any reference to Seller means any one or all of them, whether their
liability is joint or several.

(d)          Counterparts. This Guaranty may be executed in counterparts.

22.        WAIVER OF TRIAL BY JURY, ETC. GUARANTOR AND BUYER WAIVE TRIAL BY JURY
IN ANY ACTION OR PROCEEDING ARISING FROM OR RELATING TO THIS GUARANTY OR THE
REPURCHASE DOCUMENTS OR ANY OBLIGATION(S) OF GUARANTOR AND BUYER HEREUNDER OR
UNDER THE REPURCHASE DOCUMENTS. FURTHER, GUARANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY:

(1)        SUBMITS FOR ITSELF AND ITS PROPERTY SOLELY FOR PURPOSES OF ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS GUARANTY, OR FOR RECOGNITION AND
ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF (AND NOT AS A GENERAL SUBMISSION
TO NEW YORK JURISDICTION), TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK, THE FEDERAL COURTS OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY
THEREOF;

(2)        CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH
COURTS, AND TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND
AGREES NOT TO PLEAD OR CLAIM THE SAME;

(3)        AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY
BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY
SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH
UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH THE BUYER SHALL HAVE
BEEN NOTIFIED; AND

(4)        AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE
OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE
IN ANY OTHER JURISDICTION.

23.        Miscellaneous.

 

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(a)          Assignability. Buyer may assign this Guaranty (in whole or in part)
together with any one or more of the Repurchase Documents in accordance with the
provisions of the Repurchase Agreement, without in any way affecting Guarantor’s
or Seller’s liability. Upon request in connection with any such assignment,
Guarantor shall deliver such documentation as Buyer shall reasonably request.
Buyer may from time to time designate any Buyer Entity, subject to the terms and
provisions of the Repurchase Documents, to hold and exercise any or all of
Buyer’s rights and remedies under this Guaranty. This Guaranty shall benefit
Buyer and its permitted successors and assigns (including any Buyer Entity) and
shall bind Guarantor and its heirs, executors, administrators, successors, and
assigns.

(b)          Notices. All notices, requests, and demands to be made under this
Guaranty shall be given in writing at the address set forth in the opening
paragraph of this Guaranty together with a copies to (x) in the case of
Guarantor, KBS Real Estate Investment Trust, Inc. c/o KBS Capital Advisors, LLC,
620 Newport Center Drive, Suite 1300, Newport Beach, CA 92660, Attention: Jim
Chiboucas, Telephone: 949-417-6555, Fax: 949-417-6523; and (y) in the case of
Buyer, Sidley Austin LLP, 787 Seventh Avenue, New York, New York 10019,
Attention: Brian Krisberg, Esq., Telephone: 212-839-8735, Fax: 212-839-5599, by
any of the following means: (i) hand delivery, with proof of attempted delivery,
(ii) registered or certified, United States mail, postage prepaid or
(iii) expedited or prepaid delivery service, either commercial or United States
Postal Service, with proof of attempted delivery, or (iv) by telecopier (with
answerback acknowledged) provided that such telecopied notice must also be
delivered by one of the means set forth in (i), (ii) or (iii) above. A party’s
address may be changed by notice to the other parties given in the same manner
as provided above. A notice shall be deemed to have been given: (a) in the case
of hand delivery, at the time of delivery, (b) in the case of registered or
certified mail, when delivered or the first attempted delivery on a Business
Day, (c) in the case of expedited prepaid delivery upon the first attempted
delivery on a Business Day, or (d) in the case telecopier, upon receipt of
answerback confirmation, provided that such telecopied notice was also delivered
as required in this Section. A party receiving a notice which does not comply
with the technical requirements for notice under this Section may elect to waive
any deficiencies and treat the notice as having been properly given.

(c)          Interpretation. The word “include” and its variants shall be
interpreted in each case as if followed by the words “without limitation.”

(d)          Confidentiality. Buyer shall not disclose or otherwise put
financial and reporting information relating to Guarantor in the public domain
and Buyer shall not disclose confidential or non-public information regarding
Guarantor, provided, however, that (A) if Buyer is compelled as a matter of law
to disclose any such information, Buyer may disclose such information as is
required by law, and (B) this subsection shall not apply to any information
which is or becomes generally available to the public through no action by Buyer
or which is or becomes available to Buyer on a nonconfidential basis from a
source other than Guarantor. Notwithstanding the foregoing, Buyer may, subject
to compliance with applicable securities laws, disclose without limitation of
any kind, any information with respect to the “tax treatment” and “tax
structure” (in each case, within the meaning of Treasury Regulation
Section 1.6011-4(b)(3)(iii)) of the transactions contemplated hereby and all
materials of any kind (including opinions or other tax analyses) that are
provided to such party relating to such tax treatment and tax structure.

24.        Business Purposes. Guarantor acknowledges that this Guaranty is
executed and delivered for business and commercial purposes, and not for
personal, family, household, consumer, or agricultural purposes. Guarantor
acknowledges that Guarantor is not entitled to, and does not require the
benefits of, any rights, protections, or disclosures that would or may be
required if this Guaranty were given for personal, family, household, consumer,
or agricultural purposes. Guarantor acknowledges that none of Guarantor’s
obligation(s) under this Guaranty constitute(s) a “debt” within the meaning of
the United

 

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States Fair Debt Collection Practices Act, 15 U.S.C. § 1692a(5), and accordingly
compliance with the requirements of such Act is not required if Buyer (directly
or acting through its counsel) makes any demand or commences any action to
enforce this Guaranty.

25.        No Third-Party Beneficiaries. This Guaranty is executed and delivered
for the benefit of Buyer and its heirs, successors, and assigns, and is not
intended to benefit any third party.

26.        CERTAIN ACKNOWLEDGMENTS BY GUARANTOR. GUARANTOR ACKNOWLEDGES THAT
BEFORE EXECUTING THIS GUARANTY: (A) GUARANTOR HAS HAD THE OPPORTUNITY TO REVIEW
IT WITH AN ATTORNEY OF GUARANTOR’S CHOICE; (B) BUYER HAS RECOMMENDED TO
GUARANTOR THAT GUARANTOR OBTAIN SEPARATE COUNSEL, INDEPENDENT OF SELLER’S
COUNSEL, REGARDING THIS GUARANTY; AND (C) GUARANTOR HAS CAREFULLY READ THIS
GUARANTY AND UNDERSTOOD THE MEANING AND EFFECT OF ITS TERMS, INCLUDING ALL
WAIVERS AND ACKNOWLEDGMENTS CONTAINED IN THIS GUARANTY AND THE FULL EFFECT OF
SUCH WAIVERS AND THE SCOPE OF GUARANTOR’S OBLIGATIONS UNDER THIS GUARANTY.

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IN WITNESS WHEREOF, Guarantor has duly executed and delivered this Guaranty as
of the day and year first above written.

GUARANTOR:

 

 

KBS REAL ESTATE INVESTMENT TRUST, INC., a

Maryland corporation

 

By:

 

/s/ Charles J. Schreiber, Jr.

      

Charles J. Schreiber, Jr.

      

Chief Executive Officer

  

 

 

 

 

 

[SIGNATURE PAGE TO GUARANTY]