Exhibit 10.7
KE Draft 12/16/13
AMENDED AND RESTATED ASSET MANAGEMENT SERVICES AGREEMENT
THIS AMENDED AND RESTATED ASSET MANAGEMENT SERVICES AGREEMENT (this “Agreement”)
is made as of December 1, 2013 (“Effective Date”) by and between KBS Acquisition
Sub, LLC, a Delaware limited liability company (the “Company”), and GKK Realty
Advisors LLC, a Delaware limited liability company (“Manager”).
WIT N E SSE T H:
WHEREAS, the Company and Manager previously entered into that certain Asset
Management Services Agreement dated as of March 30, 2012, as amended by that
certain First Amendment to Asset Management Services Agreement dated __,2012 and
as further amended by that certain Second Amendment to Asset Management Services
Agreement dated as of December 12, 2012 (as so amended, the “Original AM
Agreement”);
WHEREAS, in connection with the entering into this Agreement and in satisfaction
of amounts owing to Company pursuant to the Original AM Agreement relating to
the Profit Participation, Company shall pay to Manager, on the Effective Date,
the sum of$12,000,000.
WHEREAS, the Company and Manager desire to amend and restate the Original AM
Agreement in its entirety by entering into this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements herein set forth, the
parties hereto agree as follows:
1.
Definitions.

(a)
“Accounting Services” means the services provided by Manager set forth in
Section 2(b)(x) hereof.

(b)
“Affiliate” means any person or entity which, directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with the party in question.

(c)
“Applicable Percentage” means (a) 0% for Construction Projects having
Construction Costs of less than $50,000; (b) 10.0% for Construction Projects
with Construction Costs between $50,001 and $500,000; (c) 5.0% for Construction
Projects with Construction Costs between $500,001 and $1,000,000; and (d) 3.0%
for Construction Projects with Construction Costs over $1,000,001. For the
avoidance of doubt, in the event there are multiple related improvement projects
being undertaken at a Property, they shall together be construed as a single
construction project.

(d)
“Applicable Portfolios” means those portfolios of Properties set forth on Annex
A-2.

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(e)
“Approved Budget” has the meaning assigned in Section 2(b)(i)(1).

(f)
“Agreement” has the meaning assigned in the first paragraph.

(g)
“Asset Value Documentation” has the meaning set forth in the definition of Fair
Value of Applicable Portfolios.

(h)
“Base Management Fee” has the meaning assigned in Section 7(a).

(i)
“BD2 Sale” has the meaning assigned in Section 12.

(j)
“Breach” means fraud, misappropriation of funds, or embezzlement against Company
by Manager in its corporate capacity (as distinguished from the acts of any
employees of Manager which are taken without the complicity of any of the
Executive Officers) which is not cured within thirty (30) days after notice
thereof from Company.

(k)
“Cause” means any of the following, determined to have occurred by a majority
ruling of a panel of three arbitrators (one arbitrator chosen by the Company,
one arbitrator chosen by the Manager and the third arbitrator chosen by the
other two arbitrators (collectively, the “Arbitrators”)) to have caused material
damage to the Company: (i) a Material Breach; (ii) a Material Control Failure;
or (iii) a Service Failure. The parties agree to use commercially reasonable
efforts to appoint the Arbitrators within seven (7) days of the receipt by
Manager of written notice from Company that it intends to seek the determination
discussed herein and to have any determination of “Cause” by the Arbitrators
completed within thirty (30) days of submission by Company or Manager.

(l)
“Company Account” has the meaning assigned in Section 4.

(m)
“Company Default” means a failure by Company to pay the Base Management Fee,
Termination Fee, Construction Oversight Fee or the Profit Participation payment
due to Manager under this Agreement, which failure to pay continues for five (5)
business days following written notice of such default, such notice containing
the following legend prominently displayed in bold, all caps and fourteen (14)
point or larger font in the transmittal letter requesting approval: THIS IS A
NOTICE OF A COMPANY DEFAULT. COMPANY’S RESPONSE IS REQUESTED WITHIN FIVE (5)
BUSINESS DAYS. COMPANY’S FAILURE TO RESPOND WITHIN SUCH TIME PERIOD SHALL RESULT
IN COMPANY BEING DEEMED TO HAVE AGREED THAT A COMPANY DEFAULT; provided,
however, that such failure is not caused by any action or inaction of Manager,
or any of Manager’s officers, employees, directors, managing directors, members,
managers, principals, partners, shareholders, affiliates or subsidiaries.

(n)
“Company’s Insurance” has the meaning assigned in Section 6.

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(o)
“Consistent with Accounting Past Practices” or words of similar import means
those accounting services and practices (“Accounting Services and Practices”)
provided to the Properties by Manager and those affiliates of Manager over the
six (6) month period prior to the Effective Date, with adjustments thereto as
have been mutually agreed to by Manager and Company.

(p)
“Consistent with Past Practices” or words of similar import means those asset
management services and practices (other than Accounting Services and Practices)
provided to the Properties by Manager and those affiliates of Manager over the
six (6) month period prior to the Effective Date.

(q)
“Construction Costs” shall mean all hard costs, engineering costs and
architects’ costs actually incurred for a Construction Project.

(r)
“Construction Oversight Fee” has the meaning set forth in Section 7(d)

(s)
“Construction Projects” has the meaning assigned in Section 2(b)9.

(t)
“Effective Date” has the meaning assigned in the first paragraph.

(u)
“Executive Officers” means the President, Chief Executive Officer, General
Counsel and Chief Financial Officer of Gramercy Property Trust Inc.

(v)
“Expenses” has the meaning assigned in Section 8.

(w)
“Extension Option” has the meaning set forth in Section 2(a).

(x)
“Fair Value of Applicable Portfolios “ means the gross fair market value of the
Properties included within the Applicable Portfolios (with no deduction for any
mortgage debt, mezzanine debt or any other liabilities associated with anyone or
more of the Properties and no additions for any other assets that are not real
property) of the Company as set forth in the work papers and other supporting
documentation (collectively, “Asset Value Documentation”) used by KBS REIT and
its accountants in determining its gross asset value as reported by KBS REIT in
its then most recent applicable filing with the Securities Commission, and as
certified by the Chief Financial Officer of KBS REIT as being the values
contained in such work papers and other supporting documentation.

(y)
“First Threshold of Incentive Profits“ means an amount equal to 10% of the
Profit Participation Threshold for an Applicable Portfolio.

(z)
“Fraud Loss” is defined in the definition of Termination Fee below.

(aa)
“Good News Capital Expenditures” means (i) all capital expenditures at a
Property (as determined by GAAP) which are being funded in order to increase the
value of a Property (for example upgrading the quality of materials located at a
Property in order to charge tenants higher rent) as opposed to being funded to

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prevent or resolve repair or maintenance issues at a Property (for example
repairing or replacing a root); (ii) all tenant improvements at such Property in
connection with newly signed leases at such Property (including any lease
renewals); and (iii) leasing commissions for new leases at such Property
(including any lease renewals). Notwithstanding the foregoing to the contrary,
in the event of a contractual renewal at Beaver Valley, Tenant improvements,
leasing commissions and capital expenditures in connection with such contractual
renewal, shall not be included in Good News Capital Expenditures, except to the
extent that a subsequent non-contractual renewal is entered into during the Term
of this Agreement for such leased space.
(bb)
“Governing Instruments” means, with respect to any Person, the articles of
incorporation and bylaws in the case of a corporation, the certificate of
limited partnership (if applicable) and partnership agreement in the case of a
general or limited partnership or the articles of formation and operating
agreement in the case of a limited liability company.

(cc)
“Gross Value” means the sum of (1) the gross sales price of anyone or more of
the Properties included within any of the Applicable Portfolios sold from and
after December 1, 2013 through and including the Measurement Date (with, for
avoidance of doubt, no deduction for any mortgage debt, mezzanine debt, any
other debt or any closing costs or customary closing adjustments (for example,
taxes, prepaid expenses, cam charges, rents, leasing costs and similar items
shall not be taken into account but prorations which are not customary but
rather are in the nature of a seller providing income support or other
inducements to a purchaser of a property shall be included) plus (2) the Fair
Value of Applicable Portfolios as of the Measurement Date.

(dd)
“Incentive Profits” means the amount, if any, by which (A) Gross Value for each
Applicable Portfolio exceeds (B) the sum of (1) the Profit Participation
Threshold for such Applicable Portfolio, plus (2) all cash expended with respect
to such Applicable Portfolio, if any, after December 1, 2013 to fund Good News
Capital Expenditures at such Applicable Portfolio by KBS REIT or any of, its
Affiliates and/or joint venture partner(s) (“Included Capital Contributions”).
For avoidance of doubt, Incentive Profits shall be determined on (and paid on)
an Applicable Portfolio by Applicable Portfolio basis taking into account all
sales of Properties in an Applicable Portfolio from time to time (and all such
Properties remaining as of the Measurement Date).

(ee)
“Included Capital Contributions” has the meaning set forth in the definition of
Incentive Profits.

(ff)
“KBS REIT” means KBS Real Estate Investment Trust, Inc.

(gg)
“Material Breach” means fraud, misappropriation of funds, or embezzlement
against Company or other willful and material violation of this Agreement by
Manager in its corporate capacity (as distinguished from the acts of any

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employees of Manager which are taken without the complicity of any of the
Executive Officers) which is not cured within thirty (30) days after notice
thereof from Company and which would have a material adverse effect on the
Company. Manager and Company each agree to promptly notify the other of any
Material Breach that Manager or Company is aware of or becomes aware of during
the Term.
(hh)
“Material Control Failure” means any “significant deficiencies” or any “material
control weakness” identified by the Manager’s independent external auditors or
by the Company’s internal auditors; provided, however, a Material Control
Failure shall not occur if: (i) the “significant deficiencies” or “material
control weakness” arose out of the actions of persons employed by Company; or
(ii) Manager has cured such breach within a period of fifteen (15) days after
notice of such fact or in the case of a breach that cannot be cured, has
diligently modified its internal controls in order to prevent re-occurrence.
Manager and Company each agree to promptly notify the other of any Material
Control Failure that Manager or Company is aware of or becomes aware of during
the Term. Company and Manager hereby agree that no Material Control Failure
shall exist based on events or circumstances which arose prior to the date
hereof and which Company is aware of as of the Effective Date.

(ii)
“Measurement Date” means the earliest to occur of (a) December 31, 2016 (or
December 31, 2017 if the Extension Option is properly exercised as provided for
in Section 2(a) below), (b) the date on which Company, directly or indirectly,
sells, conveys or otherwise transfers (together with all prior transfers) at
least ninety percent (90%) of the Properties (by value), including, but not
limited to a Sale, merger, reorganization, issuance of equity securities or
other recapitalization of the Company or its Subsidiaries, affiliates, or parent
companies (whether or not the Company, its Subsidiaries, affiliates or parent
companies is the surviving entity in such transaction); (c) the effective date
of the termination of this Agreement for Cause; or (d) the effective date of the
termination of this Agreement pursuant to Section 12 hereof following a BD2
Sale.

(jj)
“Offset Amounts” means any damages incurred by Company as a result of Cause, as
determined by the Arbitrators.

(kk)
“Person” means any individual, corporation, partnership, joint venture, limited
liability company, estate, trust, unincorporated association, any federal,
state, county or municipal government or any bureau, department or agency
thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.

(ll)
“Profit Participation Percentage” means (i) 10% for Incentive Profits with
respect to an Applicable Portfolio up to and including the First Threshold of
Incentive Profits; (ii) 20% for Incentive Profits with respect to an Applicable
Portfolio in excess of the First Threshold of Incentive Profits but less than or
equal to the Second Threshold of Incentive Profits; and (iii) 30% for Incentive
Profits with

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respect to an Applicable Portfolio in excess of the Second Threshold of
Incentive Profits.
(mm)
“Profit Participation” has the meaning assigned in Section 7(b).

(nn)
“Profit Participation Threshold” means the amount for each of the Applicable
Portfolios as set forth on Annex A-2

(oo)
“Properties” means the fee or leasehold interest in the real estate assets
described on Annex A-1 attached hereto and made a part hereof.

(pp)
“Response Notice” has the meaning set forth in Section 9.

(qq)
“Sale” (or “Sells” as applicable) means any sale, transfer, conveyance or other
assignment including, any long term (being more than 15 years) ground lease of
all or substantially all of a Property.

(rr)
“Second Threshold of Incentive Profits” means an amount equal to 20% of the
Profit Participation Threshold for an Applicable Portfolio.

(ss)
“Service Failure” means (i) the failure of Manager to provide a substantively
equivalent level of asset management and performance under this Agreement which
is Consistent with Past Practices; provided, however, a Service Failure shall
not be deemed to have occurred if Manager has substantially cured such failure
within a period of ten (10) days after written notice outlining the specific
details of such failure, and (ii) the failure of Manager to provide a
substantively equivalent level of accounting services and performance under this
Agreement which is Consistent with Accounting Past Practices; provided, however,
a Service Failure shall not be deemed to have occurred if Manager has
substantially cured such failure within a period of ten (10) days after written
notice outlining the specific details of such failure. Manager agrees to
promptly notify Company of any Service Failure that Manager is aware of or
becomes aware of during the Term.

(tt)
“Settlement Agreement” means, collectively, that certain (a) Collateral Transfer
and Settlement Agreement, dated as of September 1,2011, by and among GKK Stars
Acquisition LLC (“GKK Stars”), KBS Acquisition Sub, LLC, KBS GKK Participation
Holdings I, LLC, KBS GKK Participation Holdings II, LLC, KBS Debt Holdings Mezz
Holder, LLC and KBS Acquisition Holdings, LLC, and (b) Acknowledgment and
Consent Agreement, dated as of September 1,2011, by and among Goldman Sachs
Mortgage Company, Citicorp North America, Inc., GKK Stars, KBS Acquisition Sub,
LLC, KBS GKK Participation Holdings I, LLC, KBS GKK Participation Holdings II,
LLC, KBS Debt Holdings Mezz Holder, LLC and KBS Acquisition Holdings, LLC.

(uu)
“Subsidiary” means any direct or indirect subsidiary of the Company, any
partnership, the general partner of which is the Company or any direct or
indirect subsidiary of the Company and any limited liability company, the
managing

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member of which is the Company or any direct or indirect subsidiary of the
Company.
(vv)
“Systemic Accounting Failure” has the meaning set forth in Section 9.

(ww)
“Systemic Accounting Failure Notice” has the meaning set forth in Section 9.

(xx)
“Termination Fee” means: (a) $7,500,000 for any termination of this Agreement by
the Company pursuant to Section 12(1)(B) of this Agreement, which termination is
effective prior to January 1, 2016, (b) $3,750,000 for any termination of this
Agreement by the Company pursuant to Section 12(1)(B) of this Agreement
effective on or after January 1,2016 and on or prior to December 31, 2016, and
(c) $0.00 for any termination of this Agreement pursuant to Section 12(l)(B) of
this Agreement on or after January 1, 2017. Notwithstanding the foregoing, at
such time as Company pays to Manager the full Profit Participation payable to
Manager as set forth in Section 7(b) hereof as a result of the termination of
this Agreement by the Company pursuant to Section 12(1)(B) of this Agreement,
Manager shall rebate to the Company all or a portion of (but not in excess of)
the Termination Fee paid by Company to Manager in an amount equal to 50% of (X)
the amount by which the Profit Participation paid by Company to Manager exceeds
(Y) (1) $15,000,000 for a termination effective prior to January 1, 2016 or (2)
the Third Year Termination Baseline for a termination effective on or after
January 1, 2016 and on or prior to December 31, 2016. The parties agree that the
amount of the foregoing rebate may be offset against the payment by the Company
to Manager of the Profit Participation triggered by the termination of this
Agreement pursuant to Section 12(1)(B) hereof. Notwithstanding anything in this
Agreement to the contrary, in the event of a termination of this Agreement by
Company pursuant to Section 12(1)(A), Manager shall not receive a Termination
Fee. Additionally, in the event (i) there is no Profit Participation, and (ii)
Company suffers an unreimbursed actually incurred loss, cost or expense arising
out of the fraud, misappropriation of funds or embezzlement against Company or
other willful and material violation of this Agreement by manager or any
employees of Manager (a “Fraud Loss”), then the parties agree that the amount of
the Fraud Loss may be offset against the payment by the Company to Manager of
any Termination Fee.

(yy)
“Third Threshold of Incentive Profits” means an amount equal to 30% of the
Profit Participation Threshold for an Applicable Portfolio.

(zz)
“Third Year Termination Baseline” means the amount set forth on Annex E.

2.
Appointment and Duties of Manager.

(a)
Appointment. Unless earlier terminated in accordance with the terms of this
Agreement, commencing on the Effective Date and continuing until December 31,
2016, the Company hereby appoints Manager as its exclusive asset manager to
manage the Properties subject to the further terms and conditions set forth in
this

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Agreement. So long as the Company is not in default of its obligations
hereunder, Company shall have the right to extend the foregoing expiration date
to December 31, 2017 by delivery of written notice to Manager irrevocably
exercising such option, such notice, to be effective must be delivered no later
than May 30, 2016 (herein, the “Extension Option”). Subject to the terms and
conditions of this Agreement, Manager hereby agrees to use its commercially
reasonable efforts to perform each of the duties set forth herein , provided
funds are made available by the Company for such purposes, as set forth in
Section 8 hereof.
(b)
Duties. Manager will perform (or cause to be performed) the following services
and activities for the Company, all of which activities shall be performed
Consistent with Past Practices:

(i)
administering or overseeing the Company’s day-to-day operations and performing
and supervising the performance of other administrative functions necessary to
the Company’s management, including the collection of revenues and the payment
of the Company’s debts and obligations (subject to funds being made available to
Manager to pay such debts and obligations), and in the event of an emergency,
Manager shall use commercially reasonable efforts to notify Company of such
emergency as soon as reasonably possible;

(ii)
serving as the Company’s consultant with respect to the periodic review of the
Properties;

(iii)
investigating, analyzing and selecting possible opportunities for the sale of
anyone or more of the Properties;

(iv)
retaining and supervising third parties or affiliates to provide property
management services with respect to those Properties that are not otherwise
managed by a tenant pursuant to the terms of such tenant’s lease;

(v)
engaging and supervising, on the Company’s behalf and at the Company’s expense,
independent contractors which provide real estate-related services, property
management services, legal services, accounting services, due diligence services
and such other services as may be required relating to the Properties;

(vi)
to the extent expressly authorized by the Company in writing, negotiating, and
closing on the Company’s behalf the sale, exchange or other disposition of any
of the Properties (it being understood that third party fees and expenses may be
incurred at the Company’s expense in connection with any such disposition
efforts);

(vii)
arranging, negotiating, coordinating and managing operations of any joint
venture or co-investment interests held by the Company with respect to the
Properties and conducting all matters with any joint venture or co-investment
partners;

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(viii)
monitoring the operating performance of the Properties;

(ix)
providing oversight (including providing development budgets) with respect to
construction, development and other capital improvement projects being
undertaken at any Property (whether on site or located off site but for the
benefit of the Property) including, without limitation, tenant improvements
being undertaken by, or at the direction of, a tenant at any Property (herein,
“Construction Projects”) ;

(x)
providing or overseeing the following accounting related services Consistent
with Accounting Past Practices:

(1)
administration and maintenance of general ledger accounts in the Company’s MRI
accounting system using the Company’s approved chart of accounts. The Company’s
books are to be separate from Manager’s and/or any other Subsidiary’s books;

(2)
administration and maintenance of general ledger on both a cash and US GAAP
basis. US GAAP shall include, among other things, straightlining of rent, FAS
141 setup and maintenance, and proper treatment of lease incentives;

(3)
monthly cash cutoff, other than at the end of the calendar year, shall be on the
20th of each month. Accruals are to be through the end of each month;

(4)
administration and maintenance of a general ledger trial balance, balance sheet,
income statement and certain other reports the Manager customarily prepares in
the normal course of business and periodic distribution of such reports to the
Company;

(5)
preparation of period-end reconciliations and associated period-end journal
entries for all significant balance sheet accounts;

(6)
accounting oversight including review of monthly trial balances and supporting
documentation and timely correct bank reconciliations;

(7)
ensure that all expense invoices are submitted for “proper approval” before
processing them for payment;

(8)
administration of accounts payable (including check generation and wire
transfers);

(9)
administration of timely payment and recordation of any required principal and
interest payments under any underlying debt of the Properties;

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(10)
administration of recurring cash transfers between bank accounts;

(11)
determine monthly accruals for any costs incurred and unpaid, regardless of
whether actual invoice has been received, including fixed expenses, and
non-recurring expenses such as repair and maintenance and capital expenditures.
Accruals will be reviewed with the budget and changes will be recommended as
necessary and reflected in accruals. Notwithstanding the foregoing, Manager will
utilize a quarterly accrual process for construction in process. All other
accruals will be prepared monthly;

(12)
administration of accounts receivable and collections including daily posting of
cash receipts;

(13)
maintenance of lease database including preparation of lease abstracts for new
and modified lease agreements and preparation of related schedules such as lease
inventory reports and rent rolls;

(14)
recording and maintenance of depreciation and amortization on all the following
basis- GAAP, tax, and E&P. Depreciation is to be available as requested in a
excel downloaded format;

(15)
monitor the Company’s compliance with internal policy guidelines as provided by
the Company, including those applicable under Sarbanes-Oxley and including loan
covenants with respect to applicable financing arrangements;

(16)
act as liaison between the Company and its independent accountants to provide
backup and answer questions with respect to information presented on the general
ledger, trial balance, balance sheet, income statement and certain other reports
the Manager customarily prepares in the normal course of business;

(17)
maintenance of all accounting records supporting the financial statements
(consistent with the Company’s record retention program) in reasonable fashion
and separate and discrete from the Manager’s accounting records; and

(18)
following all documented accounting and internal control policies, processes and
procedures as they currently exist and/or may be established in the future with
the approval of Manager and Company.

(xi)
advising the Company with respect to qualifying to do business in all applicable
jurisdictions and to obtain and maintain all appropriate licenses;

(xii)
assisting the Company in complying with all regulatory requirements applicable
to the Company in respect of its business activities;

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(xiii)
assisting with the preparation of work papers for required tax filings and
reports;

(xiv)
communicating on the Company’s behalf, with any first mortgage lenders having
loans on any of the Properties and with any landlords with respect to any leased
Properties and providing written reports to such lenders in connection therewith
to the extent required by the loan documents applicable to such loans;

(xv)
using commercially reasonable efforts to oversee the property managers and to
not consent or authorize the property managers to incur expenses by or on behalf
of the Company other than in accordance with the Approved Budget (subject to any
variance permitted in accordance with the applicable property management
agreements);

(xvi)
provide additional services reasonably requested by Company which are consistent
with the services currently being provided by Manager as of the Effective Date
(for purposes of clarification, if any requested services will require Manager
to hire new employees, then such services shall fall under romanette (xvii)
below); and

(xvii)
providing additional services to, or for the benefit of, the Company as may be
mutually agreed upon by the Company and Manager (which additional services may
require the payment of additional fees to Manager as may be agreed upon by
Company and Manager).

(c)
404 Services. As of the Effective Date of this Agreement, the Manager shall:

(i)
provide Company with reasonable access to internal documents, reports, risk
assessments, process narratives and other information pertaining to and/or used
by Manager in connection with ensuring compliance with Section 404 of the
Sarbanes-Oxley Act;

(ii)
allow Company’s internal audit to perform property audits, walkthroughs, process
documentation, control testing and any other procedure needed to comply with
Section 404 of the Sarbanes-Oxley Act on an annual basis;

(iii)
make changes as reasonably requested by the Company to its accounting reporting
requirements; and

(iv) make available to the Company, its internal audit team and its accountants
all necessary books, records and other information needed in order to permit
Company to complete ongoing audits.
(d)
Property Management Subcontracts. Consistent with Past Practices and subject to
the prior written approval of Company, such approval not to be unreasonably
withheld, delayed or conditioned, Manager may enter into agreements with other
parties (on the Company’s standard form), including its affiliates, at market
rates

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and costs for the purpose of engaging one or more property managers for and on
behalf, and at the sole cost and expense, of the Company to provide property
management and/or similar services to the Company with respect to the
Properties. Notwithstanding the foregoing, all new property management contracts
shall be terminable upon thirty (30) days’ notice without penalty.
(e)
Other Service Providers. Manager may retain for, and on behalf of, the Company,
and at the sole cost and expense of the Company, at market rates and costs, such
services of accountants, legal counsel, appraisers, insurers and brokers, among
others, including Manager’s affiliates, as Manager deems necessary or advisable
in connection with the management and operations of the Company and the
provision of its duties under this Agreement; provided, that any such agreement
entered into with an affiliate of Manager to perform any such services shall be
engaged on terms no more favorable to such affiliate than would be obtained from
a third party on an arm’s-length basis and if the costs and expenses of such
third party contracts exceed $10,000 in any calendar year they will be subject
to the Company’s approval. Notwithstanding the foregoing, all new third party
contracts shall be terminable upon thirty (30) days’ notice without penalty.

(f)
Claims. Should any claims, demands, suits or other legal proceedings in respect
to any of the Properties be made or instituted against Company or any
Subsidiary, Manager shall reasonably assist the Company in the defense or other
disposition thereof.

(g)
Employees. All matters pertaining to the employment, supervision, compensation
and promotion of Manager’s employees are the sole responsibility of Manager.

(h)
Reporting Requirements.

(i)
Manager shall prepare, or cause to be prepared, with respect to the Properties:
(a) reports and information on the Properties’ operations and performance as
described on Annex B attached hereto in form and substance and to the extent
Consistent with Past Practices and Consistent with Accounting Past Practices;
and (b) such other reports as may be reasonably requested by Company. Monthly
and quarterly books shall be finalized and available for review by Company as
soon as reasonably practicable and in any event shall be available for review by
Company within seven (7) business days following the 20th of each month other
than December and within seven (7) business days following December 31st;

(ii)
Intentionally Omitted

(iii)
Manager shall prepare, or cause to be prepared, all materials and data necessary
to complete an annual audit of the Company’s books of account by a nationally
recognized independent accounting firm of good reputation, initially Ernst &
Young; and

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(iv)
Additionally and notwithstanding anything in this Agreement to the contrary,
Manager acknowledges and agrees that it will prepare the financial accounting
reports required by all mortgage loans which affect the Properties.

(i)
Budgets and Business Plans:

(1)
The operating and capital budget (the “Budget”) for the operation, repair and
maintenance of each of the Properties for 2013 (the “2013 Budget”) has been
submitted to, and has been approved by, Company. On or before the date specified
each year by the Company (but no earlier than July 31st, nor later than October
31st), Manager shall prepare and submit to Company a preliminary Budget for the
next calendar year followed by a final Budget for the next calendar year,
incorporating any changes requested by Company. Such Budgets shall be uploadable
by the MRI accounting system and shall:

(A)
Be prepared on a basis Consistent with Past Practices and Consistent with
Accounting Past Practices and in sufficient form and detail that when uploaded
into the MRI accounting system, can be used by the Company to prepare a cash and
accrual basis budget; and

(B)
Show a month by month projection of income, expenses, capital expenditures and
reserves. After written approval of each such Budget by Company (each such
approved Budget being an “Approved Budget”), Manager shall oversee the
implementation by the property managers of the Approved Budget.

(C)
Manager shall prepare on a monthly basis (i) variance analysis of rental income
as compared to budget (to be prepared as part of a 13 month trend analysis);
(ii) variance analysis of common area maintenance (CAM) percentages as compared
to prior month actual (to be prepared as part of a 13 month trend analysis);
(iii) variance analysis of actual expenses as compared to prior month actual;
and (iv) comparison of actual expenses to budgeted expenses as requested, but
not more than quarterly.

(2)
For Significant Properties in major metropolitan areas, Manager shall provide
Company such other information reasonably requested by Company including: (i) a
list of all properties competitive with the Properties, a list of the tenants of
each, and all other reasonably available information for such competitive
properties, and (ii) basic demographic data relating to the market

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area of the Properties, including population growth, major employers, employment
and unemployment levels and, if a property is a retail property, retail sales
and housing starts in such area.
(3)
From time to time, upon Company’s request, such other information with regard to
Properties as may reasonably be requested including the following:

(A)
Supporting leases and lease abstracts as requested;

(B)
Cash flow projection broken out by NOI, capital expenditures, debt service
payments, principal draws and paydowns, and projected net sales proceeds updated
as requested over the assets’ expected hold period to the extent Company advises
Manager of such hold period (or if not provided, the hold period shall be deemed
to be equal to 5 years), but at a minimum on a quarterly basis and provided in a
format approved by Company; and

(C)
Property Performance Report (“PPR”): Manager shall provide to Company a
Quarterly PPR for each of the Properties, in the form attached hereto as Annex
C. Manager shall use good faith efforts to provide such PPRs to Company by the
third week of each calendar quarter, but in any event, shall provide such
Quarterly PPRs to Company by the last day of the month following the month with
respect to which the PPR is applicable.

(j)
Use of Manager’s Funds. Manager shall not be required to expend money in excess
of that contained in any applicable Company Account or otherwise made available
by the Company to be expended by Manager hereunder.

(k)
Reliance by Manager. Manager, in performing its duties under this Section 2,
shall be entitled to rely on qualified experts and professionals (including,
without limitation, accountants, legal counsel and other professional service
providers) hired by Manager at the Company’s sole cost and expense.

(l)
Payment and Reimbursement of Expenses. The Company shall pay all expenses, and
reimburse Manager for Manager’s expenses incurred on its behalf, in connection
with any such services to the extent such expenses are reimbursable by the
Company to Manager pursuant to Section 8 hereof.

3.
Dedication; Other Activities.

(a)
Devotion of Time. Manager will provide a management team (“Team”) to deliver the
management services to the Company hereunder. Manager covenants to the Company
that the Team shall devote sufficient time to the management of the

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Company to satisfy its responsibilities under this Agreement and to properly
perform its duties and obligations under this Agreement, including, without
limitation, (i) to address and remedy any and all accounting processes and
errors which have occurred by Manager and its Team over the prior twelve (12)
calendar month period, and (ii) timely providing correct bank reconciliations.
The Company shall have the benefit of Manager ’s reasonable judgment and effort
in rendering services and, in furtherance of the foregoing, Manager shall not
undertake activities which, in its reasonable judgment, will adversely affect
the performance of its obligations under this Agreement.
(b)
Other Activities. Except to the extent set forth in clause (a) above, nothing
herein shall prevent Manager or any of its affiliates or any of the officers and
employees of any of the foregoing from engaging in other businesses, or from
rendering services of any kind to any other Person .

4.
Bank Accounts. At the direction of the Company, Manager may establish and
maintain on behalf of the Company one or more bank accounts in the name of the
Company or any other Subsidiary (any such account, a “Company Account”), collect
and deposit funds into any such Company Account and disburse funds from any such
Company Account, Consistent with Past Practices and Consistent with Accounting
Past Practices and in accordance with the terms of this Agreement.
Notwithstanding the foregoing, Manager shall designate control of any such
Company Account to the Company and the Company shall give to Manager joint
signature authority with respect to checks for such bank: accounts. Manager
shall from time to time render appropriate accountings of such collections and
payments to the Company and, upon request, to the auditors of Company as set
forth in Section 2 of this Agreement. The bank: at which such accounts will be
maintained shall be subject to the approval of Company.

5.
Records; Confidentiality.

(a)
Records. Manager shall maintain appropriate books of account and records
relating to services performed under this Agreement, and such books of account
and records shall be accessible for inspection by representatives of the Company
at any time during normal business hours.

(b)
Confidentiality. Manager shall keep confidential any nonpublic information
obtained in connection with the services rendered under this Agreement and shall
not disclose any such information (or use the same except in furtherance of its
duties under this Agreement), except: (i) with the prior written consent of the
Company; (ii) to legal counsel, accountants and other professional advisors;
(iii) to appraisers, consultants , financing sources and others in the ordinary
course of the Company’s business; (iv) to governmental officials having
jurisdiction over the Company; (v) in connection with any governmental or
regulatory filings of the Company or disclosure or presentations to Company
investors; or (vi) as required by law or legal process to which Manager or any
Person to whom disclosure is permitted hereunder is a party. The foregoing shall
not apply to information which has previously become available through the
actions of a Person other than

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Manager not resulting from Manager’s violation of this Section 5(b). The
foregoing is not intended to prevent Manager or its Affiliates from, and Manager
is permitted to, bid on Properties offered for sale by the Company even if such
bid utilizes confidential information; provided, however, prior to bidding or
participating in any foreclosure sale of any of the Properties, (i) Manager or
any Affiliate of Manager shall first notify Company and KBS REIT in writing of
Manager’s or any of its Affiliate’s interest in bidding on any such foreclosure
sales of any Properties, (ii) Manager shall represent and warrant to Company and
KBS REIT in writing that Manager is unaware of any material information (whether
written or oral) relating to the Properties offered for sale that is not
available to the Company, and (iii) Manager shall recuse itself from the sales
process for such Properties, and Manager shall not be privy to any other bids
for such Properties.
6.
Obligations of Manager; Restrictions .

(a)
Restrictions. Manager shall refrain from any action that, in its sole judgment
made in good faith, would violate any law, rule or regulation of any
governmental body or agency having jurisdiction over the Company or the
Properties. Furthermore, Manager shall use its good faith, commercially
reasonable efforts to not authorize the property managers to take actions that
would cause the Company to incur costs in excess of that set forth in the
Approved Budget (plus any variance afforded the property managers pursuant to
the property management agreements) without first advising the Company of such
costs and obtaining their approval. If Manager is ordered to take any such
action by the Company, Manager shall promptly notify the Company of Manager’s
judgment that such action would violate any such law, rule or regulation or
would be for a cost in excess of that set forth in the Approved Budget.
Notwithstanding the foregoing, the Manager, shall not be liable to the Company
or any Subsidiary, or any of the Company’s stockholders, members or partners for
any act or omission by Manager, its managers, directors, officers, employees or
agents taken in good faith or except as provided in Section 10 hereof.

(b)
Manager’s Insurance. Manager shall maintain the following insurance in Manager’s
name applicable to Manager’s activities under this Agreement (collectively,
“Manager’s Insurance”): (i) “errors and omissions” coverage with an aggregate
policy limit of $10,000,000, (ii) commercial crime coverage with an aggregate
policy limit of not less than $1,000,000, (iii) broad form commercial general
liability coverage in an amount not less than $20,000,000 combined single limit,
(iv) automobile liability coverage for both owned and non-owned vehicles, in an
amount not less than $5,000,000 combined single limit and (v) workers
compensation insurance as required by law covering all Manager’s employees (and,
when required by law, compulsory non-occupational disability insurance).

(c)
Manager’s Insurance Requirements. Manager’s Insurance shall be underwritten by
reputable, financially sound companies. Manager shall furnish Company with
certificates evidencing Manager’s Insurance within ten (10) business days

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following the Effective Date and thereafter upon renewing or replacing such
insurance. Manager’s Insurance policies shall provide that they may not be
cancelled or modified unless thirty (30) days’ prior written notice of such
cancellation or modification has been provided to Company. Company shall be
named as a loss payee on Manager’s commercial crime insurance policy.
(d)
Company’s Insurance. Company and Manager acknowledge and agree that Company, at
its expense, has obtained property and liability insurance with respect to the
Properties and shall maintain and keep in force such property and liability
insurance to the extent reasonably and commercially feasible (“Company’s
Insurance”). Company shall deliver to Manager certificates of insurance
evidencing Company’s Insurance within ten (10) business days following the
Effective Date, which certificates shall state that Company’s Insurance shall be
primary and non-contributory as to claims made against Company and Manager and
which are not covered by Manager’s indemnity pursuant to Section 10 below.
Manager shall be named as an additional insured on Company’s liability insurance
and evidence thereof shall be furnished to Manager. Manager shall furnish any
information that is reasonably requested or required by Company for the purpose
of establishing the placement of insurance coverage and shall aid and cooperate
in every reasonable way with respect to such insurance and any loss thereunder.
Manager shall promptly notify Company and the insurance carrier if Manager
receives notice of any loss, damage or injury with respect to any of the
Properties. Company shall cause Manager to be covered as an additional insured
under Company’s Commercial General Liability Insurance covering the Properties.
To the extent that Company is entitled to any Offset Amounts or reimbursement of
Fraud Losses as expressly provided for herein, Manager shall be entitled to
receive any subsequent recoveries from any insurance policies relating to such
Offset Amounts. Company shall use commercially reasonable efforts to pursue any
insurance claims relating to Offset Amounts or Fraud Losses.

7.
Compensation.

(a)
Management Fee. For the entire term of this Agreement, Company hereby agrees to
pay to Manager a management fee equal to $7,500,000 per year in equal monthly
installments of $625,000, plus reimbursement of all property related expenses
paid by Manager on behalf of Company (together, the “Base Management Fee”),
payable monthly in arrears, plus the amount, if any, of the Profit
Participation, as described below. Notwithstanding the foregoing to the
contrary, in the event Manager, after the Effective Date in its sale and
absolute discretion, at any time or from time to time reduces the head count of
employees providing services to Company in any material respect, Manager and
Company agree that the Base Management Fee shall thereafter be reduced by an
amount equal to the actual savings to Manager resulting from the reduction in
head count (base salary and benefits and after payment of severance). In such
event, Company and Manager shall execute a writing setting forth the new Base
Management Fee.

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(b)
Profit Participation.

(i)
Calculation. Company shall also pay to Manager a profit participation (“Profit
Participation”) in an amount equal to the Profit Participation Percentage of the
Incentive Profits minus any Offset Amounts and Fraud Losses (without double
counting). The Profit Participation shall be determined on an Applicable
Portfolio by Applicable Portfolio basis taking into account all sales of
Properties in an Applicable Portfolio from time to time (and all such Properties
remaining as of the Measurement Date). For avoidance of doubt, an example of the
calculation of the Profit Participation is attached hereto as Annex D.

(ii)
Intentionally Omitted

(iii)
Reporting; Inspections. Manager will require, and Company shall provide: (i)
Asset Value Documentation (to be delivered no later than five (5) days following
the public disclosure by KBS REIT of its net asset value); (ii) if this
Agreement has been terminated prior to such date, any other reports and
information reasonably requested by Manager and reasonably available to Company
to verify or determine the amounts included in the calculation of the Profit
Participation; and (iii) notice of all Affiliate transactions along with detail
confirming those transaction are on third party terms. If Manager does not agree
with the values of any net assets in the Company for the calendar year in which
the Measurement Date occurs submitted by Company as set forth above, then
Company shall make available to an independent third party selected by Manager
and reasonably acceptable to Company (the “Third Party Reviewer”) the applicable
Company books and records for such Third Party Reviewer to value such net
assets. If such Third Party Reviewer’s valuation differs in any manner from the
Company’s valuation of any net asset(s) and within seven (7) days of the receipt
of such Third Party Reviewer’s valuation by the parties the Company and Manager
are still not able to agree on the value of the applicable net asset(s), then
within seven (7) days of the receipt of such Third Party Reviewer’s valuation by
the parties, each of the Company and the Manager shall choose an arbitrator, and
such arbitrators shall work in good faith to agree upon the value of the
applicable net asset(s) within thirty (30) days of their selection. In the event
such arbitrators cannot agree upon a value, they shall choose a third arbitrator
who shall work in good faith to determine the value of the applicable net
asset(s) within fifteen (15) days of his/her selection and such valuation shall
be accepted by Company and Manager and shall be determinative and final.
Representatives of the Manager shall have the right to inspect the books and
records of the Company and its Subsidiaries at any time during normal business
hours upon reasonable notice to the Company.

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(iv)
Determination of Profit Participation. The obligation to pay the Profit
Participation to Manager shall survive any termination of the Agreement
(including a termination for Cause). The terms and provisions of this Agreement
relating to the determination of the Profit Participation shall survive any
termination of this Agreement (including a termination for Cause). The amount,
if any, of the Profit Participation payable to Manager shall be determined on
the Measurement Date (whether or not this Agreement has been terminated prior to
such date).

(v)
Payment. Payment of the Profit Participation shall be due and payable in cash
(except as otherwise set forth in the following sentence), within (a) five (5)
business days following the sale of one or more Properties included in an
Applicable Portfolio for an amount (when taking into account all prior sales
within that Applicable Portfolio) that is at least equal to the Profit
Participation Threshold for that Applicable Portfolio; and (b) with respect to
the calculation of Equity Value as of the Measurement Date, no later than ten
(10) business days following the calculation of such Gross Value which must be
completed no later than sixty (60) days following the Measurement Date. If the
Company sells Properties, or is itself sold, directly or indirectly, for
non-cash consideration, Manager shall be paid a pro-rata portion of the Profit
Participation in the form of such non-cash consideration.

(vi)
Survival. The obligation to pay the Profit Participation shall survive any
direct or indirect Sale by Company, its parent or any Subsidiary, of all or any
portion of the direct or indirect equity interests in Company or any of the
direct or indirect equity interests in the entities which own the Properties
(including, without limitation any merger, reorganization, issuance of equity
securities or other recapitalization of the Company or its Subsidiaries,
Affiliates or parent companies (whether or not the Company, its Subsidiaries,
Affiliates or parent companies is the surviving entity in such transaction)).

(c)
No Interest in Company or Properties. Notwithstanding anything in this Agreement
to the contrary, both Company and Manager acknowledge and agree that (i) the
Profit Participation are simply contractual rights being granted by Company to
Manager in this Agreement, and (ii) Manager shall have no equity interest
whatsoever in the Properties, the Company or any of the Company’s Subsidiaries.

(d)
Construction Management. Company shall pay to Manager a fee (“Construction
Oversight Fee”) equal to the Applicable Percentage of Construction Costs with
respect to Construction Projects. The Construction Oversight Fee shall be paid
on a monthly basis on or before the 5th day of each calendar month based on an
agreed to schedule between the Company and Manager as it relates to each
applicable Construction Project.

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(e)
No Breach Event. The Company and Manager each acknowledge that (i) each of the
Company and GKK Stars has completely satisfied each and every one of its
respective obligations under the Settlement Agreement to the date of this
Agreement, (ii) no Breach Event has occurred under the Settlement Agreement, and
(iii) none of the Company or any affiliate of the Company has any right under
the Settlement Agreement to (A) offset any amounts then and thereafter owing to
Manager under this Agreement or (B) seek the return from Manager or any
affiliate of Manager of any amounts accrued and paid under this Agreement.
Manager acknowledges that GKK Stars still has continuing obligations set forth
under Section 5.8 of the Settlement Agreement.

(f)
Releases. Each of the Company and the Manager acknowledge and agree on behalf of
themselves and their respective officers, directors, managing directors,
members, managers, principals, partners, shareholders, affiliates, subsidiaries
, agents , attorneys, employees, heirs, executors, administrators , legal
representatives, successors and assigns that the Release Effective Date (as
defined in the Settlement Agreement) has occurred.

8.
Expenses. So long as such expenses are incurred by Manager in good faith in
furtherance of the services provided by Manager under this Agreement, the
Company shall pay all of its expenses and shall reimburse Manager for its
documented reasonable expenses incurred on the Company’s behalf in accordance
with this Agreement (collectively, the “Expenses”). Expenses include all
reasonable and customary costs and expenses which are expressly designated
elsewhere in this Agreement as the Company’s expenses, together with the
following:

(a)
travel and out-of pocket expenses incurred in connection with the services
provided by Manager under this Agreement;

(b)
costs of third-party professional fees including, but not limited to, legal,
accounting, tax, auditing and other similar services performed for the Company;

(c)
compensation and expenses, including salary, bonuses, health and welfare
benefits and liability insurance, for employees and independent contractors
assigned to one or more Properties;

(d)
costs associated with establishing and maintaining bank accounts;

(e)
costs associated with any computer hardware or software used for the Company,
including, but not limited to, any software or licenses required for Manager’s
use of the MRI accounting system;

(f)
costs and expenses incurred contracting with third parties, including affiliates
of Manager;

(g)
all other costs associated with the Company’s business and operations, including
, but not limited to, costs of owning, protecting, maintaining, developing and

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disposing of Properties, including appraisal, engineering and environmental
studies, reporting, audit and legal fees;
(h)
costs and expenses charged by states and municipalities on entities doing
business in those locations;

(i)
costs and expenses incurred in connection with corporate and partnership
maintenance and legal compliance including annual filing fees, state fees,
service company charges and other items;

(j)
all expenses actually incurred by Manager which are reasonably necessary for the
performance by Manager of its duties and functions in accordance with the terms
of this Agreement;

(k)
actual wages, salaries and benefits of property accounting staff at the level of
property controller and below, for all property accounting services relating to
the Properties as agreed to by Company and Manager; and

(l)
payment to Manager for costs incurred in providing in house legal services to,
or for the benefit of Company and/or the Properties, provided, that the total
payment to Manager shall not exceed $41,667 for the balance of 2013 and shall
not exceed $500,000 in any full calendar year thereafter and further provided
that such $500,000 cap shall be reduced in a manner mutually agreed to by
Company and Manager in the event Manager reduces its staff of in-house lawyers
providing legal services for the benefit of the Company.

Manager may retain third parties including accountants, legal counsel, real
estate underwriters and brokers, among others, on the Company’s behalf, and be
reimbursed for such services. The provisions of this Section 8 shall survive the
expiration or earlier termination of this Agreement to the extent such expenses
have previously been incurred or are incurred in connection with such expiration
or termination.
9.
Accounting Matters. In the event Company reasonably determines Manager is
failing in a systemic and repeated manner to perform Accounting Services in any
material respect (each such failure being a “Systemic Accounting Failure”),
Company shall have the right to promptly notify Manager (the “Systemic
Accounting Failure Notice”), in writing, of such event, which Accounting Failure
Notice shall include a reasonably detailed description of such Systemic
Accounting Failure together with all appropriate backup documentation. Within
ten (10) business days of Manager’s receipt of such Systemic Accounting Failure
Notice, Manager shall notify Company, in writing (the “Response Notice”), that
it elects to cure in all material respects such Systemic Accounting Failure as
described below. If Manager fails to deliver a Response Notice by the end of
such ten (10) business day period, Company shall deliver to Manager a second
Systemic Accounting Failure Notice containing the following legend prominently
displayed in bold, all caps and fourteen (14) point or larger font in the
transmittal letter requesting approval: THIS IS A SECOND NOTICE OF A SYSTEMIC
ACCOUNTING FAILURE.

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MANAGER’S RESPONSE IS REQUESTED WITHIN FIVE (5) BUSINESS DAYS. MANAGER’S FAILURE
TO RESPOND WITHIN SUCH TIME PERIOD SHALL RESULT IN MANAGER BEING DEEMED TO HAVE
AGREED THAT A SYSTEMIC ACCOUNTING FAILURE HAS OCCURRED AND MANAGER HAS ELECTED
TO NOT CURE SUCH SYSTEMIC ACCOUNTING FAILURE. In the event that Manager fails to
deliver a Response Notice to Company within five (5) business days of receipt of
a second Systemic Accounting Failure Notice delivered with the legend described
above, then Manager shall be deemed to have agreed that a Systemic Accounting
Failure has occurred and Manager has elected to not cure such Systemic
Accounting Failure and Company shall be entitled to the Remedy until such time
as the Systemic Accounting Failure is cured as described below.
If Manager delivers a Response Notice it shall promptly commence and diligently
proceed to correct the Systemic Accounting Failures noted by Company, which
correction may be achieved by curing the specific Systemic Accounting Failures
or by Manager correcting its internal controls, procedures and processes as
appropriate to avoid a repeat of the identified Systemic Accounting Failure and
which cure must be completed, in any event, no later than fifteen (15) business
days following the receipt of the initial Systemic Accounting Failure Notice;
provided, however, with respect to a cure that requires performance by Manager
on a quarterly basis, Manager shall complete such cure within such fifteen (15)
business day period (and shall be charged a Remedy if such cure is not completed
within such fifteen (15) business day period) and provided such cure is in place
within such fifteen (15) business day period, Manager shall not be charged a
Remedy unless in the next following applicable quarter such cure fails. If
Manager fails to so cure such Systemic Accounting Failure on or before said
fifteen (15) business day period (or next quarter as applicable), then, as the
Company’s sole remedy, a portion of the Base Management Fee payable to Manager
in an amount equal to $100,000 per month (or $3,333.33 per day per Systemic
Accounting Failure until all such Systemic Accounting Failure(s) are cured, as
reasonably determined by Company) shall be retained by Company, and shall not
paid to Manager (herein, the “Remedy”).
Notwithstanding the foregoing to the contrary, Manager shall have the right to
dispute the existence of a Systemic Accounting Failure and submit such matter to
the Arbitrators for their determination as set forth in the definition of Cause;
provided, however, during such determination, Manager shall use best efforts to
reasonably address any concerns raised by Company and notwithstanding the
forgoing, Company shall be entitled to the Remedy if a Systemic Accounting
Failure is not cured within the applicable cure period set forth above (without
Manager being deemed to agree that a Systemic Accounting Failure has occurred)
regardless of whether or not Manager is disputing the existence of a Systemic
Accounting Failure. However, if at a later date the Arbitrators determine that
there was not a Systemic Accounting Failure, then Company shall promptly
reimburse the Remedy to Manager. If the Arbitrators conclude that a Systemic
Accounting Failure has occurred, then Company shall have the right to cure such
Systemic Accounting Failure within the time frames set forth above or a Remedy
shall be due.
10.
Limits of Manager Responsibility; Indemnification.

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(a)
Pursuant to this Agreement, Manager will not assume any responsibility other
than to render the services called for hereunder and will not be responsible for
any action of the Company in following or declining to follow its advice or
recommendations. Except in the event of a Material Breach, Manager will not be
liable to the Company, any Subsidiary, any of their directors, officers,
stockholders, managers, owners or partners for acts or omissions performed or
not performed in accordance with and pursuant to this Agreement. In no event
shall any Affiliate of the Manager or any of the Manager’s or its Affiliates
respective members, stockholders, partners, managers, directors, officers,
employees and agents be liable to the Company, any Subsidiary, any of their
directors, officers, stockholders, managers, owners or partners for acts or
omissions performed or not performed in accordance with, pursuant to or
otherwise in connection with this Agreement The Company agrees to indemnify
Manager and its Affiliates and their respective members, stockholders, partners,
managers, directors, officers, employees and agents with respect to all
expenses, losses, actual damages , liabilities, demands, charges and claims
arising from acts or omissions of Manager performed in good faith in accordance
with and pursuant to this Agreement and not resulting from the gross negligence
or willful misconduct of Manager or as a result of the reckless disregard by
Manager of its duties hereunder, as determined pursuant to a final,
non-appealable order of a court of competent jurisdiction; provided, however,
Manager first agrees to (i) make all necessary claims under the Manager’s
Insurance that Manager is required to carry under this Agreement, (ii) use best
efforts to pursue such claims until completion, and (iii) first use all proceeds
of such claims, prior to making any claims against the Company under this
Section 10. Manager agrees to indemnify Company and its directors and officers
with respect to all expenses, losses, actual damages , liabilities, demands,
charges and claims arising from acts of Manager constituting willful misconduct,
gross negligence or reckless disregard of its duties under this Agreement by
Manager, as determined pursuant to a final, non-appealable order of a court of
competent jurisdiction. The provisions of this Section 10 shall survive the
expiration or earlier termination of this Agreement.

(b)
In the event of a Breach, regardless of whether or not such Breach is a Material
Breach, (i) Manager shall reimburse Company (A) any funds or monies which
Company loses due to fraud, misappropriation of funds or embezzlement by Manager
in its corporate capacity and (B) all out of pocket costs and expenses incurred
by the Company relating to such matters and (ii) the Company shall be entitled
to pursue all rights and remedies available at law or in equity, except as
otherwise set forth herein .

11.
No Joint Venture/Independent Contractor. Nothing in this Agreement shall be
construed to make the Company and Manager partners or joint venturers or impose
any liability as such on either of them. Manager in performance of its duties
however is an independent contractor.

12.
Term; Termination.

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The “Term” of this Agreement is from the Effective Date through December
31,2016, (or December 31, 2017 if the Extension Option is properly exercised)
subject to the right of (1) the Company to terminate this Agreement: (A) at any
time on thirty (30) days prior written notice for Cause; or (B) with no
requirement of Cause upon the satisfaction of the following conditions: (i) the
closing of the sale of all or substantially all of the Properties comprising the
BD2 portfolio (the “BD2 Sale”); (ii) 60 days prior written notice of termination
delivered by the Company to the Manager, which notice shall be irrevocable and
which notice may only be delivered following the closing of the BD2 Sale; and
(iii) the payment of the Termination Fee by Company to Manager in immediately
payable funds on or prior to the effective date of termination; and (2) the
right of manager to terminate this Agreement in the event of a Company Default.
13.
Action Upon Termination or Expiration of Agreement. Without limiting the
obligation of Company to pay to Manager the Profit Participation and the
Termination Fee (to the extent otherwise payable) and without limiting the
obligation of the Company to continue to comply with the reporting requirements
contained herein for the benefit of the Company which shall expressly survive
any termination of this Agreement), from and after the effective date of a
termination of this Agreement, Manager shall not be entitled to the Base
Management Fee or Construction Oversight Fee for further services under this
Agreement, but shall be paid all compensation accruing to the date of
termination and shall be reimbursed for properly incurred expenses. Upon such
termination or expiration, Manager shall reasonably promptly:

(a)
after deducting any accrued compensation and reimbursement for Expenses to which
it is then entitled, pay over to the Company all money collected and held for
the account of the Company pursuant to this Agreement;

(b)
deliver to the Company a full accounting, including a statement showing all
payments collected and all money held by it, covering the period following the
date of the last accounting furnished to the Company with respect to the Company
and through the termination date; and

(c)
upon notice of termination of this Agreement, Manager shall immediately gather
all books, records, accounts and any and all other records, documents or
materials relating to the Properties or the Company as may be in the possession
or control of Manager, including, without limitation, diskettes containing
reports or other materials generated in connection with the performance by
Manager of its services hereunder, originals of all insurance policies, bills of
sale, leases, licenses , service contracts, permits, plans, equipment, tools,
supplies and keys with respect to the Properties; and Manager shall provide to
Company a list of employees who perform services relating to the Properties
after Manager has determined which of such employees shall be terminated. Upon
the effective date of termination, Manager shall (i) deliver to Company or its
designee all of such books, records, accounts and other materials and any and
all other records or documents pertaining to the Properties, whether or not
enumerated herein, which are necessary or desirable for the ownership and
operation of the Properties, (ii) assign to Company any and all rights Manager
may have in and to any existing

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contracts, licenses and permits relating to the operation and maintenance of the
Properties, if any, (iii) provide the Company with access to Manager’s
electronic accounting and leasing data so that such information can be uploaded
into the Company’s accounting and property management systems, and (iv) furnish
such information and take all such actions as Company shall reasonably require,
in order to effectuate an orderly and systematic ending of the duties and
activities of Manager under this Agreement.
14.
Release of Money or other Property Upon Written Request. Manager agrees that any
money or other property of the Company held by Manager under this Agreement
shall be held by Manager as custodian for the Company, and Manager’s records
shall be clearly and appropriately marked to reflect the ownership of such money
or other property by the Company. Upon the receipt by Manager of a written
request signed by a duly authorized officer of the Company requesting Manager to
release to the Company any money or other property then held by Manager for the
account of the Company under this Agreement, Manager shall release such money or
other property to the Company within ten (10) business days following such
request. Manager shall not be liable to the Company, any Subsidiary or any of
their respective directors, officers, stockholders, managers, owners or partners
for any acts or omissions by the Company in connection with the money or other
property released to the Company in accordance with the terms hereof. The
Company shall indemnify Manager and its affiliates and their respective members,
stockholders, partners, managers , directors, officers, employees and agents
against any and all expenses , losses, damages, liabilities, demands, charges
and claims of any nature whatsoever which arise in connection with Manager’s
release of such money or other property to the Company in accordance with the
terms of this Section 14. Indemnification pursuant to this Section 14 shall be
in addition to any right to indemnification under Section 10.

15.
Notices. Unless expressly provided otherwise in this Agreement, all notices,
requests, demands and other communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been duly given, made
and received when delivered against receipt or upon actual receipt of (a)
personal delivery, (b) delivery by a reputable overnight courier, (c) delivery
by facsimile transmission against answerback, or (d) delivery by registered or
certified mail, postage prepaid, return receipt requested, addressed as set
forth below:

If to the Company:
 
c/o KBS Capital Advisors, LLC
620 Newport Center Drive, Suite 1300
Newport Beach, CA 92660
Attn: Brian Ragsdale and David Snyder
 
 
 
With a copy to:
 
Greenberg Traurig, LLP
3161 Michelson Drive, Suite 1000
Irvine, CA 92612
Attn: Bruce Fischer
 
 
 
With a copy to:
 
Mayer Brown LLP

25

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700 Louisiana, Suite 3400
Houston, Texas 7702
Attn: Ronald M. Shoss
 
 
 
If to Manager:
 
c/o Gramercy Property Trust,
521 Fifth Avenue, 30th Floor
New York, New York 10175
Attn: Allan B. Rothschild and Peter Tubesing
 
 
 
With a copy to:
 
Kirkland & Ellis, LLP
300 N. LaSalle Street
Chicago, IL 60654
Attn: Andrew D. Small

Any party may change the address to which communications or copies are to be
sent by giving notice of such change of address in conformity with the
provisions of this Section 15 for the giving of notice.
16.
Binding Nature of Agreement; Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and permitted assigns as provided in
this Agreement.

17.
Entire Agreement; Amendments. This Agreement contains the entire agreement and
understanding among 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 of this Agreement. The express
terms of this Agreement controls and supersedes any course of performance and/or
usage of the trade inconsistent with any of the terms of this Agreement. This
Agreement may not be modified or amended other than by an agreement in writing
signed by the parties hereto.

18.
Governing Law. This Agreement and all questions relating to its validity,
interpretation, performance and enforcement shall be governed by and construed,
interpreted and enforced in accordance with the internal laws of the State of
New York, without regard to conflicts of laws principles thereof. Any legal
suit, action or proceeding arising out of or relating to this Agreement may at
the instituting party’s option be instituted in any Federal Court in the City of
New York, County of New York, pursuant to Section 5-1402 of the New York General
Obligations Law and each party hereto waives any objections which it may now or
hereafter have based on venue and/or forum non convenient of any such suit,
action or proceeding, and each party hereto hereby irrevocably submits to the
jurisdiction of any such court in any suit, action or proceeding.

26

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19.
Indulgences, Not Waivers. 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.

20.
Titles Not to Affect Interpretation. The titles of sections, paragraphs and
subparagraphs 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 of this Agreement.

21.
Execution in 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 of this Agreement, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.

22.
Provisions Separable. The provisions of this Agreement are independent of and
separable 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.

23.
Principles of Construction. 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. All references to recitals, sections, paragraphs and
schedules are to the recitals, sections, paragraphs and schedules in or to this
Agreement unless otherwise specified.

24.
Assignment; Change of Control of Manager. Manager may not assign its duties
under this Agreement except as described in this Section 24. Manager may assign
this Agreement, Manager’s duties hereunder or direct or indirect interests in
Manager so long as the assignee or Manager, as the case may be, shall be
controlled, directly or indirectly, by Gramercy Property Trust. For avoidance of
doubt the purposes of this Section 24, Gramercy Property Trust. shall include
any successor to Gramercy Property Trust. whether by merger, consolidation or
similar business combination transaction, however characterized. Furthermore,
Manager may assign, freely, to one or more persons or entities its rights to
receive the Profit Participation and/or the Termination Fee. This Agreement may
not be assigned by Company without the prior written consent of the Manager.

25.
No Personal Liability. None of the members, owners, partners (general or
limited), direct or indirect, officers, directors, shareholders, employees,
agents, trustees or representatives of Company, any Subsidiary or Manager shall
be liable, accountable or

27

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subject to any suit for any costs, expenses, or liability arising directly or
indirectly, out of Company’s or Manager’s (as applicable) failure or refusal to
satisfy its obligations hereunder or out of the transactions contemplated by
this Agreement.

28

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

KBS ACQUISITION SUB, LLC
a Delaware limited liability company

By:/s/ David E. Snyder
Name:    David E. Snyder
Title:    Chief Financial Officer

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GKK REALTY ADVISORS LLC
a Delaware limited liability company

By:/s/ Allan B. Rothschild
Name:    Allan B. Rothschild
Title:    Vice President

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Annex A-2

Profit Participation Threshold

Portfolio
 
Profit Participation
Threshold
 
BBD2
 
25,000,000

 
101IND
 
88,200,000

 
PITNEY BOA
 
64,089,405

 
Citizens JV
 
64,300,000

 
BEAVER
 
48,000,000

 
600A
 
31,915,876

 
600B
 
36,655,711

 
600C
 
30,856,783

 
PITNEY WACH
 
34,275,087

 
STERLING
 
30,598,505

 
RBCCENTURA
 
23,000,000

(1)
FSI
 
11,030,574

(2)
 
 
719,094,941

 

(1) RBCCENTURA includes only RG1720 - 3032 Westinghouse and RG1715 - 3009
Winterpark.

(2) FSI includes RG1324 - 334 NBOC Op Center, RG1324 - 3372 NBOC Operations, RG
1278 - 4209 Central Avenue, RG1289 - 4233 Bellevile, RG1301 - 4265 South First
Street, RG1265 - 3316 Deland Main, and RG1312 - 4300 Cookeville.
 
 
 
 
 

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Annex B
Reports
1.    Monthly U.S. GAAP Financial Statements shall be prepared on a consolidated
basis, in sub-portfolio groups and/or on a individual property basis in such
form as approved by Company, which shall include, among other things, balance
sheet, thirteen (13) month income statement with year-to-date actual to budget
comparison with explanation of usual fluxes in thirteen (13) month trend income
statement trends (until such time as the Company has had control of the
properties for thirteen (13) months, such income statement shall include
historical information on the Properties prior to control by the Company),
report summarizing any capital expenditures and repair and maintenance which
year-to-date are greater than $100,000, supporting depreciation and amortization
schedule, FAS13 schedules, and support for significant balance sheet items
schedules (in same groupings consolidated basis, in sub-portfolios and/or on
individual property basis) such as accounts payable accruals, property taxes,
insurance, prepaids, and allowance for doubtful accounts. See Exhibit__ for GAAP
Report Table of Contents and Accrual Basis Report Checklist for a complete
listing of required reports. Both the GAAP Report Table of Contents and Accrual
Basis Report Checklist is required to be signed by both the preparer of the
financial statements and their supervisor as representation that the reports are
accurate and complete.
2.    Quarterly Financial Statements shall be prepared in a manner consistent
with Item 1 above. In addition, Manager shall provide any information, including
supporting back-up schedules/information, as required to complete the Company’s
quarterly 10-Q and board packages, including among other things:
(a)     Consolidated Properties portfolio balance sheet, income statement and
statement of cash flow
(b)     Five (5) year and thereafter minimum rent schedule
(c)     Five (5) year and thereafter minimum principal paydown schedule
(d)     Schedule of lease expirations by year based on rsf and annualized base
rent
(e)     Base information on lease terms, location, industry, annual base rent
and rsf on Top Ten (10) Tenants in the Properties portfolio
(f)     Breakout of portfolio by annualized base rent and rsf by geographic and
industry dispersion
(g)     Net absorption data for the Properties portfolio by month for a trailing
and forward twelve (12) months

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(h)     Variances explanations for significant fluctuations between current
quarter and current year to date numbers compared to prior year quarter and
prior year to date numbers
(i)     Other information as requested.
3.     Annual U.S. GAAP Financial Statements: As soon as practicable, and in any
event within seven (7) working days of December 31st, the manager shall deliver
annual accrual basis financial statements prepared in a manner and form
consistent with Items 1 and 2 above. In addition, Manager shall provide any
information as required to complete the Company's annual audited financial
statements and l0-K.
4.     Annual E&P and Tax Return information: In addition to Item 3 above,
Manager shall provide FAS depreciation schedules on a E&P basis no later than
seven (7) business days prior to January 31st and any other information as
requested to allow the Company to prepare an annual E&P estimate for purposes of
meeting its 1099-DIV requirements to its investors. In addition, fifteen (15)
days after year end numbers have been finalized, FAS depreciation schedules
which sort and summarize information by year placed in service and depreciable
life categories on a tax basis and other information as requested to allow the
Company to prepare its annual tax returns.

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Annex D
 
 
 
 
 
 
 
 
 
Example of Profit Participation Calculation for a Sample Portfolio:
 
 
 
 
 
 
 
 
 
Portfolio Value:
 
 
 
 
Plus: Net Sales Price of the Properties Sold from and after November 1, 2013
 
$
—

 
 
Plus: Fair Value of Applicable Remaining Properties as of the Measurement Date
 
80,000,000

 
 
 
 
 
 
 
Total Portfolio Value
 
80,000,000

 
 
 
 
 
 
 
Profit Participation Threshold
 
64,295,988

 
 
 
 
 
 
 
Good News Cash Equity Contributions Funded after December 1, 2013
 
 
 
 
Plus: Capital Expenditures
 
—

 
 
Plus: Tenant Improvements
 
—

 
 
Plus: Lease Commissions
 
1,000,000

 
 
 
 
 
 
 
Total Cash Equity Contributions
 
1,000,000

 
 
 
 
 
 
 
Incentive Profit Calculation
 
 
 
 
Plus: Total Portfolio Value
 
80,000,000

 
 
Less: Profit Participation Threshold
 
64,295,988

 
 
Less: Cash Equity Contributions
 
1,000,000

 
 
 
 
 
 
 
 
 
14,704,012

 
 
 
 
 
 
 
Profit Participation
 
 
 
 
Plus: 10% for Incentive Profits
 
642,960

 
 
Plus: 20% for Incentive Profits
 
1,285,920

 
 
Plus: 30% for Incentive Profits
 
553,444

 
 
 
 
 
 
 
 
 
$
2,482,324

 
 
 
 
 
 

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Annex E

Third Year Termination Baseline

Effective Date of Termination
 
Third Year Termination Baseline
 
 
 
Month of January, 2016
 
14,062,500
Month of February, 2016
 
13,125,000
Month of March, 2016
 
12,187,500
Month of April, 2016
 
11,250,000
Month of May, 2016
 
10,312,500
Month of June, 2016
 
9,375,000
Month of July, 2016
 
8,437,500
Month of August, 2016
 
7,500,000
Month of September, 2016
 
6,562,500
Month of October, 2016
 
5,625,000
Month of November, 2016
 
46,875,000
Month of December, 2016
 
3,750,000

37