Document:

Share Purchase Agreement

 EXHIBIT 10.2 
 SHARE PURCHASE AGREEMENT 
 BETWEEN 
 SOUTHERN GRAPHIC SYSTEMS-CANADA, CO./SYSTEMES GRAPHIQUES SOUTHERN-CANADA, CO. 
 AND 
 JANKO HERAK 
 AND 
 ADRIANNE HERAK 
 AND 
 ADRIANNE HERAK TRUST 
 AND 
 C. J. K. PHOTO ENGRAVERS LIMITED 
 MADE AS OF 
 January 2, 2008

 McCarthy Tétrault LLP 

 TABLE OF CONTENTS 
  

					
	 ARTICLE 1 - INTERPRETATION
	  	1
	 1.01
	  	 Definitions
	  	1
	 1.02
	  	 Headings
	  	7
	 1.03
	  	 Extended Meanings
	  	8
	 1.04
	  	 Statutory References
	  	8
	 1.05
	  	 Accounting Principles
	  	8
	 1.06
	  	 Currency
	  	8
	 1.07
	  	 Schedules
	  	8
		
	 ARTICLE 2 - SALE AND PURCHASE
	  	9
	 2.01
	  	 Shares to be Sold and Purchased
	  	9
	 2.02
	  	 Purchase Price
	  	9
	 2.03
	  	 Working Capital Adjustment
	  	10
	 2.04
	  	 Net Assets Adjustment
	  	11
	 2.05
	  	 Payment of Purchase Price
	  	11
	 2.06
	  	 Non-Compete Filing
	  	12
		
	 ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
	  	12
	 3.01
	  	 Vendor’s Representations and Warranties
	  	12
	 3.02
	  	 Purchaser’s Representations and Warranties
	  	26
		
	 ARTICLE 4 - COVENANTS
	  	27
	 4.01
	  	 Taxes
	  	27
	 4.02
	  	 Covenants of the Vendors
	  	27
	 4.03
	  	 Examination of Records and Assets
	  	29
	 4.04
	  	 Covenants of the Purchaser
	  	29
		
	 ARTICLE 5 - CONDITIONS AND TERMINATION
	  	29
	 5.01
	  	 Conditions for the Benefit of the Purchaser
	  	29
	 5.02
	  	 Conditions for the Benefit of the Vendors
	  	32
	 5.03
	  	 Waiver of Condition
	  	33
	 5.04
	  	 Termination
	  	33
	 5.05
	  	 Effect of Termination
	  	34
		
	 ARTICLE 6 - CLOSING ARRANGEMENTS
	  	34
	 6.01
	  	 Closing
	  	34
	 6.02
	  	 Deliveries and Confidentiality
	  	34
		
	 ARTICLE 7 - INDEMNIFICATION
	  	35
	 7.01
	  	 Survival
	  	35
	 7.02
	  	 Indemnification by the Vendors
	  	35
	 7.03
	  	 Indemnification by the Purchaser
	  	37
	 7.04
	  	 Environmental Indemnity
	  	38
	 7.05
	  	 Indemnification Claims
	  	39
	 7.06
	  	 After Tax Basis
	  	43

					
	 7.07
	  	 Adjustment to Purchase Price
	  	43
	 7.08
	  	 Indemnification Claims
	  	43
		
	 ARTICLE 8 - GENERAL
	  	44
	 8.01
	  	 Tax Matters
	  	44
	 8.02
	  	 Further Assurances
	  	45
	 8.03
	  	 Time of the Essence
	  	46
	 8.04
	  	 Fees and Commissions
	  	46
	 8.05
	  	 Public Announcements
	  	46
	 8.06
	  	 Benefit of the Agreement
	  	46
	 8.07
	  	 Entire Agreement
	  	46
	 8.08
	  	 Amendments and Waivers
	  	46
	 8.09
	  	 Assignment
	  	47
	 8.10
	  	 Notices
	  	47
	 8.11
	  	 No Third Party Beneficiaries
	  	48
	 8.12
	  	 Governing Law
	  	48
	 8.13
	  	 Attornment
	  	48
	 8.14
	  	 Counterparts
	  	48
	 8.15
	  	 Facsimiles
	  	49

  

 - ii - 

 SHARE PURCHASE AGREEMENT 
 THIS AGREEMENT is made as of January 2, 2008 
 BETWEEN 
 Southern Graphic Systems-Canada, Co./Systèmes Graphiques Southern-Canada, Co., a corporation incorporated
under the laws of Nova Scotia (the “Purchaser”) 
 - and - 
 Janko Herak, of the City of Toronto in the Province of Ontario (“Janko”) 
 - and - 
 Adrianne Herak, of the City of Toronto in the Province of Ontario
(“Adrianne”) 
 - and - 
 Adrianne Herak Trust, a trust established under the laws of the Province of Ontario (“Adrianne Trust”) 
 - and -

 C. J. K. Photo Engravers Limited, a corporation incorporated under the laws of the Province of Ontario (“CJK”, and
together with Janko, Adrianne and Adrianne Trust, the “Vendors”) 
 WHEREAS the Vendors are the beneficial and
registered owner of the Shares; 
 AND WHEREAS the Vendors desire to sell and the Purchaser desires to purchase the Shares upon and
subject to the terms and conditions set out in this Agreement; 
 NOW THEREFORE, in consideration of the covenants and agreements
herein contained, the parties agree as follows: 
 ARTICLE 1—INTERPRETATION 
  

	1.01	Definitions 

 In this Agreement, unless
something in the subject matter or context is inconsistent therewith: 
 “1043497” means 1043497 Ontario Limited. 
 “1043497 Shares” means all of the outstanding shares in the capital of 1043497. 

 “Accredited Investor” means an accredited investor within the meaning of National Instrument 45-106
Prospectus and Registration Exemptions. 
 “Affiliate” means, with respect to any person, any other person that controls or is controlled by
or is under common control with the referent person and, for purposes of this definition, “control” of a person means the possession, directly or indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or otherwise. 
 “Agreement” means this agreement, including its
recitals and schedules, as amended from time to time. 
 “Advance Ruling Certificate” means an advance ruling certificate issued by the
Commissioner of Competition pursuant to section 102 of the Competition Act with respect to the transactions contemplated by this Agreement. 
 “Applicable Law” means 
  

	(i)	any applicable domestic law including any statute, subordinate legislation or treaty; and 

  

	(ii)	any applicable guideline, by-law, directive, rule, standard, requirement, policy, order, judgment, injunction, award or decree of a Governmental Authority, in each case having the
force of law, including common law. 

 “Benefit Plans” means every benefit plan, program, agreement or arrangement (whether
written or unwritten) maintained, contributed to, or provided by each of Tri-Ad, 1043497, Flex-Art or C&W for the benefit of any their employees, former employees or dependent or independent contractors, as applicable, or their respective
dependants or beneficiaries, including all bonus, deferred compensation, incentive compensation, share purchase, share option, stock appreciation, phantom stock, savings, profit sharing, severance or termination pay, health or other medical, life,
disability or other insurance (whether insured or self-insured), supplementary unemployment benefit, pension, retirement and supplementary retirement plans, programs, agreements and arrangements, except for any statutory plans to which Tri-Ad,
1043497, Flex-Art or C&W is obliged to contribute or comply including the Canada/Québec Pension Plan, or plans administered pursuant to applicable federal or provincial health, worker’s compensation or employment insurance
legislation. 
 “Business” means the business currently carried on by 1043497, C&W, Flex-Art and Tri-Ad. 
 “Business Day” means a day other than a Saturday, Sunday or statutory holiday in Toronto, Ontario. 
 “C&W” means Cooper & Williamson Inc. 
 “C&W Shares” means all of the outstanding shares of C&W. 
 “CJK Transactions” means the subscription by
CJK for shares of 1043497 in exchange for the $7,872,000 promissory note dated May 31, 2004 issued by 1043497 to CJK. 
  

 - 2 - 

 “Claims” means all losses, damages, expenses, liabilities, claims and demands of whatever nature or kind
including all reasonable legal fees (on a solicitor and his own client) and disbursements. 
 “Closing Date” means January 2, 2008 or
such other date as may be agreed to in writing by the Vendors and the Purchaser. 
 “Commissioner of Competition” means the Commissioner of
Competition appointed pursuant to the Competition Act. 
 “Competition Act” means the Competition Act (Canada). 
 “Competition Act Compliance” means: 
  

	(i)	the issuance of an Advance Ruling Certificate; 

  

	(ii)	the Purchaser, 1043497 and C&W have given the notice required under section 114 of the Competition Act with respect to the transactions contemplated by this Agreement and the
applicable waiting period under section 123 of the Competition Act has expired or been waived in accordance with the Competition Act; or 

  

	(iii)	the obligation to give the requisite notice has been waived pursuant to subsection 113(c) of the Competition Act. 

 “CRA” means the Canada Revenue Agency. 
 “Defence
Counsel” has the meaning set out in Section 7.04. 
 “Defence Notice” has the meaning set out in Section 7.04.

 “Developers” has the meaning set out in Section 3.01(5)(e). 
 “Effective Time” means January 1, 2008 at 12:01 a.m. 
 “Environmental Law” means any
Applicable Law relating to pollution, the protection of the environment or occupational health and safety, including Applicable Laws relating to the following (to the extent that they relate to the protection of the environment and/or occupational
health and safety): 
  

	(i)	the generation, treatment, Release, disposal, storage, transportation, investigation, remediation, use of or exposure to Hazardous Substances; 

  

	(ii)	reporting, licensing, permitting, investigating, remediating and cleaning up in connection with any presence or Release, or the threat of the same, of Hazardous Substances; and

  

	(iii)	the manufacture, processing, use, treatment, storage, disposal, transport, handling of Hazardous Substances. 

  

 - 3 - 

 “Environmental Liabilities” means all matters for which the Purchaser is entitled to be indemnified
pursuant to Article 7, including any indemnification that the Purchaser would have received but for Sections 7.02 or 7.04. 
 “Estimated Net
Assets” has the meaning set out in Section 2.04(1). 
 “Estimated Working Capital” has the meaning set out in
Section 2.03(1). 
 “Financial Statements” means the compiled, combined balance sheets, statements of retained earnings, statements of
income and statements of cash flows for Tri-Ad, C&W, Flex-Art and 1043497, each for the 12 month periods ended January 31, 2007 with respect to Flex-Art, September 30, 2007 with respect to 1043497 and C&W and May 31, 2007 with
respect to Tri-Ad. 
 “Flex-Art” means Flex-Art Design Inc. 
 “Governmental Authority” means any domestic or foreign legislative, executive, judicial or administrative body or person having jurisdiction in the relevant circumstances. 
 “Hazardous Substance” means any substance or material that is prohibited, controlled or regulated by any Governmental Authority pursuant to
Environmental Laws including pollutants, contaminants, dangerous goods or substances, toxic or hazardous substances or materials, wastes (including solid non-hazardous wastes and subject wastes), petroleum and its derivatives and by-products and
other hydrocarbons, all as defined in or pursuant to any Environmental Law. 
 “Indemnitee” has the meaning set out in Section 7.04.

 “Indemnitor” has the meaning set out in Section 7.04. 
 “Intellectual Property” means intellectual property of any nature and kind including all domestic and foreign trade-marks, business names, trade names, domain names, trading styles, patents, trade
secrets, software, industrial designs and copyrights, whether registered or unregistered, and all applications for registration thereof, and inventions, formulae, recipes, product formulations, processes and processing methods, technology and
techniques, and know-how. 
 “Inventories” means all inventories of the Corporation which are of merchantable quality and reasonably fit for
the purpose intended including all finished goods, work in progress, raw materials and spare parts. 
 “Investment Canada Act” means the
Investment Canada Act (Canada). 
 “Investment Canada Act Approval” means that the Purchaser has been advised in writing that the
Minister designated under the Investment Canada Act is satisfied, or the Minister is deemed to be satisfied, that the acquisition of the Shares contemplated by this Agreement is likely to be of net benefit to Canada. 
 “knowledge” means, with respect to the Vendors, the actual knowledge of Janko and Adrianne, after due inquiry by each of them of the appropriate
directors and officers of 1043497, C&W, Flex-Art and Tri-Ad. 
  

 - 4 - 

 “Lands” means all freehold and leasehold property and interests therein described in Schedule 1.01A
including all rights of way, licences or rights of occupation, easements or other similar rights of the Corporation in connection with such freehold and leasehold property. 
 “Lease” means the Industrial Lease between Lore Sales and Investments Ltd. and Purchaser entered into on the date hereof in respect of 2/10 Dorchester and 18 Dorchester and the
Industrial Lease between Adrianne and Purchaser entered into on the date hereof in respect of 14 Dorchester. 
 “Licensed Intellectual
Property” means all Intellectual Property other than shrink-wrap software that is used by Tri-Ad, 1043497, Flex-Art or C&W but owned by another party. 
 “Material Adverse Change” or “Material Adverse Effect” means, when used in connection with each of Tri-Ad, 1043497, Flex-Art or C&W or its respective business, any change, event, violation, inaccuracy,
circumstance or effect that is or could reasonably be expected to be materially adverse to the business, assets, liabilities, financial condition, results of operations of Tri-Ad, 1043497, Flex-Art or C&W, taken as a whole, other than as a
result of: (i) changes adversely affecting the Canadian and/or United States economy (so long as such person is not disproportionately affected thereby); (ii) changes adversely affecting the industry in which such person operates (so long
as such person is not disproportionately affected thereby); (iii) the announcement or pendency of the transactions contemplated by this Agreement; (iv) changes in laws; or (v) acts of war and terrorism. 
 “Net Assets” means total assets minus total liabilities (it being acknowledged that the parties do not intend for the Purchaser to acquire any debt in
the transactions contemplated by this Agreement other than intercompany debt (current and long term) between 1043497, Tri-Ad, Flex-Art and/or C&W or any ordinary course payables included in current liabilities). 
 “Net Assets Statement” has the meaning set out in Section 2.04(2). 
 “Non-Compete” means the agreement described in Section 5.01(l). 
 “Owned Intellectual
Property” means all Intellectual Property that is owned by Tri-Ad, 1043497, Flex-Art or C&W. 
 “Owned Software” means all
Software that is owned by Tri-Ad, 1043497, Flex-Art or C&W. 
 “Permits” means all permits, consents, waivers, licences, certificates,
approvals, authorizations, registrations, franchises, rights, privileges, quotas and exemptions, or any item with a similar effect, issued or granted by any Governmental Authority under or pursuant to Applicable Laws. 
 “Person” means any individual, sole proprietorship, partnership, firm, entity, unincorporated association, unincorporated syndicate, unincorporated
organization, trust, body corporate, Governmental Authority, and where the context requires any of the foregoing when they are acting as trustee, executor, administrator or other legal representative. 
 “Personal Information” means the type of information regulated by Privacy Laws and collected, used, disclosed or retained by the Corporations including
information regarding the Corporation’s customers, suppliers, employees and agents, such as an individual’s name, address, age, gender, identification number, income, family status, citizenship, employment, assets, liabilities, source of
funds, payment records, credit information, personal references and health records. 
  

 - 5 - 

 “Pre-Existing Liability” means all liabilities of 1043497, Tri-Ad, C&W and/or Flex-Art, known or
unknown, actual, asserted or unasserted, based on or arising out of circumstances or events occurring on or before the Closing Date, except liabilities reflected (and then only to the extent reflected or reserved against) in the Financial
Statements, or arising in the ordinary course of business after the date of the applicable Financial Statements or Environmental Liabilities. 
 “Privacy Laws” means all applicable federal and provincial laws governing the collection, use, disclosure and retention of Personal Information, including the Personal Information Protection and Electronic Documents
Act (Canada). 
 “Privacy Policies” means all privacy, data protection and similar policies adopted or used by the Corporation in
respect of Personal Information, including any complaints process. 
 “Purchase Price” has the meaning set out in Section 2.02.

 “Purchaser Indemnitees” has the meaning set out in Section 7.02(1). 
 “Release” means any release or discharge of any Hazardous Substance including any discharge, spray, injection, inoculation, abandonment, deposit, spillage, leakage, pouring, emission, emptying,
throwing, dumping, placing, exhausting, escape, dispensing or disposal. 
 “Shares” means the 1043497 Shares and the C&W Shares.

 “Software” means all software relating to the Business including the computer programs known by the names as set out in
Schedule 1.01, including all versions thereof, and all related documentation, manuals, source code and object code, program files, data files, computer related data, field and data definitions and relationships, data definition specifications,
data models, program and system logic, interfaces, program modules, routines, sub-routines, algorithms, program architecture, design concepts, system designs, program structure, sequence and organization, screen displays and report layouts, and all
other material related to such software. 
 “Subsidiary” means, with respect to any person, any corporation or other person of which
securities or other interests having the power to elect a majority of that corporation’s or other person’s board of directors or similar governing body, or otherwise having the power to direct the business and policies of that corporation
or other person (other than securities or other interests having such power only upon the happening of a contingency that has not occurred) are held by the referent person or one or more of its Subsidiaries; when used without reference to a
particular person, “Subsidiary” means a Subsidiary of either of the Corporations. 
 “Tax Act” means the Income Tax
Act (Canada). 
 “Taxes” means all federal, state, provincial, territorial, county, municipal, local or foreign taxes, duties, imposts,
levies, assessments, tariffs and other charges imposed, assessed or collected by a Governmental Authority including: (i) any gross income, net income, gross receipts, business, royalty, capital, capital gains, goods and services, value added,
severance, stamp, franchise, occupation, 

  

 - 6 - 

 
premium, capital stock, sales and use, real property, land transfer, personal property, ad valorem, transfer, licence, profits, windfall profits,
environmental, payroll, employment, employer health, pension plan, anti-dumping, countervail, excise, severance, stamp, occupation, or premium tax; (ii) all withholdings on amounts paid to or by the relevant person; (iii) all employment
insurance premiums, Canada, Quebec and any other pension plan contributions or premiums; (iv) any fine, penalty, interest, or addition to tax; (v) any tax imposed, assessed, or collected or payable pursuant to any tax-sharing agreement or
any other contract relating to the sharing or payment of any such tax, levy, assessment, tariff, duty, deficiency, or fee; and (vi) any liability for any of the foregoing as a transferee, successor, guarantor, or by contract or by operation of
law. 
 “Tax Returns” means all returns, reports, declarations, statements, bills, schedules, forms or written information of, or in respect
of, Taxes that are, or are required to be, filed with or supplied to any Taxation Authority. 
 “Taxation Authority” means any domestic or
foreign government, agency or authority that is entitled to impose Taxes or to administer any applicable Tax legislation. 
 “Third Party
Proceedings” has the meaning set out in Section 7.04. 
 “Toronto Lands” means the lands with the municipal addresses 2/10
Dorechester, 18 Dorechester and 14 Dorechester, each in Toronto, Ontario. 
 “Tri-Ad” means Tri-Ad Graphic Communications Ltd., a
wholly-owned subsidiary of 1043497. 
 “Vendor Indemnitees” has the meaning set out in Section 7.03(1). 
 “Working Capital” means the current assets of 1043497, Tri-Ad, C&W and Flex-Art less the current liabilities of 1043497, Tri-Ad, C&W and
Flex-Art, all calculated in accordance with generally accepted accounting principles consistently applied at the close of business as of the Closing Date (it being acknowledged that the parties do not intend for the Purchaser to acquire any debt in
the transaction contemplated by this Agreement, other than intercompany debt (current and long-term) between 1043497, Tri-Ad, Flex-Art and/or C&W or any ordinary course payables included in current liabilities). 
 “Working Capital Statement” has the meaning set out in Section 2.03(2). 
  

	1.02	Headings 

 The division of this Agreement
into Articles and Sections and the insertion of a table of contents and headings are for convenience of reference only and do not affect the construction or interpretation of this Agreement. The terms “hereof”, “hereunder” and
similar expressions refer to this Agreement and not to any particular Article, Section or other portion hereof. Unless something in the subject matter or context is inconsistent therewith, references herein to Articles, Sections and Schedules
are to Articles and Sections of and Schedules to this Agreement. 
  

 - 7 - 

	1.03	Extended Meanings 

 In this Agreement words
importing the singular number include the plural and vice versa, words importing any gender include all genders and words importing persons include individuals, corporations, limited and unlimited liability companies, general and limited
partnerships, associations, trusts, unincorporated organizations, joint ventures and Governmental Authorities. The term “including” means “including without limiting the generality of the foregoing” and the term “third
party” means any person other than the Vendor, the Corporations and the Purchaser. 
  

	1.04	Statutory References 

 In this Agreement,
unless something in the subject matter or context is inconsistent therewith or unless otherwise herein provided, a reference to any statute is to that statute as now enacted or as the same may from time to time be amended, re-enacted or replaced and
includes any regulations made thereunder. 
  

	1.05	Accounting Principles 

 Wherever in this
Agreement reference is made to a calculation to be made or an action to be taken in accordance with generally accepted accounting principles or “GAAP”, such reference will be deemed to be to the generally accepted accounting principles
from time to time approved by the Canadian Institute of Chartered Accountants, or any successor institute, applicable as at the date on which such calculation or action is made or taken or required to be made or taken. 
  

	1.06	Currency 

 All references to currency herein
are to lawful money of Canada. 
  

	1.07	Schedules 

 The following are the Schedules
to this Agreement: 
  

					
	Schedule 2.02	 		 	Purchase Price Allocation
	Schedule 2.06	 	—  	 	Non-Compete Filing
	Schedule 3.01(1)(c)	 	—  	 	Share Terms
	Schedule 3.01(2)(b)	 	—  	 	Accrued, Contingent and Other Material Liabilities
	Schedule 3.01(2)(e)	 	—  	 	Director, Officer, Employee and Shareholder Indebtedness
	Schedule 3.01(3)(a)	 	—  	 	Permitted Encumbrances
	Schedule 3.01(4)(a)	 	—  	 	Contracts and Commitments
	Schedule 3.01(4)(c)	 		 	Guarantees
	Schedule 3.01(4)(d)	 		 	Real Property Leases
	Schedule 3.01(4)(e)	 	—  	 	Subsidiaries
	Schedule 3.01(5)	 	—  	 	Intellectual Property
	Schedule 3.01(5)(i)	 	—  	 	Exceptions to Intellectual Property
	Schedule 3.01(5)(d)	 	—  	 	Licenses to use Licensed Intellectual Property
	Schedule 3.01(6)	 	—  	 	Employment Disclosure

  

 - 8 - 

					
	Schedule 3.01(7)(c)	 	—  	 	Investigations Regarding Personal Information
	Schedule 3.01(8)	 	—  	 	Benefit Disclosure
	Schedule 3.01(9)(a)	 	—  	 	Restrictions on Uses of Leased Property
	Schedule 3.01(9)(b)	 	—  	 	Real Property
	Schedule 3.01(9)(c)	 	—  	 	Leases
	Schedule 3.01(10)(a)	 	—  	 	Exception to Compliance with Environmental Laws
	Schedule 3.01(10)(b)	 	—  	 	Environmental Permits
	Schedule 3.01(10)(d)	 	—  	 	Environmental Convictions
	Schedule 3.01(10)(e)	 	—  	 	Condition of Soil and Groundwater
	Schedule 3.01(10)(g)	 	—  	 	Environmental Reports
	Schedule 3.01(11)(a)	 	—  	 	Tax Matters
	Schedule 3.01(12)(a)	 	—  	 	Actions, Suits and Proceedings
	Schedule 3.01(12)(b)	 	—  	 	Compliance with Laws and Licenses
	Schedule 3.01(12)(c)	 	—  	 	Permits and Assets
	Schedule 3.01(12)(d)	 	—  	 	Insurance Policies
	Schedule 3.01(12)(i)	 	—  	 	Consents and Approvals
	Schedule 3.01(12)(j)	 	—  	 	Indebtedness of Tri-Ad, 1043497, Flex-Art and C&W
	Schedule 3.01(12)(k)	 	—  	 	Bank Accounts
	Schedule 5.01(l)	 	—  	 	Non-Compete
	Schedule 5.01(m)	 	—  	 	Consulting Agreement
	Schedule 5.01(n)	 	—  	 	New Leases
	Schedule 5.01(o)	 	—  	 	Purchaser Employment Agreements
	Schedule 5.01(p)	 	—  	 	Irrevocable Letter of Credit
	Schedule 5.01(q)	 	—  	 	Opinion of Vendors’ Counsel

 The Parties agree that the Vendors may unilaterally amend any of the Schedules at any time prior
to the Closing Date by providing a written copy of the applicable amended Schedule or Schedules together with a copy of such Schedule or Schedules marked to show the applicable amendments, in accordance with Section 8.10. In the event
that the Vendors amend any Schedule, the Purchaser’s sole remedy will be to terminate this Agreement by providing written notice to the Vendors in accordance with Section 8.10; provided that there shall be no penalty, monetary or
otherwise, imposed against the Purchaser for so terminating the Agreement. In the event that this Agreement is so terminated, all future obligations of the parties under this Agreement will terminate, except that the obligations under
Section 8.04 will survive. 
 ARTICLE 2—SALE AND PURCHASE 
  

	2.01	Shares to be Sold and Purchased 

 Upon and
subject to the terms and conditions hereof, the Vendors will sell the Shares to the Purchaser and the Purchaser will purchase the Shares from the Vendors, as of the Effective Time. 
  

	2.02	Purchase Price 

 The purchase price payable
to the Vendors for the Shares (such amount being hereinafter referred to as the “Purchase Price”) will be $22,000,000, subject to adjustment as provided in Section 2.03, 2.04 and 2.05. The Purchase Price will be allocated in
accordance with Schedule 2.02. 
  

 - 9 - 

	2.03	Working Capital Adjustment 

 (1) The
Purchase Price has been determined on the basis that 1043497, Tri-Ad, C&W and Flex-Art together will have Working Capital of not less than $4,516,895 (the “Estimated Working Capital”) at the Effective Time, including not less
than $1,300,000 in cash. The preceding sentence notwithstanding, Estimated Working Capital will be increased by the amount of any accruals for incentive compensation payable to Janko. 
 (2) Within 60 days after the Closing Date, the Vendors will prepare and deliver to the Purchaser an unaudited statement setting out (by separate
line-item) the Working Capital for 1043497, Tri-Ad, C&W and Flex-Art as at the Effective Time (the “Working Capital Statement”) with the assets and liabilities included therein valued in accordance with generally accepted
accounting principles. Inventories will be confirmed as at the close of business on the Closing Date by a physical stock-taking supervised jointly by representatives of the Vendors and representatives of the Purchaser. If requested by the Purchaser,
the Vendors will permit the Purchaser and its auditors or other representatives to review the working papers and other documentation used or prepared in connection with the preparation of, or which otherwise form the basis of, the Working Capital
Statement. The Purchaser will provide to the Vendors, or will allow the Vendors access to, the documentation and materials reasonably necessary or desirable to prepare the Working Capital Statement as soon as reasonably practicably upon request of
the Vendor. 
 (3) If the Purchaser gives written notice to the Vendors that it disputes the Working Capital Statement within 30 days
after the Working Capital Statement is given to the Purchaser and the parties cannot reach agreement on the Working Capital Statement within 30 days after such notice of dispute is given, the dispute will be referred for determination by arbitration
to a senior audit partner at the Toronto office of an auditor that is reasonably acceptable to all parties chosen by the managing partner of such office. The determination by such arbitrator will be made within 20 Business Days of such referral and
will be final and binding on both parties. The costs of the arbitrator will be borne equally by the Vendors and the Purchaser. 
 (4)
If the Working Capital as determined by the parties or the arbitrator, as the case may be, exceeds the Estimated Working Capital, the Purchaser will pay the amount of the difference (less any shortfall in cash included in Working Capital below
$1,300,000) to the Vendors by wire transfer of immediately available funds to an account specified by the Vendors within five Business Days after the determination and the Purchase Price will be adjusted accordingly. If the Working Capital as so
determined is less than the Estimated Working Capital, the Vendors will pay the amount of the difference (plus any shortfall in cash included in Working Capital below $1,300,000) to the Purchaser by wire transfer of immediately available funds to an
account specified by the Purchaser within five Business Days after the determination and the Purchase Price will be adjusted accordingly. 
  

 - 10 - 

	2.04	Net Assets Adjustment 

 (1) The
Purchase Price has been determined on the basis that 1043497, Tri-Ad, C&W and Flex-Art together will have Net Assets of not less than $5,943,833 (the “Estimated Net Assets”) at the Effective Time. The preceding sentence
notwithstanding, Estimated Net Assets will be increased by the amount of any accruals for incentive compensation payable to Janko. 
 (2)
Within 60 days after the Closing Date, the Vendors will prepare and deliver to the Purchaser an unaudited statement setting out (by separate line-item) the Net Assets for 1043497, Tri-Ad, C&W and Flex-Art as at the Effective Time (the
“Net Assets Statement”) with the assets and liabilities included therein valued in accordance with generally accepted accounting principles. Inventories will be confirmed as at the close of business on the Closing Date by a physical
stock-taking supervised jointly by representatives of the Vendors and representatives of the Purchaser. If requested by the Purchaser, the Vendors will permit the Purchaser and its auditors or other representatives to review the working papers and
other documentation used or prepared in connection with the preparation of, or which otherwise form the basis of, the Net Assets Statement. Purchaser will provide to the Vendors, or allow the Vendors access to, the documentation and materials
reasonably necessary or desirable to prepare the Net Assets Statement as soon as reasonably practicably upon request of the Vendors. 
 (3) If the Purchaser gives written notice to the Vendors that it disputes the Net Assets Statement within 30 days after the Net Assets Statement is given to the Purchaser and the parties cannot reach agreement on the Net Assets
Statement within 30 days after such notice of dispute is given, the dispute will be referred for determination by arbitration to a senior audit partner at the Toronto office of an auditor reasonably acceptable to all parties chosen by the managing
partner of such office. The determination by such arbitrator will be made within 20 Business Days of such referral and will be final and binding on both parties. The costs of the arbitrator will be borne by the party losing the majority of the
amount at issue in the arbitration. 
 (4) If the Net Assets as determined by the parties or the arbitrator, as the case may be,
exceeds the Estimated Net Assets, the Purchaser will pay the amount of the difference to the Vendors by wire transfer of immediately available funds to an account specified by the Vendors within five Business Days after the determination and the
Purchase Price will be adjusted accordingly. If the Net Assets as so determined are less than the Estimated Net Assets, the Vendors will pay the amount of the difference to the Purchaser by wire transfer of immediately available funds to an account
specified by the Purchaser within five Business Days after the determination and the Purchase Price will be adjusted accordingly. 
  

	2.05	Payment of Purchase Price 

 The Purchase
Price will be payable as follows: 
  

	 	(a)	as to $7,872,000 by the delivery to CJK at the Time of Closing of a certified cheque or bank draft payable at par in Toronto or by wire transfer at the Time of Closing of
immediately available funds to an account specified by CJK; and 

  

	 	(b)	as to $14,128,000 to the Vendors other than CJK at the Time of Closing of a certified cheque or bank draft payable at par in Toronto or by wire transfer at the Time of Closing of
immediately available funds to an account specified by the other Vendors. 

  

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	2.06	Non-Compete Filing 

 The Vendors and the
Purchaser will, subject to Applicable Law and administrative practice, execute and file on a timely basis and in the required manner and using a form reasonably acceptable to their respective counsel, and on the prescribed form (if and when
available), an election to have proposed paragraph 56.4(3)(c) of the Tax Act (or such similar provision as is or may be enacted) apply to the amount of the consideration attributable to the Non-Compete set out in Schedule 2.06 and the Vendors
and the Purchaser will prepare their respective Tax Returns consistent with such joint election. If the Purchaser and the Vendors subsequently mutually determine, or any Taxation Authority having jurisdiction alleges, that the consideration paid to
the Vendors that can reasonably be regarded as attributable to such Non-Compete is not the amount allocated by the parties in Schedule 2.06, after consultation with such Taxation Authority, the consideration attributable to the Non-Compete will
be adjusted as between the consideration for the Shares and the Non-Compete (the “Reallocation”). Thereafter, the consideration paid to the Vendors for the Shares and the consideration paid to the Vendors for the Non-Compete will be
deemed to be and always to have been the corresponding amounts under the Reallocation and the Vendors and the Purchaser will amend their elections or make such further elections as may be necessary. The Vendors and the Purchaser will make any
required elections under corresponding provincial or territorial law and the foregoing provisions will apply mutatis mutandis in respect thereof. 
 ARTICLE 3—REPRESENTATIONS AND WARRANTIES 
  

	3.01	Vendor’s Representations and Warranties 

 Each of the Vendors represents and warrants to the Purchaser that: 
  

	 	(1)	Corporate 

  

	 	(a)	Each of Tri-Ad, 1043497, Flex-Art and C&W is a corporation duly incorporated, organized and subsisting under the laws of its jurisdiction of incorporation with the corporate
power to own its assets and to carry on its business and has made all necessary filings under all applicable corporate, securities and Taxation laws or any other Applicable Laws, except where individually or in the aggregate, the failure to make
such filings would not result in a Material Adverse Effect. 

 (b) 
  

	 	(i)	The authorized capital of 1043497 consists of an unlimited number of class A special shares, an unlimited number of class B special shares, an unlimited number of class C special
shares, an unlimited number of class A common shares and an unlimited number of class B common shares, of which, of which 1,000,000 class A special shares, 1,000,000 class B special shares, 7,872,000 class C special shares, 1,000 class A common
shares and no class B common shares have been validly issued and are outstanding as fully paid and non-assessable. 

  

 - 12 - 

	 	(ii)	The authorized capital of C&W consists of an unlimited number of common shares and 50,000 class A shares of which 6,000 common shares and no class A shares have been validly
issued and are outstanding as fully paid and non-assessable. 

  

	 	(iii)	The authorized capital of Flex-Art consists of an unlimited number of class “A”, “B”, “C”, “D”, “E”, “F”, “G”,
“H”, “I”, “J” and “K” shares of which 100 class “A” shares, 3,734 class “F” shares and 125 class “J” shares and no class “B”, “C”, “D”,
“E”, “G”, “H” “I” and “K” have been validly issued and are outstanding as fully paid and non-assessable. 

  

	 	(iv)	The authorized capital of Tri-Ad consists of an unlimited number of common shares of which three have been validly issued and are outstanding as fully paid and non-assessable.

  

	 	(c)	The rights, privileges, restrictions and conditions attached to: (i) the class A special shares, class B special shares, class C special shares, class A common shares and class
B common shares of 1043497; (ii) the common shares and the class A shares of C&W; (iii) the common shares of Flex-Art; and (iv) the common shares of Tri-Ad are as set out in Schedule 3.01(1)(c). 

  

	 	(d)	Janko is the beneficial and registered owner of 1,000,000 class A special shares and 1,000,000 class B special shares, Adrianne Herak Trust is the beneficial and registered owner of
1,000 class A common shares and CJK is the beneficial and registered owner of 7,872,000 class C special shares, at the Time of Closing, the 1043497 Shares will be free and clear of all liens, charges, encumbrances and any other rights of others.
1043497 has no assets, liabilities or investments other than its ownership interest in Tri-Ad. 

  

	 	(e)	Adrianne is the beneficial and registered owner of the C&W Shares free and clear of all liens, charges, encumbrances and any other rights of others. C&W has no Subsidiaries
and no ownership interest in any other Person. 

  

	 	(f)	All of the issued and outstanding shares of Tri-Ad are owned by 1043497, free and clear of all liens, charges, encumbrances and any other rights of others. Tri-Ad has no
Subsidiaries and no ownership interest in any other Person other than Flex-Art. 

  

	 	(g)	All of the issued and outstanding shares of Flex-Art are owned by Tri-Ad, and, at the Time of Closing, such shares will be free and clear of all liens, charges, encumbrances and any
other rights of others. Flex-Art has no Subsidiaries and no ownership interest in any other Person. 

  

	 	(h)	Adrianne Trust is a trust established and existing under the laws of the Province of Ontario, and has taken all action required to enter into, execute and deliver this Agreement and
to authorize the completion of the transactions contemplated hereby. 

  

 - 13 - 

	 	(i)	CJK is a corporation duly incorporated, organized and subsisting under the laws of the Province of Ontario and has taken all action required to enter into, execute and deliver this
Agreement and to authorize the completion of the transactions contemplated hereby. 

  

	 	(j)	Each of the Vendors has the power, authority and right to enter into and deliver this Agreement and, on the Closing Date, to transfer the legal and beneficial title and ownership of
the Shares to the Purchaser free and clear of all liens, charges, encumbrances and any other rights of others. 

  

	 	(k)	This Agreement constitutes a valid and legally binding obligation of each of the Vendors, enforceable against them in accordance with its terms subject to applicable bankruptcy,
insolvency, reorganization and other laws of general application limiting the enforcement of creditors’ rights generally and to the fact that specific performance is an equitable remedy available only in the discretion of the court.

  

	 	(l)	There is no contract, option, warrant or any other right of another binding upon or which at any time in the future may become binding upon: 

  

	 	(i)	either of the Vendors to sell, transfer, assign, pledge, charge, mortgage or in any other way dispose of or encumber any of the Shares other than pursuant to the provisions of this
Agreement; 

  

	 	(ii)	Tri-Ad, 1043497, Flex-Art or C&W to allot or issue any of the unissued shares of such Corporation or to create any additional class of shares; or 

  

	 	(iii)	Tri-Ad, 1043497, Flex-Art or C&W to sell, transfer, assign, pledge, mortgage or in any other way dispose of or encumber any of the assets of such Corporation other than pursuant
to purchase orders accepted by it in the usual and ordinary course of business. 

  

	 	(m)	Neither the entering into nor the delivery of this Agreement nor the completion of the transactions contemplated hereby by the Vendors will result in the violation of:

  

	 	(i)	any of the provisions of the constating documents or by-laws of Tri-Ad, 1043497, Flex-Art or C&W; 

  

	 	(ii)	any agreement or other instrument to which the Vendors, Tri-Ad, 1043497, Flex-Art or C&W is a party or by which the Vendors, Tri-Ad, 1043497, Flex-Art or C&W is bound; or

  

	 	(iii)	any Applicable Law binding on or applicable to the Vendors, Tri-Ad, 1043497, Flex-Art or C&W. 

  

	 	(2)	Financial 

  

	 	(a)	The books and records of each of Tri-Ad, 1043497, Flex-Art and C&W present fairly and disclose in all material respects the financial position of each of them, and all material
financial transactions of each of them have been accurately recorded 

  

 - 14 - 

	 	 
in such books and records and, to the extent possible, such books and records have been prepared in accordance with generally accepted accounting principles
consistently applied. 

  

	 	(b)	None of Tri-Ad, 1043497, Flex-Art or C&W has any accrued, contingent or other material liabilities except for: (i) liabilities set out or reflected in the Financial
Statements; (ii) normal liabilities that have been incurred by it since the date of the applicable Financial Statements in the ordinary course of business and consistent with past practices; and (iii) liabilities described in
Schedule 3.01(2)(b). For the avoidance of any doubt, any incurrence of indebtedness shall not be considered to be in the ordinary course of business. 

  

	 	(c)	Since the date of the applicable Financial Statements the businesses of Tri-Ad, 1043497, Flex-Art and C&W have been carried on in their usual and ordinary course and none of
them has entered into any transaction out of the usual and ordinary course of business. For the avoidance of any doubt, any incurrence of indebtedness shall not be considered to be in the ordinary course of business. 

  

	 	(d)	Except as disclosed in Schedule 3.01(2)(d), since the date of the applicable Financial Statements there has been no Material Adverse Change in Tri-Ad, 1043497, Flex-Art or
C&W. 

  

	 	(e)	At the Time of Closing, no current or former director, officer, shareholder or employee of Tri-Ad, 1043497, Flex-Art or C&W or any person not dealing at arm’s length within
the meaning of the Tax Act with any such person or with Tri-Ad, 1043497, Flex-Art or C&W is indebted to Tri-Ad, 1043497, Flex-Art or C&W, respectively, nor is Tri-Ad, 1043497, Flex-Art of C&W indebted to any such person, except for
ordinary unpaid employment related amounts or such indebtedness as is disclosed in Schedule 3.01(2)(e). 

  

	 	(3)	Condition of Assets 

  

	 	(a)	Each of Tri-Ad, 1043497, Flex-Art and C&W is the owner, with good title to all assets owned by it, of all assets owned by it and shown or reflected on the applicable balance
sheet (except for assets disposed of in the usual and ordinary course since the date of the applicable Financial Statements or acquired since the date of the applicable Financial Statements) including the Owned Intellectual Property, free and clear
of all liens, charges, encumbrances and any other rights of others other than those set out in Schedule 3.01(3)(a) or as otherwise disclosed herein. 

  

	 	(b)	The accounts receivable of each of Tri-Ad, 1043497, Flex-Art and C&W are good accounts receivable collectible within 90 days, subject to an allowance for doubtful accounts that
is calculated in accordance with generally accepted accounting principles and in accordance with past practice and are not subject to any defence, counterclaim or set-off. 

  

 - 15 - 

	 	(c)	All machinery and equipment owned or used by Tri-Ad, 1043497, Flex-Art and C&W have been properly maintained and are in good working order for the purposes of on-going
operation, subject to ordinary wear and tear for machinery and equipment of comparable age and except where the failure to do so would not, individually or in the aggregate, have a Material Adverse Effect. 

  

	 	(d)	All of the Inventories are of merchantable quality and reasonably fit for their usual purpose. 

  

	 	(e)	There are no outstanding orders, notices or similar requirements relating to Tri-Ad, 1043497, Flex-Art or C&W issued by any Governmental Authority and there are no matters under
discussion with any Governmental Authority relating to orders, notices or similar requirements. 

  

	 	(f)	Except as set out in Schedule 3.01(3)(f), no single capital expenditure in excess of $250,000 or capital expenditures in the aggregate in excess of $250,000 have been made or
authorized by any of Tri-Ad, 1043497, Flex-Art or C&W since the date of the applicable Financial Statements. 

  

	 	(g)	No dividends have been declared or paid on or in respect of the Shares or the shares of Tri-Ad, 1043497, Flex-Art or C&W and no other distribution on any of its securities or
shares has been declared or made by Tri-Ad, 1043497, Flex-Art or C&W since the date of the applicable Financial Statements and all dividends which to the date hereof have been declared or paid by Tri-Ad, 1043497, Flex-Art or C&W have been
duly and validly declared or paid. 

  

	 	(4)	Contracts and Commitments 

  

	 	(a)	None of Tri-Ad, 1043497, Flex-Art or C&W is a party to any contract or commitment outside the usual and ordinary course of business that extends for a period of time longer than
three months or involving expenditures by it in the aggregate in excess of $25,000, except such contracts or commitments as are listed in Schedule 3.01(4)(a). 

  

	 	(b)	None of Tri-Ad, 1043497, Flex-Art or C&W is in default or breach of any contract or commitment to which it is a party and there exists no condition, event or act that, with the
giving of notice or lapse of time or both, would constitute such a default or breach, and all such contracts and commitments are in good standing and in full force and effect without amendment thereto and Tri-Ad, 1043497 or C&W, as applicable,
is entitled to all benefits thereunder. 

  

	 	(c)	Except as disclosed in Schedule 3.01(4)(c), none of Tri-Ad, 1043497, Flex-Art or C&W is a party to or bound by any guarantee, indemnification, surety or similar obligation.

  

	 	(d)	Except as disclosed in Schedule 3.01(4)(d), none of Tri-Ad, 1043497, Flex-Art or C&W is a party to any lease or agreement in the nature of a lease for real property,
whether as lessor or lessee. 

  

 - 16 - 

	 	(e)	Except for Tri-Ad in the case of 1043497 and as set forth on Schedule 3.01(4)(e), none of Tri-Ad, 1043497, Flex-Art or C&W has any subsidiaries or any agreements, options
or commitments to acquire any securities of any corporation or to acquire or lease any real property or assets other than, in the latter case, those assets that are to be used in the usual and ordinary course of business. 

 

	 	(f)	There is no agreement, option, understanding or commitment, or any right or privilege capable of becoming an agreement, for the purchase from Tri-Ad, 1043497, Flex-Art or C&W of
its business or any of its assets other than in the usual and ordinary course of business. 

  

	 	(5)	Intellectual Property 

  

	 	(a)	Set forth in Schedule 3.01(5) is a list of all domestic and foreign: (i) issued patents and pending patent applications; (ii) trademark and service mark registrations
and applications for registration thereof; (iii) copyright registrations and applications for registration thereof; and (iv) material unregistered trademarks and service marks, in each case that are owned by Tri-Ad, 1043497, Flex-Art or
C&W (the “Scheduled Intellectual Property”), including for each item listed in (i) through (iii) as applicable, the owner, the jurisdiction, the serial/application number, the patent or registration number, the filing
date, and the issuance or registration date. Tri-Ad, 1043497, Flex-Art or C&W, as the case may be, owns or has a valid right to use all Intellectual Property that is used, or held for use, in the conduct of its Business. With respect to each
item of Scheduled Intellectual Property, except as set forth in Schedule 3.01(5)(i) each of Tri-Ad, 1043497, Flex-Art or C&W, as the case may be: (i) is the sole owner and possesses all right, title, and interest in and to the item;
(ii) such person has not granted to any person (other than Tri-Ad, 1043497, Flex-Art and/or C&W) any license, option or other rights in or to such item; and (iii) such person has not received written notice of any pending or threatened
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand that challenges the legality, validity, enforceability, registrations, use, or ownership of the item. 

  

	 	(b)	No person has submitted a claim, demand or other notice in writing to any of Tri-Ad, 1043497, Flex-Art or C&W, as the case may be, that the conduct of the latter is infringing,
misappropriating, diluting or otherwise violating any Intellectual Property owned by such person and, except as would not, individually or in the aggregate, have a Material Adverse Effect, none of Tri-Ad, 1043497, Flex-Art or C&W is infringing,
misappropriating, diluting or otherwise violating the Intellectual Property rights of any person. 

  

	 	(c)	Except as would not, individually or in the aggregate, have a Material Adverse Effect, during the past two years (or earlier, if not resolved) no person has infringed,
misappropriated, diluted or otherwise violated any Intellectual Property rights of Tri-Ad, 1043497, Flex-Art or C&W. 

  

 - 17 - 

	 	(d)	Except as set out in Schedule 3.01(5)(d), there is no Licensed Intellectual Property used in the Business. 

  

	 	(e)	To the knowledge of the Vendors, there are no actions, suits or claims pending or threatened that claim that the Owned Software violates the intellectual property rights of any
third party. 

  

	 	(6)	Employees 

  

	 	(a)	Schedule 3.01(6) sets forth a complete and accurate list of the directors, officers, employees, consultants and independent contractors of Tri-Ad, 1043497, Flex-Art or C&W,
including: 

  

	 	(i)	their position/title; 

  

	 	(ii)	their status (i.e., full time, part time, temporary, casual, seasonal, co-op student); 

  

	 	(iii)	their age; 

  

	 	(iv)	their total length of employment including any employment with any predecessor company or companies that would affect calculation of years of service for any purpose; and

  

	 	(v)	whether any employees are on any approved or statutory leave of absence, and, if so, the reason for such absence and the expected date of return. 

  

	 	(b)	The Vendors have provided the Purchaser with a copy of each material employment, consulting or independent contractor agreement relating to Tri-Ad, 1043497, Flex-Art or C&W.

  

	 	(c)	Tri-Ad, 1043497, Flex-Art and C&W are and have been operated in all material respects in compliance with all Applicable Law relating to employees, consultants and independent
contractors. 

  

	 	(d)	There is no proceeding, action, suit or claim pending or threatened involving any employees, consultant or independent contractor of Tri-Ad, 1043497, Flex-Art or C&W.

  

	 	(e)	None of Tri-Ad, 1043497, Flex-Art or C&W is a party, either directly, voluntarily or by operation of law, to any collective agreement, letter of understanding, letter of intent
or other written communication with any bargaining agent, trade union or association which may qualify as a trade union, which would apply to any employees of Tri-Ad, 1043497, Flex-Art or C&W. 

  

	 	(f)	 There are no outstanding or, to the knowledge of the Vendor, threatened unfair labour practices, complaints or applications for certification or to be declared as a
related or successor employer of any kind, including any proceedings which would 

  

 - 18 - 

	 	 
result in certification of a trade union as bargaining agent for employees of Tri-Ad, 1043497, Flex-Art or C&W, and there have not been any such
proceedings within the last three years. 

  

	 	(g)	All vacation pay for employees of Tri-Ad, 1043497, Flex-Art and C&W is properly reflected and accrued in the books and accounts of Tri-Ad, 1043497, Flex-Art or C&W, as
applicable. 

  

	 	(h)	To the knowledge of the Vendors, there are no threatened or apparent union organizing activities involving any employees of Tri-Ad, 1043497, Flex-Art or C&W.

  

	 	(i)	None of Tri-Ad, 1043497, Flex-Art or C&W has any labour problems that might materially affect the value of Tri-Ad, 1043497, Flex-Art or C&W or lead to any interruption of
any of their operations at any location. 

  

	 	(7)	Privacy Laws 

  

	 	(a)	Despite any other provision in this Agreement, the Vendors make no representations and warranties in respect of Personal Information or compliance with Privacy Laws except as set
forth in this Section 3.01(7)(a). The representations and warranties contained in Section 3.01(11)(b) also apply with reference to the compliance of Tri-Ad, 1043497, Flex-Art or C&W Privacy Laws. Each of Tri-Ad, 1043497, Flex-Art or
C&W have a written privacy policy and code of practice and procedure that complies with all applicable Privacy Laws that govern the collection, use and disclosure of Personal Information or, if required under applicable Privacy Laws, information
about entities other than identifiable individuals. To the knowledge of the Vendors, Tri-Ad, 1043497, Flex-Art or C&W are in material compliance with their privacy policies, which all comply with all applicable Privacy Laws.

  

	 	(b)	There are no restrictions on the collection, use, disclosure and retention of the Personal Information by Tri-Ad, 1043497, Flex-Art or C&W except as provided by Privacy Laws and
the Privacy Policies of Tri-Ad, 1043497, Flex-Art or C&W, as applicable. 

  

	 	(c)	There are no investigations, inquiries, actions, suits, claims, demands or proceedings, whether statutory or otherwise, pending, ongoing, or to the Vendors’ knowledge,
threatened, with respect to the collection, use, disclosure or retention of the Personal Information by Tri-Ad, 1043497, Flex-Art or C&W. 

  

	 	(d)	No decision, judgment or order, whether statutory or otherwise, is pending or has been made, and no notice has been given pursuant to any Privacy Laws, requiring Tri-Ad, 1043497,
Flex-Art or C&W to take (or to refrain from taking) any action with respect to the Personal Information. 

  

	 	(8)	Benefit Plans 

  

	 	(a)	Schedule 3.01(8) sets forth a complete and accurate list of all Benefit Plans. 

  

 - 19 - 

	 	(b)	Except as set out in Schedule 3.01(8): 

  

	 	(i)	The Vendors have provided the Purchaser with a copy of each Benefit Plan, funding agreements and service provider contracts or other contracts in respect of the Benefit Plan in
respect of which Tri-Ad, 1043497, Flex-Art or C&W may have liability, and any other material document that supports each Benefit Plan, and no promises or commitments have been made by Tri-Ad, 1043497, Flex-Art or C&W to amend any Benefit
Plan. 

  

	 	(ii)	All Benefit Plans have been established, registered and qualified, and are and have been administered, funded and invested in all material respects in accordance with the terms of
such Benefit Plans and all Applicable Laws. 

  

	 	(iii)	To the knowledge of the Vendors, no event has occurred respecting any Benefit Plan which would: (A) result in the revocation of the registration of the Benefit Plan;
(B) entitle any person (without consent of Tri-Ad, 1043497, Flex-Art or C&W) to wind up or terminate the Benefit Plan, in whole or in part; (C) result in the Benefit Plan being placed under the administration of any trustee or any
regulatory authority; (D) result in the Benefit Plan being required to pay any material Taxes (except in the ordinary course of business) or penalties under any Applicable Law; or (E) otherwise reasonably be expected to adversely affect
the tax status of the Benefit Plan. 

  

	 	(iv)	None of the Benefit Plans provide for benefit increases, or the acceleration of vesting or funding obligations or an increase thereof that are contingent upon, or will be triggered
by, the completion of the transactions contemplated herein. 

  

	 	(v)	There are no unfunded liabilities in respect of any Benefit Plan including going concern unfunded liabilities, solvency deficiencies or wind-up deficiencies where applicable.

  

	 	(vi)	None of the Benefit Plans provide benefits beyond retirement or other termination of service to employees or former employees or to the beneficiaries or dependants of such
employees. 

  

	 	(vii)	There is no proceeding, action, suit or claim (other than routine claims for payments of benefits) pending or threatened involving any Benefit Plan or its assets.

  

	 	(viii)	None of the Benefit Plans require or permit a retroactive increase in premiums or payments, and the level of insurance reserves, if any, under any self-insured Benefit Plan is
reasonable and sufficient to provide for all incurred but unreported claims. 

  

 - 20 - 

	 	(9)	Realty 

  

	 	(a)	Except as disclosed in Schedule 3.01(9)(a), the operations of Tri-Ad, 1043497, Flex-Art and C&W from the Lands are not subject to any restriction or limitation and are not
in contravention of any Applicable Law. 

  

	 	(b)	Except as set forth in Schedule 3.01(9)(b), none of Tri-Ad, 1043497, Flex-Art or C&W beneficially or legally own an interest in any freehold or leasehold property.

  

	 	(c)	Except as set forth in Schedule 3.01(9)(c), none of Tri-Ad, 1043497, Flex-Art or C&W is a party to any other offer to lease, lease or agreement to lease for real property.

  

	 	(d)	The Lands are serviced by all private and public utility services that are necessary for the operations of Tri-Ad, 1043497, Flex-Art and C&W on the Lands.

  

	 	(10)	Environmental 

  

	 	(a)	Except as disclosed in Schedule 3.01(10)(a), each of the businesses of Tri-Ad, 1043497, Flex-Art and C&W, as carried on by them, and each of their assets are in compliance
in all material respects with all Environmental Laws; 

  

	 	(b)	Schedule 3.01(10)(b) contains a complete list of all environmental Permits used in or required to carry on the businesses of Tri-Ad, 1043497, Flex-Art and C&W in their
usual and ordinary course and such environmental Permits are in full force and effect, unless otherwise indicated in Schedule 3.01(10)(b). 

  

	 	(c)	None of the Lands has been used by Tri-Ad, 1043497, Flex-Art or C&W for or to the Vendors’ knowledge has been designated as a waste disposal site. 

 

	 	(d)	Except as disclosed in Schedule 3.01(10)(d), none of Tri-Ad, 1043497, Flex-Art or C&W has been convicted of an offence or been subjected to any judgment, injunction or
other proceeding or been fined or otherwise sentenced for non-compliance with any Environmental Laws, and it has not settled any prosecution or other proceeding short of conviction in connection therewith. 

  

	 	(e)	Except as disclosed in Schedule 3.01(10)(e), to the Vendors’ knowledge, there are no matters that relate to the condition of the soil or the groundwater that would have a
Material Adverse Effect on Tri-Ad, 1043497, Flex-Art or C&W (whether at, on or below the Lands or any adjoining properties). 

  

	 	(f)	None of Tri-Ad, 1043497, Flex-Art or C&W has received written notice that it or its predecessor companies are actually or potentially responsible for any remedial action under
any Environmental Law; 

  

	 	(g)	Tri-Ad, 1043497, Flex-Art and C&W have provided the Purchaser with copies of all environmental assessments or audits relating to Tri-Ad, 1043497, Flex-Art and C&W that were
obtained by, or are in their possession or control, all as set forth on Schedule 3.01(10)(g); 

  

 - 21 - 

	 	(h)	The Vendor has removed the underground storage tank on the north side of the Evolution Design Works building in compliance with Applicable Laws; and 

  

	 	(i)	Except for the representations and warranties contained in Section 3.01(12)(a) and (i) which are applicable to environmental matters, all representations and warranties by
the Vendors relating to Environmental Law and other environmental matters are contained in this Section 3.01(10). 

  

	 	(11)	Taxes 

  

	 	(a)	Except as set out in Schedule 3.01(11)(a): 

  

	 	(i)	Tri-Ad, 1043497, Flex-Art and C&W have filed all Tax Returns, including any elections and designations required by or referred to in any such Tax Return, which were required to
be filed by it with any Taxation Authority prior to the date hereof. All Tax Returns filed by Tri-Ad, 104349, Flex-Art and C&W are accurate and complete in all respects; 

  

	 	(ii)	Tri-Ad, 1043497, Flex-Art and C&W have withheld any Taxes that are required by Applicable Law to be withheld and have timely paid or remitted, and will continue until the
Closing Date to pay and remit, on a timely basis, the full amount of any Taxes that have been or will be withheld, to the applicable Taxation Authority; 

  

	 	(iii)	Tri-Ad, 1043497, Flex-Art and C&W have paid all Taxes, including any amount due on or before the Closing Date, including instalments or prepayments of Taxes, which are required
to have been paid to any Taxation Authority pursuant to Applicable Law, and no deficiency with respect to the payment of any Taxes or Tax instalments has been asserted against any of them by any Taxation Authority. None of Tri-Ad, 1043497, Flex-Art
or C&W has incurred any liability, whether actual or contingent, for Taxes or engaged in any transaction or event that would result in any liability, whether actual or contingent, for Taxes or realized any income or gain for Tax purposes
otherwise than in the usual and ordinary course of its business. Other than Taxes provided for in the applicable balance sheet, none of Tri-Ad, 1043497, Flex-Art or C&W has any liability or obligation in respect of any Taxes for any Taxable
periods ending on or before the Closing Date, and where no Taxable period ends or is deemed to end on or immediately prior to the Closing Date, no liability or obligation for Taxes in respect of any time or event prior to the Closing Date;

  

	 	(iv)	there are no liens, charges, encumbrances or any rights of others on any of the assets of Tri-Ad, 1043497, Flex-Art and C&W that arose in connection with any failure (or alleged
failure) to pay any Tax when due; 

  

 - 22 - 

	 	(v)	none of Tri-Ad, 1043497, Flex-Art or C&W has any outstanding assessments for Taxes, and the Vendors have no knowledge of any threatened or potential assessment or other
proceedings, negotiations or investigations in respect of Taxes, against 1043497, Tri-Ad, Flex-Art or C&W; 

  

	 	(vi)	none of Tri-Ad, 1043497, Flex-Art or C&W is a party to any agreement, waiver or arrangement with any Taxation Authority that relates to any extension of time with respect to the
filing of any Tax Return, any payment of Taxes or any assessment; 

  

	 	(vii)	no facts, circumstances or events exist or have existed that have resulted in or may result in the application of any of sections 79 to 80.04 of the Tax Act to Tri-Ad, 1043497,
Flex-Art or C&W; 

  

	 	(viii)	None of Tri-Ad, 1043497, Flex-Art or C&W is subject to liability for Taxes of any other person. None of Tri-Ad, 1043497, Flex-Art or C&W has acquired property from any
person in circumstances where it did or could become liable for any Taxes of such person. The value of the consideration paid or received by each of Tri-Ad, 1043497, Flex-Art and C&W for the acquisition, sale, transfer or provision of property
(including intangibles) or the provision of services (including financial transactions) from or to a person with whom it was not dealing at arm’s length within the meaning of the Tax Act was equal to the estimated fair market value of such
property acquired, provided or sold or services purchased or provided. None of Tri-Ad, 1043497, Flex-Art or C&W has entered into any agreement with, or provided any undertaking to, any person pursuant to which it has assumed liability for the
payment of income Taxes owing by such person; 

  

	 	(ix)	None of Tri-Ad, 1043497, Flex-Art or C&W has ever been required to file any Tax Return with, and has never been liable to pay any Taxes to, any Taxation Authority outside
Canada. No claim has ever been made by a Taxation Authority in a jurisdiction where each of Tri-Ad, 1043497, Flex-Art and C&W does not file Tax Returns that it is or may be subject to the imposition of any Tax by that jurisdiction;

  

	 	(x)	Each of Tri-Ad, 1043497, Flex-Art and C&W is duly registered with the CRA under the Excise Tax Act (Canada) for purposes of the goods and services tax
(“GST”). All input tax credits claimed by any such company for GST purposes were calculated in accordance with Applicable Law. Each of Tri-Ad, 1043497, Flex-Art and C&W has complied with all registration, reporting, payment,
collection and remittance requirements in respect of GST, Quebec Sales Tax and provincial sales tax or harmonized tax legislation; 

  

	 	(xi)	Except for reserves pertaining to SRED tax credits and fees related thereto, none of Tri-Ad, 1043497, Flex-Art or C&W has claimed any reserves for purposes of the Tax Act (or
analogous provincial or similar provisions) for the most recent Taxation year ending prior to the date hereof; 

  

 - 23 - 

	 	(xii)	None of Tri-Ad, 1043497, Flex-Art or C&W has made any payment, nor is obligated to make any payment, and is not a party to any agreement under which it could be obligated to
make any payment, that may not be deductible by virtue of section 67 or 78 of the Tax Act or any analogous provincial or similar provision; 

  

	 	(xiii)	Records or documents that meet the requirements of paragraphs 247(4)(a) to (c) of the Tax Act have been made and obtained by each of Tri-Ad, 1043497, Flex-Art and C&W with
respect to all material transactions between either of them and any non-resident person with whom it was not dealing at arm’s length within the meaning of the Tax Act, during a Taxation year commencing after 1998 and ending on or before the
Closing Date; 

  

	 	(xiv)	No elections, designations or similar filings relating to Taxes have been prepared by Tri-Ad, 1043497, Flex-Art or C&W for the period from the date of the applicable Financial
Statements to the Closing Date; and 

  

	 	(xv)	The Purchaser has been provided with copies of all Tax Returns and all communications relating to the Taxes of Tri-Ad, 1043497, Flex-Art and C&W for taxation years ended after
June 1, 2003; and 

  

	 	(b)	Each of the Vendors is not a non-resident of Canada or a partnership other than a Canadian Partnership within the meaning of section 116 of the Tax Act. 

  

	 	(12)	General 

  

	 	(a)	There are no actions, suits or proceedings (whether or not purportedly on behalf of Tri-Ad, 1043497, Flex-Art or C&W): 

  

	 	(i)	pending or to the knowledge of the Vendors threatened against or adversely affecting, or which could adversely affect, Tri-Ad, 1043497, Flex-Art or C&W or any of their assets;
or 

  

	 	(ii)	before or by any Governmental Authority, 

 except such
actions, suits or proceedings as are disclosed in Schedule 3.01(12)(a). 
  

	 	(b)	 Except as set forth in Schedule 3.01(12)(b), Tri-Ad, 1043497, Flex-Art and C&W are conducting their respective businesses in compliance with all Applicable
Laws except where the failure to so comply would not individually or in the aggregate result in a Material Adverse Effect and are duly licensed, registered or qualified in all jurisdictions in which they carry on their businesses to enable them to
be carried on as now conducted and their assets to be owned, leased and operated, except where the failure to be so licensed, registered or qualified would not individually or in the aggregate result in a Material Adverse Effect and all such
licences, registrations and qualifications are valid and subsisting and in good 

  

 - 24 - 

	 	 
standing except where the failure to be so valid, subsisting and in good standing would not individually or in the aggregate result in a Material Adverse
Effect and none of the same contains any term, provision, condition or limitation that has or may have an adverse effect on the operation of its business or which may be affected by the completion of the transactions contemplated hereby.

  

	 	(c)	Attached as Schedule 3.01(12)(c) is a true and complete list of all Permits necessary or required to enable the businesses of each of Tri-Ad, 1043497, Flex-Art and C&W to
be carried on as now conducted and its assets to be owned, leased and operated. 

  

	 	(d)	Attached as Schedule 3.01(12)(d) is a true and complete list of all insurance policies maintained by each of Tri-Ad, 1043497, Flex-Art and C&W that also specifies the
insurer, the amount of the coverage, the type of insurance, the policy number and any pending claims thereunder. 

  

	 	(e)	Assuming that the Closing Date is the date of this Agreement, the aggregate value of all assets in Canada of Tri-Ad, 1043497, Flex-Art and C&W and corporations controlled by
Tri-Ad, 1043497, Flex-Art or C&W or the annual gross revenues from sales in and from Canada generated from all such assets do not exceed, in either case, $50 million as determined pursuant to subsection 110(3) of the Competition Act and Tri-Ad,
1043497, Flex-Art and C&W together with their affiliates (as defined in the Competition Act) do not have assets in Canada that exceed $50 million or annual gross revenues from sales in, from and into Canada that exceed $50 million, in
either case, as determined pursuant to section 109 of the Competition Act, provided that, for the purposes of Section 5.01(a), the assumption that the Closing Date is the date of this Agreement will not apply. 

  

	 	(f)	Each of the Vendors is a WTO investor within the meaning of the Investment Canada Act. 

  

	 	(g)	The assets owned or leased by Tri-Ad, 1043497, Flex-Art and C&W are adequate to permit the conduct of the companies’ business as it is currently being conducted and to
sustain operations at their current levels. 

  

	 	(h)	Except as set out in Schedule 3.01(4)(a), since the date of the applicable Financial Statements, none of Tri-Ad, 1043497, Flex-Art or C&W has entered into or terminated any
material contract or made any material amendment thereto. 

  

	 	(i)	Except as set forth on Schedule 3.01(12)(i) neither the execution and delivery of this Agreement by the Vendors nor the consummation of the transactions contemplated hereby
will require any consent, authorization or approval of any third party or Governmental Authority. 

  

	 	(j)	Schedule 3.01(12)(j) sets forth a complete and correct summary of the indebtedness of each of Tri-Ad, 1043497, Flex-Art and C&W for borrowed money (including any guarantees
thereof, any capital lease or any other contingent obligation with respect thereto) and of any indebtedness owed to them by their directors, officers, shareholders and employees and persons controlled (directly or indirectly) by the Vendors.

  

 - 25 - 

	 	(k)	Schedule 3.01(12)(k) sets forth a list of each bank and its address and telephone number in which each of Tri-Ad, 1043497, Flex-Art or C&W have an account (including the
account numbers) or safe deposit box or lock box and the names of the persons currently authorized to draw thereon or to have access thereto. 

  

	3.02	Purchaser’s Representations and Warranties 

 The Purchaser represents and warrants to the Vendors that: 
  

	 	(a)	The Purchaser is an unlimited liability corporation duly incorporated, organized and subsisting under the laws of Nova Scotia. 

  

	 	(b)	The Purchaser has good and sufficient power, authority and right to enter into and deliver this Agreement and to complete the transactions to be completed by the Purchaser
contemplated hereunder. 

  

	 	(c)	This Agreement constitutes a valid and legally binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms subject to applicable bankruptcy,
insolvency, reorganization and other laws of general application limiting the enforcement of creditors’ rights generally and to the fact that specific performance is an equitable remedy available only in the discretion of the court.

  

	 	(d)	Neither the entering into nor the delivery of this Agreement nor the completion of the transactions contemplated hereby by the Purchaser will result in a violation of:

  

	 	(i)	any of the provisions of the constating documents or by-laws of the Purchaser; 

  

	 	(ii)	any agreement or other instrument to which the Purchaser is a party or by which the Purchaser is bound; or 

  

	 	(iii)	any Applicable Law binding on or applicable to the Purchaser. 

  

	 	(e)	Assuming that the Closing Date is the date of this Agreement, the Purchaser together with its affiliates (as defined in the Competition Act) does not have assets in Canada that
exceed $350 million or annual gross revenues from sales in, from or into Canada that exceed $350 million, in either case, as determined pursuant to section 109 of the Competition Act, provided that, for the purposes of
Section 5.02(a), the assumption that the Closing Date is the date of this Agreement will not apply. 

  

	 	(f)	The Purchaser is a Canadian within the meaning of the Investment Canada Act. 

  

	 	(g)	The Purchaser is an Accredited Investor. 

  

 - 26 - 

 ARTICLE 4—COVENANTS 
  

	4.01	Taxes 

 (1) The Purchaser does not
assume and will not be liable for any Taxes which may be or become payable by the Vendors including any Taxes resulting from or arising as a consequence of the sale by the Vendors to the Purchaser of the Shares herein contemplated, and the Vendors
will indemnify and save harmless the Purchaser and the directors, officers, employees and agents of the Purchaser from and against all such Taxes. 
 (2) Tri-Ad, 1043497, Flex-Art and C&W will, from the date hereof until the Closing Date, withhold, any Taxes that are required by Applicable Law to be withheld and has timely paid or remitted, and will continue until the Closing
Date to pay and remit, on a timely basis, the full amount of any Taxes that have been or will be withheld, to the applicable Taxation Authority. 
 (3) Tri-Ad, 1043497, Flex-Art and C&W will, from the date hereof until the Closing Date, pay all Taxes, including any amount due on or before the Closing Date, including instalments or prepayments of Taxes, which are required to
have been paid to any Taxation Authority pursuant to Applicable Law. 
  

	4.02	Covenants of the Vendors 

 (1) Except
as otherwise contemplated by this Agreement or consented to in writing by the Purchaser, from the date of this Agreement until Closing, the Vendors will ensure that Tri-Ad, 1043497, Flex-Art and C&W will: 
  

	 	(a)	carry on their businesses in the usual and ordinary course, consistent with past practice provided all acts and proceedings taken by them in the management and operation of their
businesses involving a commitment in excess of $100,000 and/or any payment in excess of $50,000 (other than a payment of Taxes) made by either of them will be subject to the prior approval of the Purchaser, which approval will not be unreasonably
withheld; 

  

	 	(b)	use all reasonable commercial efforts to preserve intact their businesses, organization and goodwill, to keep available the employees of their businesses as a group and to maintain
satisfactory relationships with suppliers, distributors, customers and others with whom they have business relationships; 

  

	 	(c)	use all reasonable commercial efforts to cause its current insurance policies not to be cancelled or terminated or any other coverage thereunder to lapse, unless simultaneously with
such terminations, cancellation or lapse, replacement policies underwritten by insurance companies of nationally recognized standing providing coverage equal to or greater than the coverage under the cancelled, terminated or lapsed policies, and
where possible, for substantially similar premiums, are in full force and effect; 

  

	 	(d)	 promptly advise the Purchaser in writing of any Material Adverse Change in Tri-Ad, 1043497, Flex-Art or C&W (other than any change in the markets or prices for
the principal products of either of them) or of any facts that come to their 

  

 - 27 - 

	 	 
attention which would cause any of the Vendor’s representations and warranties herein contained to be untrue in any material respect; and

  

	 	(e)	maintain the books, records and accounts of Tri-Ad, 1043497, Flex-Art and C&W in the usual and ordinary course, consistent with past practice and record all transactions on a
basis consistent with that practice. 

 (2) Except as otherwise contemplated by this Agreement or consented to in
writing by the Purchaser, from the date of this Agreement until Closing, the Vendors will ensure that Tri-Ad, 1043497, Flex-Art and C&W will not: 
  

	 	(a)	make any change to the articles of incorporation or by-laws of Tri-Ad, 1043497, Flex-Art or C&W; 

  

	 	(b)	issue or sell, or grant options, warrants or rights to purchase or to subscribe for, or enter into any arrangement or contract with respect to the issuance or sale of, any of its
capital stock or securities convertible into capital stock, or make any change in its capital stock; 

  

	 	(c)	make any declaration or payment of any dividend or other distribution in respect of capital stock or redemption, purchase or other acquisition of its capital stock;

  

	 	(d)	incur any obligation or liability other than in the ordinary course of business; provided that any incurrence of indebtedness or entering into of guarantees shall not be in the
ordinary course of business; 

  

	 	(e)	mortgage, pledge or otherwise encumber any of the assets of Tri-Ad, 1043497, Flex-Art or C&W, except for the permitted encumbrances set forth on Schedule 3.01(3)(a);

  

	 	(f)	sell, transfer or dispose of assets except sales of inventory in the ordinary course of business; 

  

	 	(g)	make any investment by purchase of stock or securities, contribution to capital or otherwise; or 

  

	 	(h)	purchase property or assets other than property, plant and equipment within the amounts set forth in the capital budgets previously provided to the Purchaser.

 (3) The Vendors will ensure that the representations and warranties of the Vendors set out in Section 3.01 over
which the Vendors have reasonable control are true and correct in all material respects and for this purpose all materiality qualifications in such representations and warranties will be disregarded at the Time of Closing and that the conditions of
closing for the benefit of the Purchaser set out in Section 5.01 over which the Vendors have reasonable control have been performed or complied with in all material respects and for this purpose all materiality qualifications in such conditions
of closing shall be disregarded by the Time of Closing. 
  

 - 28 - 

	4.03	Examination of Records and Assets 

 Subject
to Applicable Law, the Vendors will forthwith cause Tri-Ad, 1043497, Flex-Art and C&W to make available to the Purchaser and its authorized representatives all data bases recorded or stored by means of any device, including in electronic form,
title documents, abstracts of title, deeds, surveys, leases, certificates of trade marks and copyrights, contracts and commitments in its possession or under its control relating to any of Tri-Ad, 1043497, Flex-Art and C&W or either of their
assets or businesses. Subject to Applicable Law, the Vendors will cause Tri-Ad, 1043497, Flex-Art and C&W to forthwith make available to the Purchaser and its authorized representatives for examination all books of account and accounting records
relating to Tri-Ad, 1043497, Flex-Art or C&W. The Vendors will cause Tri-Ad, 1043497, Flex-Art and C&W to provide copies, at the cost of the Purchaser, of the following records maintained in connection with Tri-Ad, 1043497, Flex-Art and
C&W: financial statements, records of past sales, customer lists, supplier lists, payroll records, inventory data, inventory master records and accounts receivable data. Subject to Applicable Law and to confidentiality restrictions and similar
limitations, the Vendors will cause Tri-Ad, 1043497, Flex-Art and C&W to give the Purchaser and its authorized representatives every reasonable opportunity (at the Purchaser’s expense during regular business hours and subject to reasonable
constraints to protect health and safety and minimize business disruption) to have access to and to inspect their assets; to conduct or have conducted environmental assessments; and to meet with employees of Tri-Ad, 1043497, Flex-Art and C&W to
have access to and to inspect their assets. The Purchasers will indemnify and save harmless the Vendor from any liabilities or expenses that the Vendors incur as a direct result of, or relating to the conduct of, such environmental assessments;
provided that the Vendor shall be fully liable for any environmental deficiencies, remediation or other liabilities that are uncovered by such assessments and the Purchaser shall have no liability with respect thereto. The exercise of any rights of
access or inspection by or on behalf of the Purchaser under this Section 4.03 will not affect or mitigate the covenants, representations and warranties of the Vendors in this Agreement which will continue in full force and effect. 

 

	4.04	Covenants of the Purchaser 

 (1) The
Purchaser will ensure that the representations and warranties of the Purchaser set out in Section 3.02 over which the Purchaser has reasonable control are true and correct in all material respects and for this purpose all materiality
qualifications in such representations and warranties will be disregarded at the Time of Closing and that the conditions of closing for the benefit of the Vendors set out in Section 5.02 over which the Purchaser has reasonable control have been
performed or complied with in all material respects and for this purpose all materiality qualifications in such conditions of closing shall be disregarded by the Time of Closing. 
 ARTICLE 5—CONDITIONS AND TERMINATION 
  

	5.01	Conditions for the Benefit of the Purchaser 

 The sale by the Vendors and the purchase by the Purchaser of the Shares is subject to the following conditions, which are for the exclusive benefit of the Purchaser and which are to be performed or complied with at or prior to the Time of
Closing: 
  

	 	(a)	the representations and warranties of the Vendors set forth in Section 3.01 will be true and correct in all material respects (except those qualified by materiality, which will
be true in all respects) at the Time of Closing with the same force and effect as if made at and as of such time (other than those representations and warranties that address matters as of particular dates, which will be true and correct or true and
correct in all material respects, as applicable, as at and as of such particular dates); 

  

 - 29 - 

	 	(b)	the Vendors will have performed or complied with all of the obligations and covenants and conditions of this Agreement to be performed or complied with by the Vendors at or prior to
the Time of Closing; 

  

	 	(c)	the Purchaser will have completed its due diligence review, to the satisfaction of the Purchaser in its sole discretion; 

  

	 	(d)	the Purchaser will be furnished with such certificates or other instruments of Tri-Ad, 1043497, Flex-Art and C&W and of the Vendors or of officers of Tri-Ad, 1043497, Flex-Art
and C&W and of the Vendors as the Purchaser or the Purchaser’s counsel may reasonably think necessary in order to establish that the terms, covenants and conditions contained in this Agreement to have been performed or complied with by the
Vendors at or prior to the Time of Closing have been performed or complied with and that the representations and warranties of the Vendors herein given are true and correct at the Time of Closing; 

  

	 	(e)	the Vendors will deliver to the Purchaser: (i) certificates representing the Shares, endorsed for transfer to the Purchaser; and (ii) certificates representing the shares
of Tri-Ad and the shares of Flex-Art; 

  

	 	(f)	there will have been obtained from all appropriate Governmental Authorities such approvals or consents as are required to permit the change of ownership of the Shares contemplated
hereby and to permit the businesses of Tri-Ad, 1043497, Flex-Art and C&W to be carried on as now conducted; 

  

	 	(g)	no action or proceeding will be pending or threatened by any person to enjoin, restrict or prohibit: 

  

	 	(i)	the sale and purchase of the Shares contemplated hereby; or 

  

	 	(ii)	the right of Tri-Ad, 1043497, Flex-Art and C&W to conduct their businesses; 

  

	 	(h)	no Material Adverse Change to Tri-Ad, 1043497, Flex-Art or C&W, taken as a whole, will have occurred from the date hereof to the Time of Closing (other than with respect to the
decrease in sales shown in the interim profit and loss statements through May 31, 2007 provided to the Purchaser); 

  

	 	(i)	all directors and officers (other than Mark Spurgeon, Alastair McIlwham and Alan Gatschene) of Tri-Ad, 1043497, Flex-Art and C&W specified by the Purchaser will resign effective
as of the Closing Date; 

  

 - 30 - 

	 	(j)	the Vendors and all directors of Tri-Ad, 1043497, Flex-Art and C&W will release Tri-Ad, 1043497, Flex-Art or C&W, as applicable from any and all possible Claims against
Tri-Ad, 1043497, Flex-Art or C&W, as applicable arising from any act, matter or thing (in the case of the directors, while acting in their capacity as directors) arising at or prior to the Time of Closing; 

  

	 	(k)	all necessary steps and proceedings will have been taken to permit the Shares to be duly and regularly transferred to and registered in the name of the Purchaser;

  

	 	(l)	there will be a non-competition and non-solicitation agreement (the “Non-Compete”) entered into between the Vendors, Tri-Ad, 1043497, Flex-Art and C&W and the
Purchaser substantially in the form set out in Schedule 5.01(l); 

  

	 	(m)	there will be a consulting agreement entered into between Lore Sales and Investments Limited and the Purchaser substantially in the form set out in Schedule 5.01(m);

  

	 	(n)	there will be lease agreements entered into between the Purchaser and each of the current landlords of Tri-Ad, 1043497 and C&W with respect to the Toronto facilities of Tri-Ad,
1043497 and C&W substantially in the form of lease attached as Schedule 5.01(n); 

  

	 	(o)	those employees listed on Schedule 5.01(1)(o) will have entered into employment agreements with the Purchaser in form and substance satisfactory to the Purchaser or will have
otherwise indicated, to the Purchaser’s satisfaction, their willingness to remain as employees of Tri-Ad, 1043497, Flex-Art and C&W, as applicable, following the Closing Date; 

  

	 	(p)	the Vendors will have delivered to the Purchaser an irrevocable letter of credit substantially in the form set forth in Schedule 5.01(p); 

  

	 	(q)	the Vendors will have delivered to the Purchaser a favourable opinion of the Vendors’ counsel substantially in the form set out in Schedule 5.01(q);

  

	 	(r)	all indebtedness of the officers, directors and/or shareholders of Tri-Ad, 1043497, Flex-Art and C&W to Tri-Ad, 1043497, Flex-Art and C&W will have been repaid in full;

  

	 	(s)	the form and legality of all matters incidental to the sale by the Vendors and the purchase by the Purchaser of the Shares will be subject to the approval of the Purchaser’s
counsel, acting reasonably; 

  

	 	(t)	all third party consents and approvals of Governmental Authorities shall have been obtained by the Vendors and delivered to the Purchaser; 

  

	 	(u)	all indebtedness owed by Tri-Ad, 1043497, Flex-Art and C&W to CJK Photo Engravers Limited shall have been repaid in full, and all indebtedness owed by CJK Photo Engravers
Limited to Tri-Ad, 1043497, Flex-Art and C&W shall have been repaid in full; 

  

 - 31 - 

	 	(v)	All amounts owed by 1043497, Tri-Ad, C&W and Flex-Art to any other Person controlled (directly or indirectly) by any of the Vendors shall have been paid in full, and all amounts
owed by any such controlled Person to 1043497, Tri-Ad, C&W and Flex-Art shall have been paid in full; 

  

	 	(w)	all liens on the Shares, the shares of Tri-Ad and the shares of Flex-Art and on the assets of Tri-Ad, 1043497, Flex-Art and C&W shall have been discharged;

  

	 	(x)	Tri-Ad shall have sold or otherwise disposed of its investment in J&J Scans Limited; 

  

	 	(y)	all outstanding purchase price instalment obligations payable by Tri-Ad with respect to Tri-Ad’s acquisition of the shares of Flex-Art shall have been paid in full; and

  

	 	(z)	the Vendors shall have completed the CJK Transactions. 

  

	5.02	Conditions for the Benefit of the Vendors 

 The sale by the Vendors and the purchase by the Purchaser of the Shares is subject to the following conditions, which are for the exclusive benefit of the Vendors and which are to be performed or complied with at or prior to the Time of
Closing: 
  

	 	(a)	the representations and warranties of the Purchaser set forth in Section 3.02 will be true and correct in all material respects (except those qualified by materiality, which
will be true in all respects) at the Time of Closing with the same force and effect as if made at and as of such time (other than those representations and warranties that address matters as of particular dates, which will be true and correct or
true and correct in all material respects, as applicable, as at and as of such particular dates; 

  

	 	(b)	the Purchaser will have performed or complied with all of the obligations and covenants and conditions of this Agreement to be performed or complied with by the Purchaser at or
prior to the Time of Closing; 

  

	 	(c)	the Vendors will be furnished with such certificates or other instruments of the Purchaser or of officers of the Purchaser as the Vendors or the Vendors’ counsel may reasonably
think necessary in order to establish that the obligations and covenants contained in this Agreement to have been performed or complied with by the Purchaser at or prior to the Time of Closing have been performed or complied with and that the
representations and warranties of the Purchaser herein given are true and correct at the Time of Closing; 

  

 - 32 - 

	 	(d)	the Purchase Price will have been paid in accordance with Section 2.05; 

  

	 	(e)	there will have been obtained from all appropriate Governmental Authorities such approvals or consents as are required to permit the change of ownership of the Shares contemplated
hereby; 

  

	 	(f)	the Non-Compete will be entered into between the Vendors, Tri-Ad, 1043497, Flex-Art and C&W and the Purchaser substantially in the form set out in Schedule 5.01(l);

  

	 	(g)	there will be a consulting agreement entered into between Lore Sales and Investments Limited and the Purchaser substantially in the form set out in Schedule 5.01(m);

  

	 	(h)	there will be lease agreements entered into between the Purchaser and each of the current landlords of Tri-Ad, 1043497 and C&W with respect to all current leased facilities of
Tri-Ad, 1043497 and C&W substantially in the form of lease attached as Schedule 5.01(n); and 

  

	 	(i)	the form and legality of all matters incidental to the sale by the Vendors and the purchase by the Purchaser of the Shares will be subject to the approval of Vendors’ counsel,
acting reasonably. 

  

	5.03	Waiver of Condition 

 The Purchaser, in the
case of a condition set out in Section 5.01, and the Vendors, in the case of a condition set out in Section 5.02, will have the exclusive right to waive the performance or compliance of such condition in whole or in part and on such terms
as may be agreed upon without prejudice to any of its rights in the event of non-performance of or non-compliance with any other condition in whole or in part. Any such waiver will not constitute a waiver of any other conditions in favour of the
waiving party. Such waiving party will retain the right to complete the sale and purchase of the Shares herein contemplated in respect of any breach of the other party’s covenants, obligations or any inaccuracy or misrepresentation in a
representation or warranty of the other party which gave rise to the non-performance of or non-compliance with the condition so waived. 
  

	5.04	Termination 

 This Agreement may be
terminated, by notice given prior to or at the completion of the sale and purchase of the Shares herein contemplated: 
  

	 	(a)	by the Vendors or the Purchaser if a breach of any representation, warranty, covenant, obligation or other provision of this Agreement has been committed by the other party and such
breach has not been waived; 

  

	 	(b)	by the Purchaser if any of the conditions in Section 5.01 has not been satisfied as of the Closing Date or if satisfaction of such a condition is or becomes impossible (other
than through the failure of the Purchaser to comply with its obligations under this Agreement) and the Purchaser has not waived such condition on or before the Closing Date; 

  

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	 	(c)	by the Vendors if any of the conditions in Section 5.02 has not been satisfied as of the Closing Date or if satisfaction of such a condition is or becomes impossible (other
than through the failure of the Vendors to comply with its obligations under this Agreement) and the Vendors have not waived such condition on or before the Closing Date; 

  

	 	(d)	by written agreement of the Purchaser and the Vendors; or 

  

	 	(e)	by the Vendors or the Purchaser if the completion of the sale and purchase of the Shares herein contemplated has not occurred (other than through the failure of the party seeking to
terminate this Agreement to comply fully with its obligations under this Agreement) on or before January 2, 2008 or such later date as the parties may agree upon. 

  

	5.05	Effect of Termination 

 Each party’s
right of termination under Section 5.04 is in addition to any other rights it may have under this Agreement or otherwise, and the exercise of a right of termination will not be an election of remedies. If this Agreement is terminated pursuant
to Section 5.04, all further obligations of the parties under this Agreement will terminate, except that the obligations in Section 8.04 will survive; provided, however, that if this Agreement is terminated by a party because of a breach
of a representation or warranty, covenant, obligation or other provision of this Agreement by the other party or because one or more of the conditions to the terminating party’s obligations under this Agreement is not satisfied as a result of
the other party’s failure to comply with its obligations under this Agreement, the terminating party’s right to pursue all legal remedies with respect to such breach will, subject to the limitations contained in Article 7, survive such
termination unimpaired. 
 ARTICLE 6—CLOSING ARRANGEMENTS 
  

	6.01	Closing 

 The sale and purchase of the Shares
will be completed at the offices of McCarthy Tétrault LLP, Box 48, Suite 4700, Toronto Dominion Bank Tower, Toronto, Ontario M5K 1E6 on the Closing Date, as of the Effective Time. 
  

	6.02	Deliveries and Confidentiality 

 (1)
At the Time of Closing the Vendors will deliver to the Purchaser physical possession where located of all of the documents referred to in Section 4.03 to the extent they are under the possession or control of the Vendors and not also under
the possession or control of Tri-Ad, 1043497, Flex-Art and C&W. The Purchaser will ensure that Tri-Ad, 1043497, Flex-Art and C&W preserve the documents so delivered for a period of six years from the Closing Date, or for such other period as
is required by any Applicable Law, and will permit the Vendors and their authorized representatives reasonable access thereto in connection with the affairs of the Vendors, but the Purchaser will not be responsible or liable to the Vendors for or as
a result of any non-intentional loss or destruction of or damage to any such documents. 
  

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 (2) From and after the Closing Date the Vendors will not disclose to anyone or use for any purpose
any confidential information concerning Tri-Ad, 1043497, Flex-Art or C&W and will hold all such information in the strictest confidence; provided that this Section 6.02(2) will not apply to information that: 
  

	 	(i)	is already published and readily available to the public, other than by a breach of this Section 6.02(2); 

  

	 	(ii)	is rightfully received by a Vendor from a third party (which, for the purposes of Section 6.02(2), will not include Tri-Ad, 1043497, Flex-Art or C&W, or any officer,
director, employee, agent or representative of Tri-Ad, 1043497, Flex-Art or C&W) not in breach of any obligation of confidentiality; or 

  

	 	(iii)	is provided in compliance with Applicable Law or court order pursuant to the provisions of this Section 6.02(2). 

 (3) If a Vendor is, directly or indirectly, requested pursuant to, or required by, Applicable Law or legal process to disclose any confidential
information concerning Tri-Ad, 1043497, Flex-Art or C&W, such Vendor will provide the Purchaser, to the extent not prohibited by Applicable Law, with prompt notice of such request or requirement in order to enable the Purchaser to seek an
appropriate protective order or other remedy or to waive compliance with the terms of this Agreement or both. Such Vendor will not oppose any action by the Purchaser to seek such a protective order or other remedy. If, failing the obtaining of a
protective order or other remedy by the Purchaser, such disclosure is required, such Vendor will use its commercially reasonable efforts to ensure that the disclosure will be afforded confidential treatment. 
 ARTICLE 7—INDEMNIFICATION 
  

	7.01	Survival 

 All covenants, representations and
warranties of each party contained in this Agreement will survive the Closing and will continue in full force and effect, subject to the provisions of this Article 7. 
  

	7.02	Indemnification by the Vendors 

 (1)
Subject to the provisions of this Article 7, the Vendors will indemnify and save harmless the Purchaser and the directors, officers, employees and agents of the Purchaser (collectively, the “Purchaser Indemnitees”) from and
against: 
  

	 	(a)	all Claims incurred by the Purchaser directly or indirectly resulting from any breach of any covenant of the Vendors contained in this Agreement or from any inaccuracy or
misrepresentation in any representation or warranty set forth in Section 3.01; 

  

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	 	(b)	any Taxes owing or which may become owing by 1043497, Tri-Ad, C&W or Flex-Art in respect of any period ending on or before the date of the applicable Financial Statements, in
excess of the amount of the provisions for Taxes in the balance sheet contained in the applicable Financial Statements; 

  

	 	(c)	any Taxes owing or which may become owing by 1043497, Tri-Ad, C&W or Flex-Art in respect of any period commencing after the date of the applicable Financial Statements and
ending on or prior to the Closing Date, to the extent attributable to the portion of such Tax period to and including the Closing Date, other than Taxes for which provisions have been made in the Financial Statements, Working Capital Statement or
the Net Assets Statement (but only to the extent of the amount so provided for in the Financial Statements, Working Capital Statement or Net Assets Statement, as applicable); and 

  

	 	(d)	any Pre-Existing Liabilities. 

 (2) Notwithstanding
any of the other provisions of this Agreement, but subject to Section 7.04, the Vendors will not be liable to any Purchaser Indemnitee in respect of: 
  

	 	(a)	any Claim directly or indirectly resulting from any inaccuracy or misrepresentation in: 

  

	 	(i)	any representation and warranty of the Vendors set forth in Section 3.01(11) after the expiration of the relevant limitation period contained in the Tax Act, and any other
legislation imposing Tax on 1043497, Tri-Ad, C&W or Flex-Art subsequent to the expiration of which an assessment, reassessment or other form or recognized document assessing liability for Tax for the period ended on the date of the applicable
Financial Statements cannot be issued to 1043497, Tri-Ad, C&W or Flex-Art, except if such representation and warranty proves to be false as a result of any misrepresentation made or fraud committed in filing a return or supplying information for
the purposes of the Tax Act or any other legislation imposing Tax on 1043497, Tri-Ad, C&W or Flex-Art in which case no time limit will apply; 

  

	 	(ii)	any representation of the Vendors set forth in Section 3.01(10) after 48 months from the Closing Date except in the case of fraud in which case not time limit will apply; or

  

	 	(iii)	any other representation and warranty of the Vendors set forth in Section 3.01 after 36 months from the Closing Date except in the case of fraud in which case no time limit
will apply; and 

  

	 	(b)	any inaccuracy or misrepresentation in any representation or warranty set forth in Section 3.01 unless and until the aggregate of all such Claims exceeds $25,000, and then only
to the extent that such aggregate exceeds such amount; and 

  

	 	(c)	any Claim after 36 months from the Closing Date except in the case of fraud, in which case no time limit will apply; and 

  

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	 	(d)	any Claim in excess of the amount then available under the letters of credit delivered pursuant to Section 5.01(p), other than, in all cases, any Claim attributable to an
inaccuracy or misrepresentation pertaining to Sections 3.01(1)(b) to 3.01(1)(l) inclusive, Section 3.01(10), Section 3.01(12)(b) and (c) or fraud. For greater clarity, in the event that the Purchaser brings an action in a court of
competent jurisdiction against the Vendors during the term of the letters of credit for a Claim for which a final determination of the Vendors’ indemnity obligation under this Article 7 is not made until after the expiry of the letters of
credit, the maximum amount for which the Vendors will be required to indemnify the Purchaser in respect of such Claim will be the amount available on the letters of credit (less any amount paid to the Purchaser in respect of other Claims to which
this sentence applies) at their expiry and not zero by virtue of the fact that the letters of credit had expired prior to the determination. 

  

	7.03	Indemnification by the Purchaser 

 (1)
Subject to the provisions of this Article 7, the Purchaser will indemnify collectively and save harmless the Vendors and the directors, trustees, officers, employees and agents of the Vendors (the “Vendor Indemnitees”) from and
against: 
  

	 	(a)	all Claims incurred by the Vendors directly or indirectly resulting from any breach of any covenant of the Purchaser contained in this Agreement or from any inaccuracy or
misrepresentation in any representation or warranty set forth in Section 3.02; 

 (2) Notwithstanding any of the
other provisions of this Agreement, but subject to Section 7.04, the Purchaser will not be liable to the Vendor Indemnitees in respect of: 
  

	 	(a)	any Claim after 36 months after the Closing Date, except in the case of fraud; or 

  

	 	(b)	any inaccuracy or misrepresentation in any representation or warranty set forth in Section 3.02 unless and until the aggregate of all such Claims exceeds $25,000, and then only
to the extent that such aggregate exceeds such amount; or 

  

	 	(c)	any Claim in excess of the amount then available under the letters of credit delivered pursuant to Section 5.01(p). For greater clarity, in the event that the Vendors bring an
action in a court of competent jurisdiction against the Purchaser during the term of the letters of credit for a Claim for which a final determination of the Purchaser’s indemnity obligation under this Article 7 is not made until after the
expiry of the letters of credit, the maximum amount for which the Purchaser will be required to indemnify the Vendors in respect of such Claim will be the amount equal to $2,000,000 (less any amount paid to the Vendors in respect of other Claims to
which this Section 7.03 applies) and not zero by virtue of the fact that the letters of credit had expired prior to the determination. 

  

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	7.04	Environmental Indemnity 

 (1) Except
to the extent caused, contributed or exacerbated by the Purchaser Indemnitees (including to the extent that the Purchaser’s contravention of the requirements in Sections 7.04 and 7.05 prejudices the Vendors), the Vendors will indemnify and save
harmless the Purchaser Indemnitees from and against all out-of-pocket costs and expenses related to Claims incurred by the Purchaser that arise directly or indirectly in connection with: 
  

	 	(a)	the presence of Hazardous Substances at, in, on, under or about the Toronto Lands, or which were Released or otherwise emanated from the Toronto Lands on or prior to the Closing
Date and such Hazardous Substances are required by Environmental Laws to be remediated or otherwise addressed by the Purchaser; 

  

	 	(b)	the presence of any underground storage tanks in, on or under the Toronto Lands on or prior to the Closing Date, and any Release of Hazardous Substances from such underground
storage tanks whether such Release occurs prior to, on or after the Closing Date, and such underground storage tank and/or Release are required by Environmental Laws to be remediated or otherwise addressed by the Purchaser. For the avoidance of
doubt, the indemnification under this subsection 7.04(1)(b) will not cover any Claims arising from the Purchaser’s direct disturbance of any underground storage tanks present in, on, or under the Toronto Lands on the Closing Date;

  

	 	(c)	the violation of any Environmental Laws by 1043497, C&W, Flex-Art and Tri-Ad and any of their predecessor companies on or prior to the Closing Date, including:

  

	 	(i)	the operation of the Business without a Certificate of Approval (Air) under section 9 of Ontario’s Environmental Protection Act whether such Claims arise prior to, on,
or after the Closing Date, including out-of-pocket costs that the Purchaser is required to incur in order to obtain the Certificate of Approval (Air) and in order to initially comply with the requirements of the Certificate of Approval (Air) once
such certificate is issued by the Ministry of the Environment. For the avoidance of doubt, the indemnification under this subsection 7.04(c)(i) will not include any costs associated with the Purchaser’s on-going requirements under the
Certificate of Approval (Air). 

  

	 	(ii)	the operation of the Business without a Certificate of Authorization under section 22 of Québec’s Environment Quality Act whether such Claims arise prior to, on,
or after the Closing Date, including out-of-pocket costs that the Purchaser is required to incur in order to obtain the Certificate of Authorization and in order to initially comply with the requirements of the Certificate of Authorization once such
certificate is issued by the Ministry of Sustainable Development, Environment and Parks. For the avoidance of doubt, the indemnification under this Subsection 7.04(1)(ii) will not include any costs associated with the Purchaser’s on-going
requirements under the Certificate of Authorization; 

  

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 The obligations under the indemnity in this Subsection 7.04(1) will expire four years after the Closing
Date. For the avoidance of doubt, the limitations set forth in Subsection 7.02(2) shall not apply to the Vendors’ obligations in this Section 7.04. 
 (2) Except to the extent caused, contributed or exacerbated by the Vendor Indemnitees (including to the extent that the Vendors’ contravention of the requirements in Sections 7.04 and 7.05 prejudices the
Purchaser), the Purchaser will indemnify and save harmless the Vendor Indemnitees from and against all out-of-pocket costs and expenses related to Claims incurred by the Vendors that arise directly or indirectly in connection with: 
  

	 	(a)	the Release of Hazardous Substances at, in, on, under or about the Toronto Lands after the Closing Date but prior to the later of: (i) the termination of the applicable Lease
or (ii) the cessation of use by the Purchaser of such lands under the applicable Lease, except any Release or migration of Hazardous Substances which are present at, in, under or about the Toronto Lands on or prior the Closing Date, and such
Release is required by Environmental Laws to be remediated or otherwise addressed by any of the Vendors; and 

  

	 	(b)	the violation of any Environmental Laws by 1043497, C&W, Flex-Art and Tri-Ad after the Closing Date. 

 The obligations under the indemnity in this Subsection 7.04(1) will expire four years after the Closing Date. For the avoidance of doubt, the limitations
set forth in Subsection 7.03(2) shall not apply to the Purchaser’s obligations in this Section 7.04. 
  

	7.05	Indemnification Claims 

 (1) Promptly
after the assertion by any third party of any claim, demand or notice thereof (a “Third Party Proceeding”) against any person entitled to indemnification under this Agreement (the “Indemnitee”) that results or may
result in the incurrence by such Indemnitee of any Claims for which such Indemnitee would be entitled to indemnification pursuant to this Agreement, such Indemnitee will promptly notify the party from whom such indemnification is or may be sought
(the “Indemnitor”) of such Third Party Proceeding. Such notice will also specify with reasonable detail (to the extent the information is reasonably available) the factual basis for the Third Party Proceeding, the amount claimed by
the third party, or if such amount is not then determinable, a reasonable estimate of the likely amount of the claim by the Third Party. The failure to promptly provide such notice will not relieve the Indemnitor of any obligation to indemnify the
Indemnitee, except to the extent such failure prejudices the Indemnitor. Thereupon, the Indemnitor will have the right, upon written notice (the “Defence Notice”) to the Indemnitee within 30 days after receipt by the Indemnitor of
notice of the Third Party Proceeding (or sooner if such Third Party Proceeding so requires) to conduct, at its own expense, the defence against the Third Party Proceeding in its own name or, if necessary, in the name of the Indemnitee provided that:
(a) the Indemnitor acknowledges and agrees in the Defence Notice that as between the Indemnitor and the Indemnitee, it is liable to pay for all Claims arising from or relating to such Third Party Proceeding; and (b) the Indemnitor provides
to the Indemnitee adequate security (approved by the Indemnitee acting reasonably) from time to time in respect of such Claims. The Defence Notice will specify the counsel that the Indemnitor will appoint to defend such Third Party Proceeding (the
“Defence Counsel”), and the Indemnitee will 

  

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have the right to approve the Defence Counsel, which approval will not be unreasonably withheld. Any Indemnitee will have the right to employ separate
counsel in any Third Party Proceeding and/or to participate in the defence thereof, but the fees and expenses of such counsel will not be included as part of any Claims incurred by the Indemnitee unless: (i) the Indemnitor failed to give the
Defence Notice; (ii) such Indemnitee has received an opinion of counsel, reasonably acceptable to the Indemnitor, to the effect that the interests of the Indemnitee and the Indemnitor with respect to the Third Party Proceeding are sufficiently
adverse to prohibit the representation by the same counsel of both parties under applicable ethical rules; or (iii) the employment of such counsel at the expense of the Indemnitor has been specifically authorized by the Indemnitor. The party
conducting the defence of any Third Party Proceeding will keep the other party apprised of all significant developments and will not enter into any settlement, compromise or consent to judgment with respect to such Third Party Proceeding unless the
Indemnitor and the Indemnitee consent, which consent will not be unreasonably withheld. 
 (2) Only with respect to any claims made
pursuant to the Environmental Indemnity provisions in Section 7.04 that are not Third Party Proceedings (“Direct Environmental Claims”), the Indemnitee will promptly notify the Indemnitor of the matter which forms or may form
the basis of the indemnity claim. Such notice will also specify with reasonable detail (to the extent the information is reasonably available) the factual basis for the Direct Environmental Claim, the amount claimed, or if such amount is not then
determinable, a reasonable estimate of the likely amount of the claim. For the avoidance of doubt, the failure to promptly provide such notice will not relieve the Indemnitor of any obligation to indemnify the Indemnitee, except to the extent such
failure prejudices the Indemnitor. Following receipt of notice from the Indemnitee of a Direct Environmental Claim, the Indemnitor shall have 30 days (or if the circumstances require, such shorter or longer period of time as is reasonable in such
circumstances) to investigate the Direct Environmental Claim. For the purpose of such investigation, the Indemnitee will make available to the Indemnitor the information relied upon by the Indemnitee to substantiate the Direct Environmental Claim,
together with all such other information as the Indemnitor may reasonably request and which is in the possession of the Indemnitee. 
 (3)
Section 7.04 shall only apply to any Claim that arises due to (i) a Claim against the Indemnitee by an unrelated arms length third party that is not an agent or retained by the Indemnitee and without the Indemnitee participating in any
way in actions or inactions that result in the commencement of a Claim; or (ii) a Claim that is identified by the Purchaser in the normal operations of the Business, consistent with past practice. For the avoidance of any doubt,
Section 7.04 shall not apply to any Claim that is identified by audits or other investigations by or on behalf of the Purchaser except to the extent that the audit or investigation is required by Environmental Laws or is conducted to provide
the factual basis for an existing Third-Party Environmental Claim or Direct Environmental Claim. 
 (4) The Indemnitee will at all
times act and conduct itself regarding environmental matters that may be, or are, the subject of a Direct Environmental Claim or a Third-Party Claims made pursuant to Section 7.04 (“Third-Party Environmental Claims”), including
in its dealings with any Governmental Authority, in good faith and in accordance with prudent business practices and as though the Indemnitee was not potentially the beneficiary of an indemnity under this Agreement. 
  

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 (5) The Indemnitee will provide to the Indemnitor any report, document or information (including
any report, document or information used to establish the basis for a Claim) for which the Indemnitee has paid or will be paying pursuant to Section 7.04, and the Indemnitee will ensure that to the extent that it may rely on such report,
document or information that the Indemnitor may rely on such report, document or information to the same extent as the Indemnitee. 
 (6)
The Purchaser will be required to prove that the Hazardous Substance and/or underground storage tank that forms the basis of, a Third-Party Environmental Claim, or a Direct Environmental Claim (whether such Claim is made by the Purchaser or by
the Vendors) was not Released or installed, as the case may be, after the Closing Date, provided however that the if the Purchaser proves that the Hazardous Substance and/or underground storage tank was not Released or installed after the Closing
Date, all reasonable costs and expenses, including all reasonable investigation, consulting and legal fees and disbursements, incurred by the Purchaser that prove that the Hazardous Substance and/or underground storage tank was not Released or
installed after the Closing Date will be immediately paid by the Vendors to the Purchaser. 
 (7) In the event that after implementing
the procedure set out in this Subsection 7.05, there is a dispute between the parties regarding the basis for a Third-Party Environmental Claim or a Direct Environmental Claim under Section 7.04 and the dispute relates to an engineering,
scientific or technical issue (as opposed to a legal issue), the parties, each acting reasonably, shall appoint a mutually agreed-upon third-party qualified environmental consultant (“Consultant”) to take such further action as
required to investigate the basis for the Third-Party Environmental Claim or the Direct Environmental Claim and the decision of the Consultant regarding the basis for the Third-Party Environmental Claim or the Direct Environmental Claim shall be
final and binding on the parties for the purposes of this Agreement. Without limiting the generality of the foregoing, a decision of the Consultant regarding whether a Hazardous Substance was present in, on or under the Toronto Lands on or prior to
the Closing Date or was Released after the Closing Date but prior to the termination of the Lease shall be final and binding on the parties for the purposes if this Agreement. 
 (8) In the event that both parties agree at or prior to the expiration of the investigation period (or any mutually agreed upon extension thereof)
or any other time upon the validity and final amount of: 
  

	 	(a)	a Direct Environmental Claim, the Indemnitor shall immediately pay to the Indemnitee the full agreed-upon amount of the Direct Environmental Claim in full satisfaction of the Claim
and the resolution of the Direct Environment Claim shall be final and binding on the parties for the purposes of this Agreement; 

  

	 	(b)	a Third-Party Environmental Claim, the Indemnitor shall immediately pay to the Indemnitee the full agreed-upon amount of the Third-Party Environmental Claim in full satisfaction of
the Third-Party Environmental Claim and the resolution of the Third-Party Environmental Claim shall be final and binding on the parties for the purposes of this Agreement; 

  

	 	(c)	 an underlying basis for a Third-Party Environmental Claim, the Indemnitor shall immediately pay to the Indemnitee the full agreed-upon amount of the underlying
basis for the Third-Party Environmental Claim in full satisfaction of the underlying 

  

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basis for the Third-Party Environmental Claim and the resolution of the underlying basis for the Third-Party Environmental Claim shall be final and binding
on the parties for the purposes of this Agreement. 

 For the avoidance of doubt, once a claim has been resolved for a
particular matter, no future Claim will be brought in connection with that matter. 
 (9) During the period between an Indemnitee
providing the Indemnitor notice of the Direct Environmental Claim or a Third-Party Environmental Claim (as the case may be) and final satisfaction of the Direct Environmental Claim or a Third-Party Environmental Claim (as the case may be), the
Indemnitee will inform the Indemnitor of progress in addressing the Direct Environmental Claim or the Third-Party Environmental Claim, including the underlying basis of such claim (as the case may be) at significant points and in any event, upon
request by the Indemnitee to Indemnitor. 
 (10) Unless the procedure provided for in subsection 7.05(8) applies, the Indemnitee and
the Indemnitor will agree (both acting reasonably with a view to achieving compliance in the most-cost effective, timely manner and to minimizing the exposure of both parties to Claims) on an approach (including the particular method) to address a
Direct Environmental Claim, a Third-Party Environmental Claim or the underlying basis for a Third-Party Environmental Claim (as the case may be), including a schedule for payment by the Indemnitor of costs involved in implementing this approach. If
a decision (including the continued implementation of the approved approach and method) will result or may result in a deviation from the agreed-upon approach (including the method of implementing the approach), expenditures of the greater of $5,000
or 5% more than the estimated cost for the matter, or significant delays in timing are expected or occur, the party conducting the work will seek the prior written agreement of the other party before making such a decision and the parties will
negotiate (both acting reasonably with a view to achieving compliance in the most-cost effective, timely manner and to minimizing exposure to Claims against either party) to agree upon the approach (including the particular method) to be
implemented. 
 (11) The Indemnitee and the Indemnitor will use all reasonable efforts and diligence to remedy or otherwise address
the basis for the Third-Party Environmental Claim or Direct Environmental Claim, as well as any Third-Party Environmental Claim, in the most cost-effective and timely manner and to minimize the exposure of the Indemnitee and the Indemnitor to
Claims. Without limiting the generality of the foregoing, the Purchaser will use all reasonable efforts and diligence to obtain, and to initially comply with, the Certificate of Approval referenced in Subsection 7.04(1)(c)(i) and the
Certificate of Authorization referenced in Subsection 7.04(1)(c)(ii) in the most cost-effective and timely manner and to minimize the exposure of the Vendors and the Purchaser to Claims given the circumstances at the Effective Time. 

(12) If any Direct Environmental Claim, any Third-Party Environmental Claim or the underlying basis for any Third-Party Environmental Claim may
be addressed by way of a clean-up, risk assessment, tank removal or other actions affecting or relating to the Toronto Lands, the Vendors will have the right (but not the obligation) to elect to undertake the clean-up, risk assessment, tank removal
or other actions affecting or relating to the Lands provided that (i) the Vendors give the Purchaser written notice of their election and confirm the indemnification of the Purchaser and (ii) the Vendors will limit, to the extent
commercially reasonable, the disruption to the Business from such clean-up, risk assessment, tank removal or other actions. For greater clarity, reasonable 

  

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out-of-pocket costs incurred by the Purchaser as a result of such a disruption will be covered by the indemnity in section 7.04, including without
limitation, reasonable costs associated with temporary relocation of the Business if required due to such disruptions. For the avoidance of doubt, the Vendors may use risk assessment to address any violation with Environmental Laws provided that the
use of risk assessment is not prohibited by Environmental Laws. 
 (13) The Vendors will have remedied and otherwise satisfied any
Direct Environmental Claim or the underlying basis for any Third-Party Environmental Claim if the basis for the Direct Environmental Claim or the underlying basis for any Third-Party Environmental Claim meets or satisfies either: (i) the
requirements under Environmental Laws on the Closing Date or (ii) the requirements under Environmental Laws on the date that the remediation or other work is conducted. 
  

	7.06	After Tax Basis 

 In determining the amount
of any Claim under this Article 7, such Claim will be increased (or decreased) to take into account any net Tax cost (or net current or future Tax benefit) incurred or enjoyed by the Indemnitee as a result of the matter giving rise to such Claim and
the receipt of an indemnity payment hereunder. For greater certainty, any net Tax cost will include any further cost resulting from such increased payment. 
  

	7.07	Adjustment to Purchase Price 

 All amounts
payable by the Vendors to a Purchaser Indemnitee pursuant to Article 7 will be deemed to be a decrease to the Purchase Price. All amounts payable by the Purchaser to a Vendor Indemnitee pursuant to Article 7 will be deemed to be an increase to the
Purchase Price. 
  

	7.08	Costs 

 The parties agree that the successful
party will have the right, in addition to its other rights and remedies, to request that the costs of the action will be awarded on a solicitor and client basis and the other parties agree not to object to such request. 
  

	7.09	Indemnification Claims 

 The parties agree
that, except with respect to: (i) Claims for which the Purchaser becomes liable because the Vendors cannot be found; (ii) any Claims with respect to a landlord’s or tenant’s obligations (including without limitation such
landlord’s or tenant’s obligation to indemnify against environmental claims) under any lease agreement; and (iii) any Claims arising from intentional misrepresentation or fraud, this Article 7 sets out the sole and exclusive manner by
which the Vendors and the Purchaser may seek monetary compensation from the other for any matter in respect of which such party may make a Claim under this Article 7. 
  

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 ARTICLE 8—GENERAL 
  

	8.01	Tax Matters 

  

	 	(1)	The Vendors shall duly and timely prepare all Tax Returns required to be prepared by each of Tri-Ad, 1043497, Flex-Art and C&W and shall duly and timely file all Tax Returns
required to be filed by each of them for any period which ends on or before the Closing Date and for which Tax Returns have not been filed as of such date. 

  

	 	(2)	The Purchaser shall duly and timely prepare all Tax Returns with respect to each of Tri-Ad, 1043497, Flex-Art and C&W required to be prepared by each of them and to duly and
timely file all Tax Returns required to be filed by each of them for periods beginning before and ending after the Closing Date. The Purchaser will also be responsible for preparing and filing tax returns with respect to each of Tri-Ad, 1043497,
Flex-Art and C&W required to be prepared by each of them and to duly and timely file all Tax Returns required to be filed by each of them for periods beginning and ending after the Closing Date. 

  

	 	(3)	The Vendors and the Purchaser shall co-operate fully with each other and make available to each other in a timely fashion such data and other information as may reasonably be
required for the preparation of any Tax Return of any of Tri-Ad, 1043497, Flex-Art or C&W for a period ending on or before the Closing Date or for periods beginning before and ending after the Closing Date and shall preserve such data and other
information until the expiration of any applicable limitation period under any applicable law with respect to Taxes. 

  

	 	(4)	Tax Returns required to be prepared by the Vendors for periods beginning before and ending on or before the Closing Date shall be submitted in draft form to the Purchaser at least
30 days before the date on which such Tax Returns are required by law to be filed with the relevant Governmental Authority (provided that such 30-day period may be abridged by the Vendors as necessary in order for such Tax Returns to be filed within
the time required by law). The Purchaser may request the Vendors to make reasonable changes, only to the extent such reasonable changes are consistent with past practice, to any such Tax Return by communicating such changes in writing to the Vendors
at least 15 days before the date on which such Tax Return is required by law to be filed with the relevant Governmental Authority (or such other reasonable period of time in the case where the 30-day period for the Purchaser’s review has been
abridged by the Vendors). Subject to Applicable Law, Vendor shall make, or cause to be made, such reasonable changes that are consistent with past practice by the Purchaser and shall file any such Tax Return on or before the date on which it is
required by law to be filed with the relevant Governmental Authority. Notwithstanding any other provision of this agreement, the Vendors will not be required to indemnify the Purchaser in respect of any Taxes in respect of any changes requested to
be made by the Purchaser unless such requested changes are required by the Tax Act or any regulations promulgated thereunder. 

  

 - 44 - 

	 	(5)	Tax Returns required to be prepared by the Purchaser for periods beginning before and ending after the Closing Date shall be submitted in draft form to the Vendors at least 30 days
before the date on which such Tax Returns are required by law to be filed with the relevant Governmental Authority (provided that such 30-day period may be abridged by the Purchaser as necessary in order for such Tax Returns to be filed within the
time required by law). 

  

	 	(6)	Neither the Purchaser nor any of its affiliates shall, without the prior written consent of the Vendors, which consent shall not be unreasonably withheld: (i) make or change
any election in respect of Taxes affecting any pre-Closing taxation year or period or any taxation year or period beginning before and ending after the Closing Date of any of Tri-Ad, 1043497, Flex-Art or C&W; (ii) amend, refile or otherwise
modify any Tax Return relating to any pre-Closing taxation year or period or any taxation year or period beginning before and ending after the Closing Date; or (iii) take any action that results, or could reasonably be expected to result, in
any increased Tax liability (including a reduction in a refund) of any of Tri-Ad, 1043497, Flex-Art or C&W in respect of any pre-Closing taxation year or period or any taxation year or period beginning and ending after the Closing Date.

  

	 	(7)	If a refund of Taxes that is not reflected on the applicable balance sheet is received by or credited to the account of any of Tri-Ad, 1043497, Flex-Art or C&W in respect of any
taxation year or period ending on or prior to the Closing Date or, in the case of any taxation year or period beginning before and ending after the Closing Date, in respect of the portion of such period beginning before and ending on the Closing
Date, Tri-Ad, 1043497, Flex-Art or C&W, as applicable, shall be entitled to receive such refund and shall pay the amount of any such refund to the Vendors. 

  

	8.02	Further Assurances 

 Each of the Vendors and
the Purchaser will from time to time execute and deliver all such further documents and instruments and do all acts and things as the other party may, either before or after the Closing Date, reasonably require to effectively carry out or better
evidence or perfect the full intent and meaning of this Agreement. 
 Without limiting the generality of the preceding sentence, the Vendors
acknowledge that the Purchaser’s parent corporation, SGS International, Inc., will be required by the rules of the United States Securities and Exchange Commission (the “SEC”) to provide to, and disclose in publicly available filings
with, the SEC audited financial statements with respect to 1043497, Tri-Ad, C&W and Flex-Art for periods preceding the Purchaser’s ownership of such entities, and the Vendors shall cooperate fully with the Purchaser and its representatives
and shall make available to the Purchaser and its representatives in a timely fashion such data and other information as may reasonably be required by SGS International, Inc. for the preparation of such audited financial statements, and the Vendors
shall undertake commercially reasonable efforts to cause its auditors and accountants to cooperate fully with the Purchaser and its representative and make available such data and information. 
  

 - 45 - 

	8.03	Time of the Essence 

 Time is of the essence
of this Agreement. 
  

	8.04	Fees and Commissions 

 Each of the Vendors
and the Purchaser will pay its respective legal and accounting costs and expenses incurred in connection with the preparation, execution and delivery of this Agreement and all documents and instruments executed pursuant to this Agreement and any
other costs and expenses whatsoever and howsoever incurred and will indemnify and save harmless the other from and against any Claim for any broker’s, finder’s or placement fee or commission alleged to have been incurred as a result of any
action by it in connection with the transactions under this Agreement. 
  

	8.05	Public Announcements 

 Except as required by
law, no public announcement or press release concerning the sale and purchase of the Shares may be made by either of the Vendors or the Purchaser without the prior consent and joint approval of the Vendors and the Purchaser, which shall not be
unreasonably withheld. Without limiting the generality of the preceding sentence, the Vendors acknowledge that the Purchaser’s parent corporation, SGS International, Inc., will be required by the rules of the United States Securities and
Exchange Commission (the “SEC”) to disclose in publicly available filings with the SEC this Agreement, details regarding the transactions contemplated by this Agreement and historical and pro forma financial information with respect
to 1043497, Tri-Ad, C&W and Flex-Art, and consent to such disclosures. 
  

	8.06	Benefit of the Agreement 

 This Agreement
will enure to the benefit of and be binding upon the respective heirs, executors, administrators, other legal representatives, successors and permitted assigns of the parties hereto. 
  

	8.07	Entire Agreement 

 This Agreement constitutes
the entire agreement between the parties hereto with respect to the subject matter hereof and cancels and supersedes any prior understandings and agreements between the parties hereto with respect thereto. There are no representations, warranties,
terms, conditions, undertakings or collateral agreements, express, implied or statutory, between the parties other than as expressly set forth in this Agreement. 
  

	8.08	Amendments and Waivers 

 No amendment to this
Agreement will be valid or binding unless set forth in writing and duly executed by both of the parties hereto. No waiver of any breach of any provision of this Agreement will be effective or binding unless made in writing and signed by the party
purporting to give the same and, unless otherwise provided, will be limited to the specific breach waived. 
  

 - 46 - 

	8.09	Assignment 

 This Agreement may not be
assigned by any of the Vendors without the written consent of the Purchaser but (x) this Agreement may be assigned by the Purchaser without the consent of the Vendors to an Affiliate of the Purchaser and (y) the Purchaser (or any Affiliate
of the Purchaser pursuant to an assignment described in the preceding clause (x)) may assign any of its rights, but not its obligations, hereunder to any of its lenders, including any agent, successor or assign of such lenders, without the consent
of the Vendors. 
  

	8.10	Notices 

 Any demand, notice or other
communication to be given in connection with this Agreement must be given in writing and will be given by personal delivery, by registered mail or by electronic means of communication addressed to the recipient as follows: 
  

			
	To the Vendors:
	
	Janko Herak
	2095 Lakeshore Blvd. West, PH 15
	Toronto, Ontario
	M8V 4G4
	
	To the Purchaser:
	
	c/o SGS International Inc.
	626 West Main Street, Suite 500
	Louisville, Kentucky
	40202
	USA
		
	Fax No.:	  	(502) 634-5298
		
	Attention:	  	President

 or to such other street address, individual or electronic communication number or address as may be designated by
notice given by either party to the other. Any demand, notice or other communication given by internationally recognized courier or personal delivery will be conclusively deemed to have been given on the day of actual delivery thereof and, if given
by registered mail, on the third Business Day following the deposit thereof in the mail and, if given by electronic communication, on the day of transmittal thereof if given during the normal business hours of the recipient and on the Business Day
during which such normal business hours next occur if not given during such hours on any day. 
  

 - 47 - 

	8.11	No Third Party Beneficiaries 

 Except as
provided in Section 8.06, this Agreement is solely for the benefit of: 
  

	 	(a)	the Vendors, and each of their heirs, executors, administrators, other legal representatives, successors and permitted assigns, with respect to the obligations of the Purchaser
under this Agreement; and 

  

	 	(b)	the Purchaser and its successors and permitted assigns, with respect to the obligations of the Vendors under this Agreement; 

 and this Agreement will not be deemed to confer upon or give to any other person any remedy, claim, liability, reimbursement, cause of action or other right. The Vendors
appoint the Purchaser as the trustee for the Purchaser’s directors, officers, employees and agents of the covenants of indemnification of the Vendors with respect to such persons as specified in this Agreement and the Purchaser accepts such
appointment. 
  

	8.12	Governing Law 

 This Agreement is governed by
and will be construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. 
  

	8.13	Attornment 

 For the purpose of all legal
proceedings this Agreement will be deemed to have been performed in the Province of Ontario and the courts of the Province of Ontario will have jurisdiction to entertain any action arising under this Agreement. The Vendors and the Purchaser each
attorns to the jurisdiction of the courts of the Province of Ontario. 
  

	8.14	Counterparts 

 This Agreement may be executed
in any number of counterparts, each of which will be deemed to be an original and all of which taken together will be deemed to constitute one and the same instrument. 
  

 - 48 - 

	8.15	Facsimiles 

 Delivery of an executed
signature page to this Agreement by any party by electronic transmission will be as effective as delivery of a manually executed copy of this Agreement by such party. 
 IN WITNESS WHEREOF the parties have executed this Agreement. 
  

							
		 		 	SOUTHERN GRAPHIC SYSTEMS-CANADA, CO./SYSTEMES GRAPHIQUES SOUTHERN-CANADA, CO.
				
		 		 	Per:	 	/s/ Luca C. Naccarto
		 		 	Name:	 	Luca C. Naccarto
		 		 	Title:	 	
				
	SIGNED, SEALED AND DELIVERED in the presence of:	 		 	)	 	
		 		 	)	 	
	/s/ Adam S. Armstrong	 		 	)	 	/s/ Janko Herak
	Witness	 		 	)	 	Janko Herak
		 		 	)	 	
	/s/ Adam S. Armstrong	 		 	)	 	/s/ Adrianne Herak
	Witness	 		 	)	 	Adrianne Herak
			
		 		 	ADRIANNE HERAK TRUST
				
		 		 	Per:	 	/s/ Janko Herak
		 		 	Name:	 	Janko Herak
		 		 	Title:	 	
			
		 		 	C. J. K. PHOTO ENGRAVERS LIMITED
				
		 		 	Per:	 	/s/ Janko Herak
		 		 	Name:	 	Janko Herak
		 		 	Title:	 	

  

 - 49 -Loan Agreement related to the acquisition of Nashville Flex Portfolio

 Exhibit 10.188 
  

 LOAN AGREEMENT 
 (Non-Revolving) 
 BETWEEN 
 KBS NASHVILLE INDUSTRIAL PORTFOLIO I, LLC, 
 a Delaware limited liability company,

 AS BORROWER, 
 AND

 WELLS FARGO BANK, NATIONAL ASSOCIATION, 
 AS LENDER 
 Dated as of November 15, 2007 
 Loan No. 105267 
  

 TABLE OF CONTENTS 
  

									
	 	 	 	 	 	  	 	  	Page
	 ARTICLE I DEFINITIONS
	  	1
		 	 1.1
	 	Certain Defined Terms.	  	1
		 	 1.2
	 	Computation of Time Periods.	  	11
		 	 1.3
	 	Terms.	  	11
		
	 ARTICLE II THE LOAN
	  	12
		 	 2.1
	 	Loan Disbursements and Repayment.	  	12
		 		 	 (a)
	  	Disbursement.	  	12
		 		 	 (b)
	  	General.	  	12
		 		 	 (c)
	  	Term.	  	12
		 		 	 (d)
	  	Borrower Representatives.	  	12
		 	 2.2
	 	Fees; Expenses.	  	13
		 		 	 (a)
	  	Fees and Expenses.	  	13
		 		 	 (b)
	  	Payment of Fees.	  	13
		 	 2.3
	 	Interest on the Loan.	  	13
		 	 2.4
	 	Payments.	  	13
		 		 	 (a)
	  	Voluntary Prepayments.	  	13
		 		 	 (b)
	  	Credit for Payments.	  	13
		 		 	 (c)
	  	Payments on Non-Business Days.	  	14
		 		 	 (d)
	  	Exit Fee.	  	14
		 	 2.5
	 	Increased Capital.	  	14
		 	 2.6
	 	Notice of Increased Costs.	  	15
		 	 2.7
	 	Full Repayment and Reconveyance or Release.	  	15
		 	 2.8
	 	Partial Reconveyance of Parcels.	  	15
		
	 ARTICLE III PROPERTY REQUIREMENTS AND REPRESENTATIONS
	  	15
		 	 3.1
	 	Representations Regarding the Property.	  	15
		 	 3.2
	 	Appraisals.	  	17
		 	 3.3
	 	Covenants Relating to the Property.	  	17
		 		 	 (a)
	  	Insurance, Casualty.	  	17
		 		 	 (b)
	  	Leases; Lease Approval; Lease Termination.	  	18
		 		 	 (c)
	  	SNDAs.	  	20
		 		 	 (d)
	  	Major Agreements; Property Management Agreements.	  	20
		 		 	 (e)
	  	Major Construction.	  	20
		 		 	 (f)
	  	Property Taxes.	  	21
		 		 	 (g)
	  	Security Instrument.	  	21
		 		 	 (h)
	  	Survey.	  	21
		
	 ARTICLE IV DISBURSEMENT
	  	21
		 	 4.1
	 	Conditions to Disbursement.	  	21
		 		 	 (a)
	  	Loan Documents.	  	21
		 		 	 (b)
	  	Property Documents.	  	22
		 		 	 (c)
	  	Organizational Documents.	  	22

  

 i 

									
		 		 	(d)	  	Fixed Rate Notice.	  	23
		 		 	 (e)
	  	Solvency.	  	23
		 		 	 (f)
	  	Material Adverse Changes.	  	23
		 		 	 (g)
	  	Litigation Proceedings.	  	23
		 		 	 (h)
	  	Perfection of Liens.	  	23
		 		 	 (i)
	  	Indefeasible Title.	  	23
		 		 	 (j)
	  	No Event of Default.	  	23
		 		 	 (k)
	  	Fees and Expenses.	  	24
		 		 	 (l)
	  	Opinions of Counsel.	  	24
		 		 	 (m)
	  	Consents and Approvals.	  	24
		 		 	 (n)
	  	Insurance.	  	24
		 		 	 (o)
	  	Due Diligence.	  	24
		 		 	 (p)
	  	Representations and Warranties.	  	24
		 	 4.2
	 	Intentionally Omitted.	  	24
		 	 4.3
	 	Funds Transfer Disbursements.	  	24
		
	 ARTICLE V REPRESENTATIONS AND WARRANTIES
	  	25
		 	 5.1
	 	Organization; Corporate Powers.	  	26
		 	 5.2
	 	Authority.	  	26
		 	 5.3
	 	Ownership of Borrower.	  	26
		 	 5.4
	 	No Conflict.	  	26
		 	 5.5
	 	Consents and Authorizations.	  	27
		 	 5.6
	 	Governmental Regulation.	  	27
		 	 5.7
	 	Prior Financials.	  	27
		 	 5.8
	 	Financial Statements; Projections and Forecasts.	  	27
		 	 5.9
	 	Prior Operating Statements.	  	27
		 	 5.10
	 	Operating Statements and Projections.	  	28
		 	 5.11
	 	Litigation; Adverse Effects.	  	28
		 	 5.12
	 	No Material Adverse Change.	  	28
		 	 5.13
	 	Payment of Taxes.	  	28
		 	 5.14
	 	Material Adverse Agreements.	  	29
		 	 5.15
	 	Performance.	  	29
		 	 5.16
	 	Federal Reserve Regulations.	  	29
		 	 5.17
	 	Disclosure.	  	29
		 	 5.18
	 	Requirements of Law; ERISA.	  	29
		 	 5.19
	 	Environmental Matters.	  	30
		 	 5.20
	 	Major Agreements; Leases.	  	30
		 	 5.21
	 	Solvency.	  	31
		 	 5.22
	 	Title to Property; No Liens.	  	31
		 	 5.23
	 	Use of Proceeds.	  	31
		 	 5.24
	 	Property Management Agreements.	  	31
		 	 5.25
	 	Single Purpose Entity.	  	31
		 	 5.26
	 	Tax Shelter Regulations.	  	31
		 	 5.27
	 	Organizational Documents.	  	32
		
	 ARTICLE VI REPORTING COVENANTS
	  	32
		 	 6.1
	 	Financial Statements and Other Financial and Operating Information (Borrower).	  	32

  

 ii 

									
		 		 	(a)	  	Operating Statements and Operating Results.	  	32
		 		 	 (b)
	  	Quarterly Financial Statements.	  	32
		 		 	 (c)
	  	Borrower’s Certificate.	  	33
		 		 	 (d)
	  	Budgets.	  	33
		 		 	 (e)
	  	Knowledge of Event of Default.	  	34
		 		 	 (f)
	  	Litigation, Arbitration or Government Investigation.	  	34
		 		 	 (g)
	  	ERISA Matters.	  	34
		 		 	 (h)
	  	Other Information.	  	34
		 		 	 (i)
	  	Accountant Reports.	  	35
		 	 6.2
	 	Financial Statements and Other Financial and Operating Information (KBS REIT).	  	35
		 		 	 (a)
	  	Quarterly Financial Statements.	  	35
		 		 	 (b)
	  	Additional Reporting.	  	35
		 	 6.3
	 	Environmental Notices.	  	35
		 	 6.4
	 	Confidentiality.	  	36
		
	 ARTICLE VII AFFIRMATIVE COVENANTS
	  	36
		 	 7.1
	 	Existence.	  	36
		 	 7.2
	 	Qualification, Name.	  	36
		 	 7.3
	 	Compliance with Laws, Etc.	  	37
		 	 7.4
	 	Payment of Taxes and Claims.	  	37
		 	 7.5
	 	Maintenance of Property; Insurance.	  	37
		 	 7.6
	 	Inspection of Property; Books and Records; Discussions.	  	37
		 	 7.7
	 	Maintenance of Permits, Etc.	  	38
		 	 7.8
	 	Single Purpose Entity.	  	38
		 	 7.9
	 	Subordination of Property Management Agreements.	  	38
		 	 7.10
	 	SNDAs.	  	38
		 	 7.11
	 	KBS REIT Covenants.	  	38
		 	 7.12
	 	Property Condition.	  	38
		 		 	 (a)
	  	Thirty Day Work.	  	38
		 		 	 (b)
	  	Sixty Day Work.	  	38
		 		 	 (c)
	  	Ninety Day Work.	  	38
		
	 ARTICLE VIII NEGATIVE COVENANTS
	  	39
		 	 8.1
	 	Operating Restrictions:	  	39
		 		 	 (a)
	  	Indebtedness; Liens.	  	39
		 		 	 (b)
	  	Transfers of Collateral.	  	39
		 		 	 (c)
	  	Restrictions on Fundamental Changes.	  	39
		 		 	 (d)
	  	Loans to Other Persons; Investments.	  	39
		 	 8.2
	 	Amendment of Constituent Documents.	  	40
		 	 8.3
	 	Margin Regulations.	  	40
		 	 8.4
	 	Ownership; Management.	  	40
		 		 	 (a)
	  	Ownership of Borrower.	  	40
		 		 	 (b)
	  	Management.	  	40
		
	 ARTICLE IX FINANCIAL COVENANT
	  	40
		 	 9.1
	 	Distributions.	  	40
		 	 9.2
	 	Incurrence of Additional Indebtedness.	  	41

  

 iii 

									
	ARTICLE X EVENTS OF DEFAULT; RIGHTS AND REMEDIES	  	41
		 	 10.1
	 	Events of Default.	  	41
		 		 	 (a)
	  	Failure to Make Payments When Due.	  	41
		 		 	 (b)
	  	Distributions; Additional Indebtedness.	  	41
		 		 	 (c)
	  	Other Defaults.	  	41
		 		 	 (d)
	  	Breach of Representation or Warranty.	  	42
		 		 	 (e)
	  	Involuntary Bankruptcy; Appointment of Receiver, Etc.	  	42
		 		 	 (f)
	  	Voluntary Bankruptcy; Appointment of Receiver, Etc.	  	42
		 		 	 (g)
	  	Judgments and Attachments.	  	43
		 		 	 (h)
	  	Dissolution.	  	43
		 		 	 (i)
	  	Loan Documents; Failure of Security.	  	43
		 		 	 (j)
	  	ERISA Liabilities.	  	43
		 		 	 (k)
	  	Environmental Liabilities.	  	43
		 		 	 (l)
	  	Solvency; Material Adverse Change.	  	43
		 		 	 (m)
	  	Interest Rate Management Agreement.	  	44
		 		 	 (n)
	  	Default under any Other Security Instrument.	  	44
		 		 	 (o)
	  	KBS REIT Covenant Compliance.	  	44
		 	 10.2
	 	Rights and Remedies.	  	44
		 		 	 (a)
	  	Acceleration, Etc.	  	44
		 		 	 (b)
	  	Access to Information.	  	45
		 		 	 (c)
	  	Use of Intangibles.	  	45
		 		 	 (d)
	  	Waiver of Demand.	  	45
		 		 	 (e)
	  	Waivers, Amendments and Remedies.	  	45
		 	 10.3
	 	Permitted REIT Distributions.	  	46
		
	 ARTICLE XI MISCELLANEOUS
	  	46
		 	 11.1
	 	Expenses.	  	46
		 		 	 (a)
	  	Generally.	  	46
		 		 	 (b)
	  	After Event of Default.	  	47
		 	 11.2
	 	Indemnity.	  	47
		 	 11.3
	 	Change in Accounting Principles.	  	47
		 	 11.4
	 	Amendments and Waivers.	  	48
		 	 11.5
	 	Independence of Covenants.	  	48
		 	 11.6
	 	Notices and Delivery.	  	48
		 	 11.7
	 	Survival of Warranties, Indemnities and Agreements.	  	49
		 	 11.8
	 	Failure or Indulgence Not Waiver; Remedies Cumulative.	  	49
		 	 11.9
	 	Marshalling; Payments Set Aside.	  	49
		 	 11.10
	 	Severability.	  	49
		 	 11.11
	 	Headings.	  	49
		 	 11.12
	 	Governing Law; Waiver.	  	50
		 	 11.13
	 	Limitation of Liability.	  	50
		 	 11.14
	 	Successors and Assigns.	  	50
		 	 11.15
	 	Consent to Jurisdiction and Service of Process; Waiver of Jury Trial.	  	50
		 	 11.16
	 	Counterparts; Effectiveness; Inconsistencies.	  	51
		 	 11.17
	 	Performance of Obligations.	  	51
		 	 11.18
	 	Construction.	  	51

  

 iv 

									
		 	11.19	 	Entire Agreement.	  	51
		 	 11.20
	 	Assignments and Participations.	  	52
		 	 11.21
	 	Limitation on Personal Liability of Shareholders, Partners and Members.	  	53
		 	 11.22
	 	Cross-Default; Cross-Collateralization.	  	53
		 	 11.23
	 	USA Patriot Act Notice, Compliance.	  	54
		 	 11.24
	 	Electronic Document Deliveries.	  	54

  

					
	 LIST OF EXHIBITS AND SCHEDULES

	
	 Exhibits:

			
	 A
	  	-  	  	Property Description
	 B
	  	-  	  	Form of Subordination Agreement; Acknowledgment of Lease Assignment, Estoppel, Attornment and Non-Disturbance Agreement
	 C-1
	  	-  	  	Form of Borrower Certificate
	 C-2
	  	-  	  	Form of KBS REIT Compliance Certificate
	 D
	  	-  	  	Transfer Authorizer Designation
	 E
	  	-  	  	Form of Modification of Security Instrument
	 F
	  	-  	  	KBS REIT Covenants
	
	 Schedules:

			
	 2.2(a)
	  		  	Fees and Expenses
	 2.8
	  		  	Partial Reconveyance of Parcels
	 5.3
	  		  	Ownership of Borrower
	 5.11
	  		  	Litigation Disclosure
	 5.19
	  		  	Environmental Reports
	 5.24
	  		  	Property Management and Leasing Agreements
	 7.12(a)
	  		  	Work To Be Performed Within 30 Days
	 7.12(b)
	  		  	Work To Be Performed Within 60 Days
	 7.12(c)
	  		  	Work To Be Performed Within 90 Days
	 11.22
	  		  	Schedule of Loans and Properties

  

 v 

 LOAN AGREEMENT 
 THIS LOAN AGREEMENT is dated as of November 15, 2007 (as amended, supplemented or modified from time to time, the “Agreement”) and is between KBS NASHVILLE INDUSTRIAL PORTFOLIO I, LLC, a Delaware
limited liability company (“Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”). 
 RECITALS 
 WHEREAS, Borrower has requested that Lender provide Borrower with a loan facility in the principal amount
of Thirty-Two Million, Four Hundred Thirty Thousand Dollars ($32,430,000), to be secured by an approximately 551,184 square foot distribution/office/flex buildings (six (6) total buildings) to be acquired by Borrower concurrently herewith (the
“Property”), as more particularly described on Exhibit A hereto; and 
 WHEREAS, Lender is willing to make the
requested facility available to Borrower, to finance Borrower’s acquisition of the Property, on the terms and conditions set forth herein. 
 NOW, THEREFORE, the parties hereto agree as follows: 
 ARTICLE I 
 DEFINITIONS 
 1.1 Certain Defined Terms. 
 The following terms used in this Agreement shall have the following meanings (such meanings to be applicable, except to the extent otherwise indicated in
a definition of a particular term, both to the singular and the plural forms of the terms defined): 
 “Accommodation
Obligations”, as applied to any Person, means (a) any Indebtedness of another Person in respect of which that Person is liable, including, without limitation, any such Indebtedness directly or indirectly guaranteed, endorsed (otherwise
than for collection or deposit in the ordinary course of business), co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable including in respect of any partnership in
which that Person is a general partner; and (b) any Contractual Obligations (contingent or otherwise) of such Person arising through any agreement to purchase, repurchase or otherwise acquire such Indebtedness or any security therefor, or to
provide funds for the payment or discharge thereof (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain solvency, assets, level of income, or other financial condition, or to make payment
other than for value received. 
 “Accountants” means any “big four” accounting firm or another firm of certified
public accountants of national standing, if any, selected by Borrower and acceptable to Lender. 
 “Acquisition Cost” shall
mean, as to the Property, the Purchase Price of the Property, plus all costs and expenses incurred by Borrower in connection with its acquisition of the Property and all adjustments to the Purchase Price required under the terms of the purchase
agreement entered into by Borrower in connection with the acquisition of the Property. 
  

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 “Affiliates” as applied to any Person, means any other Person directly or indirectly
controlling, controlled by, or under common control with, that Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common
control with”), as applied to any Person, means (a) the possession, directly or indirectly, of the power to vote ten percent (10%) or more of all interests having voting power for the election of directors of such Person or otherwise
to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting interests or by contract or otherwise, or (b) the ownership of a general partnership interest or a limited partnership
interest (or other ownership interest) representing ten percent (10%) or more of the outstanding limited partnership interests or other ownership interests of such Person. 
 “Allocated Share” means at any time, and from time to time, an amount expressed as a percentage that is calculated by dividing the cost
basis of the Property by the cost basis of all real property owned directly or indirectly by KBS REIT or the REIT Operating Partnership. 
 “Appraisal” means a written appraisal prepared by an independent MAI appraiser acceptable to Lender and subject to Lender’s customary independent appraisal requirements and prepared in compliance with all applicable
regulatory requirements, including FIRREA. 
 “Appraised Value” means, with respect to the property being appraised, the
fair market value, on an “as-is” basis, as reflected in the then most recent Appraisal of the Property, as adjusted, if applicable, by Lender based upon its internal review of such Appraisal. 
 “Benefit Plan” means any employee pension benefit plan as defined in Section 3(2) of ERISA (other than a Multiemployer Plan) in
respect of which a Person or an ERISA Affiliate is, or within the immediately preceding five (5) years was, an “employer” as defined in Section 3(5) of ERISA. 
 “Borrower’s Certificate” means a certificate, certifying as to the matters set forth therein, signed on behalf of the Borrower by
an authorized signatory having primary responsibility with respect to the matters set forth therein. 
 “Borrower’s
Account” means Account No. 4121633416 of Borrower with Lender into which a portion of the loan funds shall be deposited in accordance with this Agreement. 
 “Business Day” means (a) with respect to the selection of a Fixed Rate under and as defined in the Note, payment or rate determination of LIBO under the Note, a day, other than a Saturday or
Sunday, on which Lender is open for business in San Francisco and on which dealings in Dollars are carried on in the London interbank market, and (b) for all other purposes any day excluding Saturday, Sunday and any day which is a legal holiday
under the laws of the State of California, or is a day on which banking institutions located in California are required or authorized by law or other governmental action to close. 
  

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 “Capital Leases”, as applied to any Person, means any lease of any property (whether
real, personal or mixed) by that Person as lessee which, in conformity with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person. 
 “Closing Date” means the date on which the initial advance of proceeds of the Loan are disbursed. 
 “Collateral” means the personal property constituting a part of the Subject Property (as defined in the Security Instrument). 
 “Compliance Ratio” means the ratio (expressed as a percentage) of (a) the Loan Commitment to (b) the lesser of (i) the Appraised Value of the Property and (ii) the
Acquisition Cost of the Property. 
 “Concessions” shall mean all above-market amounts paid or foregone by Borrower directly
to or on behalf of any tenant for the purpose of inducing such tenant to enter into a lease, including, without limitation, tenant improvement allowances, moving expenses, free rent periods or abatements, and/or assumptions or buyouts of the
tenant’s obligations under other leases. (The term “above-market” shall be understood to mean amounts in excess of those assumed in the then most recent Appraisal.) Lender shall have the right to adjust any Concessions based, in part
and as applicable, upon assumptions set forth in the then most current Appraisal. All Concessions shall be amortized over the full lease term. 
 “Contaminant” means any pollutant (as that term is defined in 42 U.S.C. 9601(33)) or toxic pollutant (as that term is defined in 33 U.S.C. 1362(13)), hazardous substance (as that term is defined in 42 U.S.C. 9601(14)),
hazardous chemical (as that term is defined by 29 CFR Section 1910.1200(c)), toxic substance, hazardous waste (as that term is defined in 42 U.S.C. 6903(5)), radioactive material, special waste, petroleum (including crude oil or any
petroleum-derived substance, waste, or breakdown or decomposition product thereof), any constituent of any such substance or waste, including, but not limited to, polychlorinated biphenyls and asbestos, or any other substance or waste deleterious to
the environment the release, disposal or remediation of which is now or at any time becomes subject to regulation under any Environmental Law, along with all “Hazardous Materials” as such term is defined in the Environmental Indemnity
Agreement executed by Borrower concurrently herewith. 
 “Contractual Obligation”, as applied to any Person, means any
provision of any securities issued by that Person or any indenture, mortgage, lease, contract, undertaking, document or instrument to which that Person is a party or by which it or any of its properties is bound, or to which it or any of its
properties is subject (including, without limitation, any restrictive covenant affecting such Person or any of its properties). 
 “Court Order” means any judgment, writ, injunction, decree, rule or regulation of any court or Governmental Authority binding upon or applicable the Person in question. 
 “Distributions”, with respect to Borrower, means any distribution of money to any equity owner or Affiliate of Borrower, whether in the
form of earnings, income or other 

  

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proceeds, repayment of any principal or interest on any loan or other advance made to Borrower by any such equity owner or Affiliate, or any loan or advance
by Borrower of any funds to any such equity owner or Affiliate. 
 “DOL” means the United States Department of Labor and any
successor department or agency. 
 “Dollars” and “$” means the lawful money of the United States of America.

 “Environmental Laws” has the meaning set forth in Section 5.19. 
 “Environmental Lien” means a Lien in favor of any Governmental Authority for (a) any liability under Environmental Laws, or
(b) damages arising from, or costs incurred by such Governmental Authority in response to, a Release or threatened Release of a Contaminant into the environment. 
 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute. 
 “ERISA Affiliate” means, as to any Person, any (a) corporation which is, becomes, or is deemed to be a member of the same
controlled group of corporations (within the meaning of Section 414(b) of the Internal Revenue Code) as such Person, (b) partnership, trade or business (whether or not incorporated) which is, becomes or is deemed to be under common control
(within the meaning of Section 414(c) of the Internal Revenue Code) with such Person, (c) other Person that is, becomes or is deemed to be a member of the same “affiliated service group” (as defined in Section 414(m) of the
Internal Revenue Code) as such Person, or (d) any other organization or arrangement described in Section 414(o) of the Internal Revenue Code which is, becomes or is deemed to be required to be aggregated pursuant to regulations issued
under Section 414(o) of the Internal Revenue Code with such Person pursuant to Section 414(o) of the Internal Revenue Code. 
 “Event of Default” means any of the occurrences set forth in Article X after the expiration of any applicable grace period expressly provided therein. 
 “Federal Reserve Board” means the Board of Governors of the Federal Reserve System or any governmental authority succeeding to its
functions. 
 “Financial Statements” has the meaning given to such term in Section 6.1(b). 
 “FIRREA” means the Financial Institutions Recovery, Reform and Enforcement Act of 1989, as amended from time to time. 
 “Fiscal Quarter” means each three month period ending on March 31, June 30, September 30 and December 31.

 “Fiscal Year” means the fiscal year of Borrower, which shall be the twelve (12) month period ending on the last day
of December in each year. 
  

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 “GAAP” means generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board, or in such other statements by such other entity as may be in
general use by significant segments of the accounting profession, which are applicable to the circumstances as of the date of determination. 
 “Governmental Authority” means any nation or government, any federal, state, local, municipal or other political subdivision thereof or any entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government. 
 “Indebtedness”, as applied to any Person (and without duplication), means
(a) the principal amount of all indebtedness of such Person for borrowed money, whether or not subordinated and whether with or without recourse beyond any collateral security, (b) the principal amount of all indebtedness of such Person
evidenced by securities or other similar instruments, (c) all reimbursement obligations and other liabilities of such Person with respect to letters of credit or banker’s acceptances issued for such Person’s account, (d) all
obligations of such Person to pay the deferred purchase price of property or services, (e) all obligations in respect of both operating and Capital Leases of such Person, (f) all Accommodation Obligations of such Person, (g) all
indebtedness, obligations or other liabilities of such Person or others secured by a Lien on any asset of such Person, whether or not such indebtedness, obligations or liabilities are assumed by, or are a personal liability of, such Person
(including, without limitation, the principal amount of any assessment or similar indebtedness encumbering any property (except for non-delinquent, accrued but unpaid real estate taxes as provided under Section 9.2)), (h) all
indebtedness, obligations or other liabilities (other than interest expense liability) in respect of interest rate swap, collar, cap or similar agreements providing interest rate protection and foreign currency exchange agreements, (i) ERISA
obligations currently due and payable, and (j) without duplication or limitation, all liabilities and other obligations included in the financial statements (or notes thereto) of such Person as prepared in accordance with GAAP. 
 “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended from time to time hereafter, and any successor statute.

 “IRS” means the Internal Revenue Service and any Person succeeding to the functions thereof. 
 “KBS REIT” means KBS Real Estate Investment Trust, Inc., a Maryland corporation. 
 “KBS REIT Compliance Certificate” means a certificate, certifying as to the matters set forth therein, signed on behalf of KBS REIT by
an authorized signatory having primary responsibility with respect to the matters set forth therein. 
 “Lease” means a
tenant lease of all or any portion of the Property. 
  

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 “Liabilities and Costs” means all claims, judgments, liabilities, obligations,
responsibilities, losses, damages (including lost profits), punitive or treble damages, costs, disbursements and expenses (including, without limitation, reasonable attorneys’, experts’ and consulting fees and costs of investigation and
feasibility studies), fines, penalties and monetary sanctions, interest, direct or indirect, known or unknown, absolute or contingent, past, present or future. 
 “Lien” means any deed of trust, mortgage, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance (including, but not limited to, easements, rights-of-way, zoning
restrictions and the like), lien (statutory or other), preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever, including without limitation any conditional sale or other title retention
agreement, the interest of a lessor under a Capital Lease, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement or document having similar effect (other than a financing
statement filed by a “true” lessor pursuant to the Uniform Commercial Code) naming the owner of the asset to which such Lien relates as debtor, under the Uniform Commercial Code or other comparable law of any jurisdiction. 
 “Loan” means the principal sum that Lender agrees to lend and Borrower agrees to borrow pursuant to the terms and conditions of this
Agreement: Thirty-Two Million, Four Hundred Thirty Thousand ($32,430,000). 
 “Loan Commitment” means the then outstanding
principal balance under the Note. 
 “Loan Documents” means this Agreement, the Note, the Security Instrument, all other
agreements, instruments and documents (together with amendments and supplements thereto and replacements thereof) now or hereafter executed by Borrower which evidence or secure the Obligations. 
 “Major Agreements” means, at any time, (a) each cross-easement, restrictions or similar agreement encumbering or affecting the
Property and any adjoining property, and (b) except as otherwise noted in Section 3.3(d)(ii), each property management agreement and leasing agreement with respect to the Property entered into with any Person. 
 “Major Lease” means any Lease (a) with respect to more than 15% of the net rentable space of the Property, or (b) under which
Borrower’s obligation as to the cost of tenant improvements exceeds 130% of the estimated tenant improvement allowance (per rentable square foot) as set forth in the then most recent Appraisal, or (c) under which the (Net Effective Rental
Rate) is less than 85% of the amount assumed for such Lease estimated effective in the then most recent Appraisal. 
 “Manager” means KBS Capital Advisors LLC, a Delaware limited liability company, or any replacement asset manager of KBS REIT appointed in accordance with Section 8.4(b). 
  

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 “Management Agreement” means the Advisory Agreement dated November 8, 2007, between
Manager and KBS REIT. 
 “Material Adverse Effect” means (a) with respect to Borrower, a material adverse effect upon
the condition (financial or otherwise), operations, performance, properties or prospects of Borrower that could reasonably be expected to impair, to a material extent, Borrower’s ability to perform its obligations under the Loan Documents; and
(b) with respect to the Property, a material adverse effect upon the physical condition of the Property, or upon its operations, performance or prospects, that reduces the Appraised Value of the Property to an amount that is less than eighty
percent (80%) of the Appraised Value of the Property as of the date hereof. The phrase “has a Material Adverse Effect” or “will result in a Material Adverse Effect” or words substantially similar thereto shall in all cases
be intended to mean “has resulted, or will or could reasonably be anticipated to result, in a Material Adverse Effect”, and the phrase “has no (or does not have a) Material Adverse Effect” or “will not result in a Material
Adverse Effect” or words substantially similar thereto shall in all cases be intended to mean “does not or will not or could not reasonably be anticipated to result in a Material Adverse Effect”. 
 “Maturity Date” has the meaning given to such term in Section 2.1(c). 
 “Multiemployer Plan” means an employee benefit plan defined in Section 4001(a)(3) of ERISA which is, or within the immediately
preceding six (6) years was, contributed to by a Person or an ERISA Affiliate of such Person. 
 “Net Effective Rental
Rate” means the actual recurring contractual base rental payment required to be paid by a tenant under a Lease, taking into account any adjustment regarding Concessions. 
 “Note” means the Promissory Note Secured by Deed of Trust, in the amount of the Loan, executed by Borrower in favor of Lender and dated
the date hereof, as the same may be amended, supplemented, replaced or modified from time to time. 
 “Obligations” means,
from time to time, all Indebtedness of Borrower owing to Lender, to any Person entitled to indemnification pursuant to Section 11.2, or to any of their respective successors, transferees or assigns, of every type and description, whether
or not evidenced by any note, guaranty or other instrument, arising under or in connection with this Agreement or any other Loan Document, whether or not for the payment of money, whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter arising and however acquired. The term includes, without limitation, all interest, charges, expenses, fees, reasonable attorneys’ fees and disbursements, reasonable fees
and disbursements of expert witnesses and other consultants, and any other sum now or hereinafter chargeable to Borrower under or in connection with this Agreement or any other Loan Document. (Notwithstanding the foregoing definition of
“Obligations”, Borrower’s obligations under any environmental indemnity agreement constituting a Loan Document, or any environmental representation, warranty, covenant, indemnity or similar provision in this Agreement or any other
Loan Document, shall be secured by the Property only to the extent, if any, specifically provided in the Security Instrument). 
  

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 “Operating Statements” has the meaning given to such term in Section 6.1(a).

 “Original Appraisals” means the Appraisals prepared by CBRE Valuation and Advisory Services, each dated October 10,
2007. 
 “Other Security Instrument” means any other mortgage or deed of trust which is now or hereafter
cross-collateralized with the Security Instrument, including, without limitation, the Other Security Instruments which secure the loans contemplated on Schedule 11.22 attached hereto. 
 “Parcel” shall mean any one of the four properties commonly known as (a) Cumberland Business Center,
(b) Greenbriar, (c) Riverview Business Center, and (d) Royal Parkway Center, each as more specifically described on Exhibit A attached hereto. 
 “PBGC” means the Pension Benefit Guaranty Corporation or any Person succeeding to the functions thereof. 
 “Permit” means any permit, approval, authorization, license, variance or permission required from a Governmental Authority under an applicable Requirement of Law. 
 “Permitted Liens” means: 
 (a) Liens (other than Environmental Liens and any Lien imposed under ERISA) for taxes, assessments or charges of any Governmental Authority or claims not yet due; 
 (b) Liens (other than any Lien imposed under ERISA) incurred or deposits made in the ordinary course of business (including without
limitation surety bonds and appeal bonds) in connection with workers’ compensation, unemployment insurance and other types of social security benefits or to secure the performance of tenders, bids, leases, contracts (other than for the
repayment of Indebtedness), or statutory obligations; 
 (c) any laws, ordinances, easements, rights of way, restrictions,
exemptions, reservations, conditions, limitations, covenants or other matters described as exceptions on Schedule B of the title insurance policies described in Section 4.1(b)(ii) which are delivered to and accepted by Lender in
satisfaction of the applicable condition to the disbursement under the Loan; 
 (d) Liens imposed by laws, such as
mechanics’ liens and other similar liens arising in the ordinary course of business which secure payment of obligations not more than thirty (30) days past due; 
 (e) Leases in effect on the Closing Date and any Leases entered into in the future that are not prohibited by the terms of the Loan
Documents; and 
 (f) any other Liens that are accepted by Lender. 
  

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 “Permitted REIT Distributions” means distributions (directly or indirectly) by Borrower
to KBS REIT to the extent that, if not distributed to KBS REIT: 
 (a) the REIT would, as the result of the failure of
Borrower to receive cash from the Property, be unable to distribute all KBS REIT taxable income with respect to the Property, or 
 (b) KBS REIT would, as a result of the failure of Borrower to receive cash from the Property, fail to satisfy its obligations to pay REIT Operating Expenses. 
 “Person” means any natural person, employee, corporation, limited partnership, general partnership, joint stock company, limited liability company, joint venture, association, company, trust, bank,
trust company, land trust, business trust or other organization, whether or not a legal entity, or any other non-governmental entity, or any Governmental Authority. 
 “Plan” means an employee benefit plan defined in Section 3(3) of ERISA (other than a Multiemployer Plan) in respect of which Borrower or an ERISA Affiliate, as applicable, is an
“employer” as defined in Section 3(5) of ERISA. 
 “Proceedings” means, collectively, all actions, suits,
arbitrations and proceedings, at law, in equity or otherwise, before, and investigations commenced or threatened by or before, any court or Governmental Authority with respect to a Person. 
 “Property” shall have the meaning set forth in the recitals. 
 “Protective Advance” means all sums expended as determined by Lender to be necessary to: (a) protect the priority, validity and
enforceability of the Lien on, and security interests in, the Collateral and the instruments evidencing or securing the Obligations, or (b) prevent the value of the Collateral from being materially diminished (assuming the lack of such a
payment within the necessary time frame could potentially cause such Collateral to lose value), or (c) protect the Collateral from being materially damaged, impaired, mismanaged or taken, including, without limitation, any amounts expended in
accordance with Section 11.1 or post-foreclosure ownership, maintenance, operation or marketing of the Property. 
 “Purchase Price” means $53,500,000. 
 “Regulations G, T, U and X” mean such Regulations of the
Federal Reserve Board as in effect from time to time. 
 “REIT Operating Expenses” means the Allocated Share of all actual
costs, expenses and/or amounts incurred by, or payable or reimbursable by, KBS REIT or the REIT Operating Partnership for any of the following: (a) charges and fees charged by banks, audit fees, tax preparation fees, legal fees, accounting
consulting fees related to emerging technical pronouncements, tax consulting fees relating to Real Estate Investment Trust issues, due diligence costs and fees arising from state and local taxes, fees and expenses incurred in connection with annual
corporate filings, and local, state and federal income taxes, and (b) professional fees related to corporate structuring and/or filings, consulting fees and filing fees 

  

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arising from SEC reporting requirements including, without limitation, 10K filings, 10Q filings, and 8k filings, consulting fees and other fees and costs
related to Sarbanes- Oxley 404 compliance requirements. 
 “REIT Operating Partnership” shall mean KBS Limited Partnership,
a Delaware limited partnership. 
 “Release” means the release, spill, emission, leaking, pumping, injection, deposit,
disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment or into or out of any property, including the movement of Contaminants through or in the air, soil, surface water, groundwater or property. 
 “Remedial Action” means any action required by applicable Environmental Laws to (a) clean up, remove, treat or in any other way
address Contaminants in the indoor or outdoor environment; (b) prevent the Release or threat of Release or minimize the further Release of Contaminants so they do not migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment; or (c) perform pre-remedial studies and investigations and post-remedial monitoring and care. 
 “Reportable Event” means any of the events described in Section 4043(b) of ERISA, other than an event for which the thirty (30) day notice requirement is waived by regulations. 
 “Requirements of Law” mean, as to any Person, the charter and by-laws, partnership agreement or other organizational or governing
documents of such Person, and any law, rule or regulation, Permit, or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or
any of its property is subject, including without limitation, applicable securities laws, Regulations G, T, U and X, FIRREA and any certificate of occupancy, zoning ordinance, building, environmental or land use requirement or Permit or occupational
safety or health law, rule or regulation. 
 “Security Instrument” means the deed of trust or mortgage, executed by
Borrower, for the benefit of Lender and dated on or about the date hereof, as the same may be amended or modified from time to time. 
 “Single Purpose Entity” means a corporation or other limited liability organization which, at all times since its formation and thereafter, was and will be organized solely for the purpose of acquiring and developing its
interest in the Property. 
 “SNDA” has the meaning given to such term in Section 3.3(c). 
 “Solvent” means, as to any Person at the time of determination, that such Person (a) owns property the value of which (both at fair
valuation and at present fair salable value and taking into account (i) the value of such Person’s rights of reimbursement, contribution, subrogation and indemnity against any other Person, and (ii) the value of any property, owned by
another Person, that secures any liabilities of the Person whose Solvency is being determined) is 

  

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equal to or greater than the amount required to pay all of such Person’s liabilities (including contingent liabilities and debts); (b) is able to
pay all of its debts as such debts mature; and (c) has capital sufficient to carry on its business and transactions and all business and transactions in which it is about to engage. 
 “Taxes” means all federal, state and local net income taxes. 
 “Termination Event” means (a) any Reportable Event, (b) the withdrawal of a Person, or an ERISA Affiliate from a Benefit Plan
during a plan year in which it was a “substantial employer” as defined in Section 4001(a)(2) of ERISA, (c) the occurrence of an obligation arising under Section 4041 of ERISA of a Person or an ERISA Affiliate to provide
affected parties with a written notice of an intent to terminate a Benefit Plan in a distress termination described in Section 4041(c) of ERISA, (d) the institution by the PBGC of proceedings to terminate any Benefit Plan under
Section 4042 of ERISA, (e) any event or condition which constitutes grounds under Section 4042 of ERISA for the appointment of a trustee to administer a Benefit Plan, (f) the partial or complete withdrawal of such Person or any
ERISA Affiliate from a Multiemployer Plan, or (g) the adoption of an amendment by any Person or any ERISA Affiliate to terminate any Benefit Plan. 
 “Uniform Commercial Code” means the Uniform Commercial Code as in effect on the date hereof in the State of California. 
 “Unmatured Event of Default” means an event which, with the giving of notice or the lapse of time, or both, would constitute an Event of Default. 
 1.2 Computation of Time Periods. 
 In this Agreement,
in the computation of periods of time from a specified date to a later specified date, unless otherwise specified, the word “from” means “from and including” and the words “to” and “until” each mean “to
and including”. Periods of days referred to in this Agreement shall be counted in calendar days unless Business Days are expressly prescribed. 
 1.3 Terms. 
 (a) Any accounting terms used in this Agreement which are not specifically defined shall have
the meanings customarily given them in accordance with GAAP. 
 (b) Any time the phrase “to the best of Borrower’s
knowledge” or a phrase similar thereto is used herein, it means: “to the actual knowledge of the then executive or senior officers of Borrower, after reasonable inquiry of those officers, employees or contractors of Borrower who could
reasonably be anticipated to have knowledge with respect to the subject matter or circumstances in question and after review of those documents or instruments which could reasonably be anticipated to be relevant to the subject matter or
circumstances in question.” 
  

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 (c) Any time the word “or” is used herein, unless the context otherwise clearly
requires, it has the inclusive meaning represented by the phrase “and/or”. The words “hereof”, “herein”, “hereby”, “hereunder” and similar terms refer to this Agreement as a whole and not to any
particular provision of this Agreement. Article, section, subsection, clause, exhibit and schedule references are to this Agreement unless otherwise specified. Any reference in this Agreement to this Agreement or to any other Loan Document includes
any and all amendments, modifications, supplements, renewals or restatements thereto or thereof, as applicable. 
 ARTICLE II

 THE LOAN 
 2.1 Loan Disbursements and Repayment. 
 (a) Disbursement. 
 Subject to the terms and conditions set forth in this Agreement, Lender hereby agrees to advance the proceeds of the Loan, in the amount of Thirty-Two
Million, Four Hundred Thirty Thousand Dollars ($32,430,000), to, or for the benefit, of Borrower, on the Closing Date. 
 (b) General.

 The Loan may be voluntarily prepaid, in whole or in part, pursuant to Section 2.4(a), but may not be reborrowed, except as
provided in Section 2.6 with respect to amounts payable to Lender under Section 6 of Exhibit A to the Note or Section 2.6 below. The principal balance of the Loan shall be payable in full on the Maturity Date. The Loan
will be evidenced by the Note. 
 (c) Term. 
 The outstanding balance of the Loan, together with all accrued and unpaid interest and other amounts accrued and unpaid under the Loan Documents, shall be payable in full on the earliest to occur of
(i) November 15, 2008, (ii) the acceleration of the Loan pursuant to Section 10.2(a), or (iii) Borrower’s written notice to Lender (pursuant to Section 2.4(a)) of Borrower’s election to prepay
all accrued Obligations (said earliest date referred to herein as the “Maturity Date”). 
 (d) Borrower
Representatives. 
 Borrower shall provide Lender with documentation satisfactory to Lender indicating the names of those representatives
of Borrower authorized to sign any Borrower’s Certificate, Fixed Rate Notice (as defined in the Note) or to effect notices, requests and acceptances of telephonic quotes of interest rates, and Lender shall be entitled to rely on such
documentation until notified in writing by Borrower of any change(s) of the persons so authorized; provided that there shall at all times be at least one individual authorized on behalf of Borrower to effect notices, requests and acceptances
of telephonic quotes of interest rates. Lender shall be entitled to act on the instructions of anyone identifying himself or herself as one 

  

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of the Persons so authorized, and Borrower shall be bound thereby in the same manner as if such Person or Persons were actually so authorized. Borrower
agrees to indemnify, defend and hold Lender harmless from and against any and all Liabilities and Costs which may arise or be created by the acceptance of instructions from any such Borrower representative, including in response to any telephonic
notice, request, or acceptance relating to any telephonic quote of an interest rate, unless caused by the gross negligence or willful misconduct of Lender. 
 2.2 Fees; Expenses. 
 (a) Fees and Expenses. 
 Not later than the Closing Date, Borrower shall pay to Lender a non-refundable Loan fee in an amount equal to $81,075 plus certain costs and
expenses (as set forth on Schedule 2.2(a)). 
 (b) Payment of Fees. 
 The fees described in the preceding paragraph represent compensation for services rendered and to be rendered separate and apart from the lending of money
or the provision of credit and do not constitute compensation for the use, detention or forbearance of money, and the obligation of Borrower to pay such fees shall be in addition to, and not in lieu of, the obligation of Borrower to pay interest,
other fees and expenses otherwise described in the Loan Documents. All fees shall be payable when due in immediately available funds and in Dollars, and shall be non-refundable when paid. If Borrower fails to make timely payment of fees or expenses
specified or referred to in this Agreement due to Lender, the amount due shall bear interest until paid at the Variable Rate (as defined in the Note) and, after ten (10) days at the Alternate Rate (as each such capitalized term is defined in
the Note), but not to exceed the maximum rate permitted by applicable law, and shall constitute part of the Obligations, secured by the Property. 
 2.3 Interest on the Loan. 
 Interest on the Loan shall accrue as set forth in the Note. 
 2.4 Payments. 
 (a) Voluntary
Prepayments. 
 Borrower may, upon not less than three (3) Business Days prior written notice to Lender not later than 11:00 A.M.
(Los Angeles time) on the date given, at any time and from time to time, prepay all or any portion of the Loan, subject to the terms of Section 2.4(d). Any notice of prepayment given to Lender under this Section 2.4(a) shall
specify the date of prepayment and the principal amount of the prepayment. In the event of a prepayment of the Loan, Borrower shall concurrently pay any Fixed Rate Price Adjustment (as defined in the Note) payable in respect thereof. 
  

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 (b) Credit for Payments. 
 All payments of principal, interest and fees hereunder payable to Lender shall be made without condition or reservation of right and free of set-off or
counterclaim, in Dollars, either by authorized debit to Borrower’s Account or by wire transfer (pursuant to Lender’s written wire transfer instructions) of immediately available funds, to Lender, not later than 11:00 A.M. (Los Angeles
time) on the date due; and funds received by Lender after that time and date shall be deemed to have been paid on the next succeeding Business Day. 
 (c) Payments on Non-Business Days. 
 Whenever any payment to be made by Borrower hereunder or under any other Loan Document
is stated to be due on a day which is not a Business Day, payment shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest hereunder. 
 (d) Exit Fee. 
 Concurrently with
Borrower’s repayment of the Loan, in whole or in part, and whether or not the Loan is repaid or otherwise satisfied (including in connection with a foreclosure or a deed in lieu thereof) on or before the Maturity Date, in addition to any Fixed
Rate Price Adjustment then due, Borrower shall pay to Lender an exit fee in an amount equal to one-eighth of one percent (0.125%) of the amount of the Loan being repaid at such time (the “Exit Fee”). Notwithstanding the foregoing,
if Borrower repays (i) all or any portion of the Loan with proceeds from replacement financing provided by Lender or (ii) the entire Loan with proceeds from the sale of the Property to a bona-fide thirty-party (i.e., non-Affiliate)
purchaser, then Borrower shall have no obligation to pay any Exit Fee with respect to that portion of the Loan that is repaid with such proceeds. In addition, Borrower shall have no obligation to pay any Exit Fee (a) with respect to a portion
of the Loan repaid on the Maturity Date with funds other than refinancing proceeds provided by Lender unless Lender has provided Borrower a reasonable quote for replacement financing, or (b) with respect to a portion of the Loan repaid for the
sole purpose of reducing the outstanding amount of the Loan to fifty percent (50%) of the lesser of (i) the Appraised Value of the Property and (ii) the Acquisition Cost of the Property; provided in all circumstances, the Exit
Fee shall be deemed earned when paid and non-refundable. For purposes hereof, a quote for replacement financing shall be deemed reasonable if it is consistent with quotes being provided by Lender to other borrowers similarly situated to Borrower at
the time of determination with respect to the type of loan being requested, including, without limitation, property type, loan terms and loan structure. 
 2.5 Increased Capital. 
 If either (a) the introduction of or any change in or in the interpretation of any law
or regulation after the Closing Date or (b) compliance by Lender with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law and whether or not the failure to comply therewith
would be unlawful) made or issued after the Closing Date affects or would affect the amount of capital required or expected to be maintained by Lender or any corporation controlling Lender, and Lender determines that the amount of such capital is
increased by or based upon the existence of Lender’s obligations under the Loan, then, 

  

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upon demand by Lender, Borrower shall immediately pay to Lender, from time to time as specified by Lender, additional amounts sufficient to compensate Lender
in the light of such circumstances, to the extent that Lender reasonably determines such increase in capital to be allocable to the existence of Lender’s obligations under the Loan; provided, however, that Lender may not claim
under this Section 2.5 any such additional amount attributable to any period preceding the date that is ninety (90) days prior to the date of its demand. A certificate as to such amounts submitted to Borrower by Lender shall, in the
absence of manifest error, be conclusive and binding for all purposes. 
 2.6 Notice of Increased Costs. 
 Lender agrees that, as promptly as reasonably practicable after it becomes aware of the occurrence of an event or the existence of a condition which would
cause it to be affected by any of the events or conditions described in Section 6 of Exhibit A to the Note or Section 2.5 hereunder, it will notify Borrower of such event and the possible effects thereof, provided that the
failure to provide such notice shall not affect Lender’s rights to reimbursement provided for herein. To the extent of any amount demanded by Lender to be reimbursed under Section 6 of Exhibit A to the Note or Section 2.5
hereunder, Lender agrees to lend such amount to Borrower, whether or not the lending of such amount would constitute a reborrowing of Loan funds or would cause the outstanding principal amount of the Loan to exceed the Loan (and which shall
constitute in all respects disbursements of Loan proceeds), subject to (a) Borrower’s execution and delivery of such amendments to the Note, Security Instrument (including the payment of any applicable mortgage recording tax and/or other
costs) and other Loan Documents, and provision to Lender of such endorsements to Lender’s policies of title insurance, as Lender may reasonably deem necessary under the circumstances, and (b) satisfaction of all other conditions precedent
to the making of disbursements under the Loan. 
 2.7 Full Repayment and Reconveyance or Release. 
 Upon receipt of all sums owing and outstanding under the Loan Documents (excluding any loans secured by the Security Instrument other than the Loan and
excluding any Other Security Instrument and the loan documents evidencing the loans secured thereby), then provided no Event of Default exists under the Loan Documents (including any Other Security Instrument and the loan documents evidencing the
loans secured thereby), Lender shall issue a full reconveyance or release of the Property from the lien of the Security Instrument; provided, however, that all of the following conditions shall be satisfied at the time of, and with
respect to, such reconveyance or release: Lender shall have received all escrow, closing and recording costs, the costs of preparing and delivering such reconveyance or release and the cost of any title insurance amendments or endorsements requested
by Lender. 
 2.8 Partial Reconveyance of Parcels. 
 At any time prior to the Maturity Date of the Loan, Lender shall, at Borrower’s request, issue partial reconveyances from the lien of the Deed of Trust of one or more Parcels; provided, however,
that prior to or simultaneously with each such partial reconveyance all of the following conditions shall be satisfied: 
 (a) No Event of
Default shall exist under the Loan Documents, or would exist with notice or passage of time, or both; 
  

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 (b) Lender shall have received any and all sums then due and owing under the Loan Documents together with
all escrow, closing and recording costs, the costs of preparing and delivering such partial reconveyance and the cost of any title insurance endorsements required by Lender, including, without limitation, a CLTA 116.3 and 111 endorsement;

 (c) For each Parcel to be reconveyed, Lender shall have received a release price to be applied as a reduction of the outstanding principal
balance of the Loan as set forth on Schedule 2.8 attached hereto; and 
 (d) Lender shall have received a written release
satisfactory to Lender of any set aside letter, letter of credit or other form of undertaking which Lender has issued to any surety, governmental agency or any other party in connection with the Loan and/or the Property. 
 Neither the acceptance of any payment nor the issuance of any partial reconveyance by Lender shall affect Borrower’s obligation to repay all amounts
owing under the Loan Documents or under the lien of the Deed of Trust on the remainder of the Property which is not reconveyed. 
 ARTICLE
III 
 PROPERTY REQUIREMENTS AND REPRESENTATIONS 
 3.1 Representations Regarding the Property. 
 Borrower
represents and warrants to Lender that Borrower has, prior to the Closing Date, delivered to Lender, with respect to the Property: 
 (a) To the extent available, operating statements for the previous two (2) years; 
 (b) A current rent roll, in
form satisfactory to Lender, and certified by Borrower to be true and correct to the best of Borrower’s knowledge and, to the extent available, an uncertified two-year operating and occupancy history; 
 (c) A survey certified by a surveyor licensed in the applicable jurisdiction to have been prepared in accordance with the then effective
Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys, including a certification that the Property is not located in a Special Flood Hazard Area as defined by the Federal Insurance Administration; 
 (d) A “Phase I” environmental assessment not more than twelve (12) months old; 
 (e) Copies (true and correct, to the best of Borrower’s knowledge) of all Major Agreements and Leases affecting the Property; and

  

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 (f) Copies (true and correct, to the best of Borrower’s knowledge) of engineering,
mechanical, structural or maintenance studies performed (if not previously performed, such studies as shall be required by Lender). 
 3.2
Appraisals. 
 The Appraised Value of the Property shall be determined or redetermined, as applicable, under each of the following circumstances (but
not more than once in any six (6) month period): 
 (a) Lender will determine the Appraised Value of the Property for
purposes of the Closing Date; 
 (b) Intentionally Omitted; 
 (c) At any time and from time to time, upon five (5) Business Days’ prior written notice to Borrower, Lender may redetermine the
Appraised Value of the Property in any of the following circumstances: 
 (i) if a major casualty, condemnation, contamination
or violation of any Requirements of Law occurs, or is discovered to exist, with respect to the Property, or if Lender reasonably believes that a Material Adverse Effect may have occurred; or 
 (ii) if necessary in order to comply with Requirements of Law applicable to Lender. 
 Lender shall notify Borrower of any change in Appraised Value. The costs of any Appraisal commissioned pursuant to this Section 3.2 shall be
paid by Borrower. 
 3.3 Covenants Relating to the Property. 
 (a) Insurance, Casualty. 
 In addition
to such title insurance as Borrower is required to maintain in respect of the Property, Borrower shall maintain or cause to be maintained insurance covering the Property, at Borrower’s sole expense, with licensed insurers approved by Lender,
the following policies of insurance in form and substance satisfactory to Lender: 
 (i) At all times, any real property under
construction at the Property shall be covered by a policy of commercial property insurance, which shall include, without limitation, such endorsements as Lender may require, insuring Lender against damage to the Property and improvements thereon, in
an amount acceptable to Lender. Lender shall be named on the policy under a Lender’s Loss Payable Endorsement (form # 438BFU or equivalent). 
 (ii) A policy of flood insurance, as required by applicable governmental regulations or as deemed reasonably necessary by Lender. 
  

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 (iii) A policy of commercial general liability insurance with limits as reasonably
required by Lender, insuring against liability for injury and/or death to any person and/or damages to property occurring on the Property and/or in the improvements thereon from any cause whatsoever. 
 Borrower shall provide to Lender certificates evidencing all required insurance policies, or other evidence of insurance acceptable to Lender. All
insurance policies shall provide that the insurance shall not be cancelable or materially adversely changed without ten (10) days’ prior written notice to Lender. Lender shall be named under a Lender’s Loss Payable Endorsement (form #
438BFU or equivalent) with respect to all insurance policies that Borrower actually maintains with respect to the Property or the improvements thereon. Borrower shall provide to Lender evidence of terrorism coverage and any other hazard insurance
Lender may deem necessary at any time while all or any portion of Lender’s commitment remains available or any portion of the Loan remains outstanding, provided, however, if Lender requires terrorism coverage and the premiums for
such coverage will be greater than three (3) times the cost of the premiums for such coverage on the date of this Agreement, or if terrorism insurance is not then available, then Borrower may elect, in lieu of obtaining such coverage from a
third-party insurer, to provide to Lender a satisfactory indemnity from KBS REIT with respect to any uninsured loss caused by terrorism. 
 (b) Leases; Lease Approval; Lease Termination. 
 (i) Unless otherwise consented to by Lender in writing, all
Leases entered into after the date of this Agreement shall (A) be to unaffiliated third parties and under market terms (provided, “market terms” shall not be deemed to require market rents), including, without limitation, those
relating to insurance, waiver of claims, damage and destruction, condemnation, notice to mortgagee and subordination and attornment, (B) provide for uses of the Property that are consistent with first-class management thereof, and (C) be
on a standard form lease reasonably approved by Lender subject to modification as reasonably required by Borrower. Additionally, at any time that Lender does not have first priority liens on at least four of the properties listed on Schedule
11.22, Borrower shall not execute any Major Lease nor materially modify or voluntarily terminate any such Major Lease (except for terminations by reason of a material default), in each case without Lender’s prior consent, not to be
unreasonably withheld. 
 (ii) With respect to Major Leases, if Lender’s consent thereto is required pursuant to clause
(i) above, or if Borrower has requested Lender’s consent to a Lease which does not comply with the requirements set forth in Section 3.3(b)(i), if Lender has not notified Borrower of its disapproval of such proposed Lease
within five (5) Business Days after Lender’s confirmation of receipt of such proposed Lease (together with a lease summary and also, in the case of a Major Lease, the financial statements and market comparisons as referenced below to the
extent available) and a transmittal letter requesting that Lender review such proposed Lease and approve or disapprove such proposed Lease within such 5-Business day period and notifying Lender that a failure to respond within five (5) Business
Days shall constitute a deemed approval, Lender shall be deemed to have consented to such proposed Lease. 
  

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 (iii) Whether Lender approval is required or not, Borrower shall promptly provide Lender
with (1) a copy of every Lease executed with tenants occupying 10,000 square feet or more of the Property, and (2) any and all financial information received by Borrower from any such tenants. 
 (iv) If Borrower receives any sums in consideration of any termination (or the release or discharge of any lessee) modification or
amendment of any Lease (any such funds, a “Termination Payment”), then if such Termination Payment is less than $100,000 such Termination Payment may be retained by the Borrower, and if such Termination Payment is equal to or
greater than $100,000, Borrower promptly shall deliver such Termination Payment to Lender to be held in a blocked and pledged cash collateral account to be then applied by Lender as follows: 
 (1) Upon receipt of such Termination Payment, Lender shall determine the then loan-to-value ratio based upon Loan amount at such time
(disbursed and undisbursed) to the market value of the Property, as such market value is reasonably determined by Lender based upon all information then available to Lender and taking into account the Lease termination or modification which
generated the Termination Payment (such determination of value, the “Desktop Valuation”). If Lender determines, based upon such Desktop Valuation, that the loan-to-value ratio is greater than 60.0%, then Lender may apply all or a
portion of such Termination Payment to repay principal outstanding under the Loan in order that such initial loan-to-value ratio may be achieved. However, if there are not sufficient funds in the Termination Payment to achieve such initial
loan-to-value ratio, Borrower shall have no obligation to remargin the Loan from its separate funds. 
 (2) If any portion of
the Termination Payment remains after application (or non-application) pursuant to subclause (1) above, the remaining balance shall be held by Lender in the cash collateral account and then disbursed by Lender to Borrower in order to pay Lender
approved re-tenanting costs with respect to the Property, subject to such reasonable conditions on disbursement as Lender may impose. After the affected premises has been re-leased, any balance remaining in such cash collateral account shall then be
disbursed to Borrower. 
 (3) Upon Borrower request, if made within ten (10) days following Lender’s determination
of the Desktop Valuation and notice to Borrower of same, Lender shall obtain, at Borrower’s cost and expense, a new Appraisal of the Property to be used in-lieu of the Desktop Valuation when determining the loan-to-value ratio for purposes of
this Section 3.3(b)(iv). 
  

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 (c) SNDAs. 
 Borrower shall use commercially reasonable efforts to obtain, from each tenant leasing more than fifteen percent (15%) of the net rentable area of the Property, a Subordination Agreement; Acknowledgment of Lease
Assignment, Estoppel, Attornment and Non-Disturbance Agreement in the form of Exhibit B or in such other form as may be approved by Lender (each such agreement, a “SNDA”). 
 (d) Major Agreements; Property Management Agreements. 
 (i) From and after the Closing Date, Borrower shall not enter into, or thereafter amend in any material manner or terminate, any Major
Agreement with respect to the Property, except upon thirty (30) days’ prior written notice to and approval by Lender. Borrower shall timely provide to Lender a copy of any such proposed Major Agreement. Any such proposed Major Agreement
submitted to Lender for approval and not disapproved by Lender within ten (10) days after receipt thereof shall be deemed to be approved by Lender. Without limiting in any way Lender’s approval rights with respect thereto, each proposed
Major Agreement shall provide for fees, reimbursements or other payments by Borrower to the other party thereto at levels not in excess of applicable market levels. 
 (ii) Notwithstanding that, for purposes of this Agreement, property management or leasing agreements entered into with CB Richard Ellis,
PM Realty or Jones Lang or any other property or leasing manager of equivalent experience and reputation managing or leasing real properties similar to the Property, do not constitute Major Agreements, if Borrower enters into such an agreement with
any such party, Borrower shall within ten (10) days after entering into, or modifying, such agreement, notify Lender of such event and provide Lender with a true and correct copy of such agreement or amendment, as the case may be. 

(e) Major Construction. 
 If
Borrower intends to engage in any construction, remodeling or demolition project or series of related projects on the Property, other than Approved Projects (as defined below) with respect to the Property, the aggregate cost per Parcel of which will
exceed $750,000 during the term of the Loan, Borrower shall first notify Lender, and such construction project shall be subject to Lender’s approval, which approval shall not be unreasonably withheld. Any proposed construction project submitted
in writing to Lender for approval and not disapproved by Lender within thirty (30) days after receipt thereof, shall be deemed to be approved by Lender. For purposes of this Section 3.3(e), “Approved Projects” shall
mean tenant improvements required under the terms of any Lease, except to the extent that such tenant improvements would involve the making of material structural alterations to the affected Property. 
  

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 (f) Property Taxes. 
 Lender is authorized to obtain and maintain, at Borrower’s expense, a tax service agreement with a third party vendor that will provide tax information, satisfactory to Lender, with respect to the Property.

 (g) Security Instrument. 
 Borrower shall comply with all provisions of the Security Instrument encumbering the Property. 
 (h) Survey. 
 On or before the Closing Date, Borrower shall deliver to Lender a survey (or an update of a survey) with respect to the Property in the form described in
Section 3.1(c), acceptable to Lender and title insurer. Such survey shall be in form and substance substantially similar to the surveys delivered to Lender pursuant to Section 4.1(b)(iii). 
 ARTICLE IV 
 DISBURSEMENT 

 4.1 Conditions to Disbursement. 
 The
obligation of Lender to disburse the proceeds of the Loan shall be subject to satisfaction of each of the following conditions precedent on or before the Closing Date (unless another date is specifically referenced below): 
 (a) Loan Documents. 
 Borrower shall
have executed and delivered to Lender each of the following, in form and substance acceptable to Lender: 
 (i) this
Agreement; 
 (ii) the Note; 
 (iii) all Uniform Commercial Code financing statements as shall be requested by Lender; 
 (iv) the Security Instrument; 
 (v) the Hazardous Materials Indemnity Agreement; 
 (vi) a tax service agreement with respect to the Property; 
  

 Page 21 

 (vii) a borrowing certificate and all necessary authorizing resolutions authorizing
Borrower’s execution, delivery and performance of the Loan Documents; 
 (viii) any consent of the equity owners of
Borrower, and its constituent entities, as applicable, which may be required under the terms of its organizational documents; and 
 (ix) incumbency certificate with respect to each officer of any corporation executing any Loan Document on behalf of Borrower, or other evidence, reasonably acceptable to Lender, of the authority of any individual executing a Loan Document
on behalf of Borrower. 
 (b) Property Documents. 
 Lender shall have received the following documents with respect to the Property in form and substance acceptable to Lender: 
 (i) an Appraisal; 
 (ii) American Land Title Association Lender’s policy of title
insurance or a commitment to issue such policy, from Chicago Title Insurance Company or another title company acceptable to Lender, in the amount of the Loan, insuring the Security Instrument as a first Lien subject only to Permitted Liens, with
endorsements as required by Lender and to the extent available, and otherwise in form and substance acceptable to Lender and Lender’s counsel; 
 (iii) if required to obtain acceptable title insurance, a survey (or update of a survey) in the form described in Section 3.1(c); 
 (iv) an environmental audit for the Property, conducted by an environmental engineering firm acceptable to Lender, and satisfactory
evidence that Borrower and the Property are in compliance in all material respects with all Environmental Laws the violation of which could have a Material Adverse Effect; and 
 (v) such other documents with respect to the Property as are listed in Section 3.1. 
 (c) Organizational Documents. 
 Lender
shall have received the following organizational documents with respect to Borrower (and each direct or indirect equity owner thereof other than the direct or indirect owners in KBS REIT), including a certificate of Borrower’s managing member,
general partner or an officer comparable thereto with respect to authorization, incumbency and all organizational documents: 
 (i) a certified copy of Borrower’s operating agreement; 
  

 Page 22 

 (ii) certified copies of all filed organizational documents of Borrower (other than
natural persons), certified by the Secretary of State of the state under the laws of which Borrower is organized; and 
 (iii)
for Borrower: (A) a Certificate of Status from the Secretary of State of the state under the laws of which Borrower is organized (and, if generally available, a certificate with respect to Borrower’s status with respect to the taxing
authorities of such jurisdiction); and (B) evidence of qualification of Borrower and Certificate of Status from the Secretary of the state where the Property is located, with respect to Borrower. 
 (d) Fixed Rate Notice. 
 If
applicable, Lender shall have delivered to Borrower a completed Fixed Rate Notice in the form attached to the Note. 
 (e) Solvency.

 Borrower shall be Solvent. 
 (f) Material Adverse Changes. 
 No change, as determined by Lender, shall have occurred which has a Material Adverse Effect.

 (g) Litigation Proceedings. 
 There shall not have been instituted or threatened any litigation or proceeding in any court or Governmental Authority affecting or threatening to affect Borrower or the Property which has a Material Adverse Effect. 
 (h) Perfection of Liens. 
 The
Security Instrument and financing statements shall have been recorded or filed, as applicable, and Lender shall have a valid, perfected first priority lien on the Property. 
 (i) Indefeasible Title. 
 Borrower
shall have good, indefeasible and merchantable title to the Property, free and clear of all Liens other than Permitted Liens. 
 (j) No
Event of Default. 
 After giving effect to the disbursement of the Loan proceeds, no Event of Default or Unmatured Event of Default shall
exist. 
  

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 (k) Fees and Expenses. 
 Lender shall have received all fees then due, and, to the extent requested by Lender, all expenses of Lender shall have been paid by Borrower. 

(l) Opinions of Counsel. 
 Lender
shall have received the favorable opinion of Borrower’s California counsel as well as that of Borrower’s counsel located in the state in which the Property is located, each dated as of the Closing Date and in form and substance
satisfactory to Lender. 
 (m) Consents and Approvals. 
 All material licenses, permits, consents, regulatory approvals and corporate action necessary to enter into the financing transactions contemplated by this Agreement shall have been obtained by Borrower. 

(n) Insurance. 
 Lender shall have
received evidence that Borrower has property, casualty and liability insurance satisfactory to Lender, and loss payable endorsements in form and substance satisfactory to Lender naming Lender as loss payee with respect to property and casualty
insurance shall have been executed and delivered to Lender, together with such certificates of insurance and binders as are requested by Lender, all in substantial compliance with the provisions of Section 3.3(a). 
 (o) Due Diligence. 
 Lender shall have
obtained and completed its review of an Appraisal of the Property and determination of the Appraised Value therefor, and Lender shall have completed such due diligence investigations as it deems necessary, and such review and investigations shall
provide Lender with results and information which, in Lender’s determination, are satisfactory to permit Lender to enter into this Agreement and fund the Loan. 
 (p) Representations and Warranties. 
 All representations and warranties contained in this Agreement
and the other Loan Documents shall be true and correct in all material respects. 
 4.2 Intentionally Omitted. 
 4.3 Funds Transfer Disbursements. 
 (a) Borrower hereby authorizes Lender to disburse the proceeds of the Loan pursuant to the Loan Documents, as requested by an authorized representative of Borrower, to any of the account(s) to be designated in the
form attached hereto as Exhibit D. Borrower agrees to be bound by any transfer request: (i) authorized or 

  

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transmitted by Borrower; or (ii) made in Borrower’s name and accepted by Lender in good faith and in compliance with these transfer instructions,
even if not properly authorized by Borrower. Borrower further agrees and acknowledges that Lender may rely solely on any bank routing number or identifying bank account number or name provided by Borrower to effect a wire or funds transfer even if
the information provided by Borrower identifies a different bank or account holder than named by Borrower. Lender is not obligated or required in any way to take any actions to detect errors in information provided by Borrower. 
 (b) If Lender takes any actions in an attempt to detect errors in the transmission or content of transfer or requests or takes any actions
in an attempt to detect unauthorized funds transfer requests, Borrower agrees that no matter how many times Lender takes these actions Lender will not in any situation be liable for failing to take or correctly perform these actions in the future,
and such actions shall not become any part of the transfer disbursement procedures authorized under this provision, the Loan Documents or any agreement between Lender and Borrower. Borrower agrees to notify Lender of any errors in the transfer of
any funds or of any unauthorized or improperly authorized transfer requests within fourteen (14) days after Lender’s confirmation to Borrower of such transfer. 
 (c) Lender will, in its sole discretion, determine the funds transfer system and the means by which each transfer will be made. Lender may
delay or refuse to accept a funds transfer request if the transfer would: (i) violate the terms of this authorization, (ii) require use of a bank unacceptable to Lender or prohibited by government authority, (iii) cause Lender to
violate any Federal Reserve Board or other regulatory risk control program or guideline, or (iii) otherwise cause Lender to violate any applicable law or regulation. 
 (d) Lender shall not be liable to Borrower or any other parties for (i) errors, acts or failures to act of others, including other
entities, banks, communications carriers or clearinghouses, through which Borrower’s transfers may be made or information received or transmitted, and no such entity shall be deemed an agent of the Lender, (ii) any loss, liability or delay
caused by fires, earthquakes, wars, civil disturbances, power surges or failures, acts of government, labor disputes, failures in communications networks, legal constraints or other events beyond Lender’s control, or (iii) any special,
consequential, indirect or punitive damages, whether or not (A) any claim for these damages is based on tort or contract or (B) Lender or Borrower knew or should have known the likelihood of these damages in any situation. Lender makes no
representations or warranties other than those expressly made in this Agreement. 
 ARTICLE V 
 REPRESENTATIONS AND WARRANTIES 
 In order to induce Lender to make the Loan, Borrower hereby represents and warrants to Lender as follows: 
  

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 5.1 Organization; Corporate Powers. 
 Borrower (a) is a limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation, (b) is duly qualified to do business as a foreign entity
and in good standing under the laws of each jurisdiction in which it owns or leases real property or in which the nature of its business requires it to be so qualified, except for those jurisdictions where failure to so qualify and be in good
standing would not have a Material Adverse Effect, and (c) has all requisite power and authority, as the case may be, to own, operate and encumber its property and assets and to conduct its business as presently conducted and as proposed to be
conducted in connection with and following the consummation of the Loan contemplated by the Loan Documents. Borrower’s chief executive office is located at its address for notice set forth below its signature hereto. 
 5.2 Authority. 
 Borrower has the requisite power and
authority to execute, deliver and perform each of the Loan Documents. The execution, delivery and performance thereof, and the consummation of the transactions contemplated thereby, have been duly approved by the equity owners of Borrower and no
other proceedings or authorizations on the part of Borrower or its equity owners are necessary to consummate such transactions, except for such as have been obtained or effected and true and correct copies of which have been delivered to Lender.
Each of the Loan Documents to which Borrower is a party has been duly executed and delivered by Borrower and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency
and other laws affecting creditors’ rights generally. 
 5.3 Ownership of Borrower. 
 Schedule 5.3 sets forth the direct and indirect owners of Borrower (but not any owners, direct or indirect, of KBS REIT) and the owners’ respective ownership
percentages therein, and there are no other ownership interests outstanding. Except as set forth or referred to in the organizational documents of Borrower, no ownership interest (or any securities, instruments, warrants, option or purchase rights,
conversion or exchange rights, calls, commitments or claims of any character convertible into or exercisable for any ownership interest) of any such Person is subject to issuance under any security, instrument, warrant, option or purchase rights,
conversion or exchange rights, call, commitment or claim of any right, title or interest therein or thereto. All of the ownership interests in Borrower have been issued in compliance with all applicable Requirements of Law. 
 5.4 No Conflict. 
 The execution, delivery and
performance by Borrower of the Loan Documents, and each of the transactions contemplated thereby, do not and will not (a) conflict with or violate Borrower’s organizational documents, or (b) conflict with, result in a breach of or
constitute (with or without notice or lapse of time or both) a default under any Requirement of Law or Court Order binding upon Borrower or any of its equity owners, which circumstance would have a Material Adverse Effect, or (c) conflict with,
result in a breach of or constitute (with or without notice or lapse of 

  

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time or both) a default under, or require termination of any Contractual Obligation of Borrower, which circumstance would have a Material Adverse Effect, or
(d) result in or require the creation or imposition of any Lien whatsoever upon any of the properties or assets of Borrower (other than Liens in favor of Lender arising pursuant to the Loan Documents or Permitted Liens). 
 5.5 Consents and Authorizations. 
 Borrower has
obtained all consents and authorizations required pursuant to its Contractual Obligations with any other Person, and shall have obtained all consents and authorizations of, and effected all notices to and filings with, any Governmental Authority, as
may be necessary to allow Borrower to lawfully execute, deliver and perform its obligations under the Loan Documents. 
 5.6 Governmental
Regulation. 
 Borrower is not subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce
Act, the Investment Company Act of 1940 or any other federal or state statute or regulation such that its ability to incur indebtedness is limited or its ability to consummate the transactions contemplated by the Loan Documents is materially
impaired. 
 5.7 Prior Financials. 
 Any
and all balance sheets and income statements of Borrower delivered to Lender prior to the date hereof were prepared in accordance with GAAP and fairly present the assets, liabilities and financial condition of Borrower or such constituent
shareholders, partners or members, at such date and the results of its operations and its cash flows, for the period then ended. 
 5.8
Financial Statements; Projections and Forecasts. 
 Each of the Financial Statements to be delivered to Lender by Borrower pursuant to
Section 6.1(b) (a) has been, or will be, as applicable, prepared in accordance with the books and records of Borrower, and (b) either fairly present, or will fairly present, as applicable, the financial condition of Borrower,
at the dates thereof (and, if applicable, subject to normal year-end adjustments) and the results of its operations and cash flows for the period then ended. Each of the projections delivered to Lender prior to the date hereof and the financial
plans and projections to be delivered to Lender pursuant to Section 6.1 (x) has been, or will be, as applicable, prepared by Borrower in light of the past business and performance of Borrower and (y) represent, or will
represent, as of the date thereof, the reasonable good faith estimates of Borrower’s financial personnel. 
 5.9 Prior Operating
Statements. 
 Each of the operating statements pertaining to the Property delivered to Lender prior to the date hereof and prepared by or on behalf of a
prior owner of the Property fairly presents, to the best of Borrower’s knowledge, the results of operations of such Property for the period covered thereby. Each of the operating statements pertaining to the Property delivered to Lender prior
to the date 

  

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hereof and prepared by or on behalf of Borrower was prepared in accordance with GAAP in effect on the date such operating statement of the Property was
prepared and fairly presents the results of operations of the Property for the period then ended. 
 5.10 Operating Statements and
Projections. 
 Each of the Operating Statements to be delivered to Lender pursuant to Section 6.1(a) (a) has been or will be, as
applicable, prepared in accordance with the books and records of the Property, and (b) fairly presents or will fairly present, as applicable, the results of operations of the Property for the period then ended. Each of the projections,
financial plans and budgets delivered to Lender prior to the date hereof (to the best of Borrower’s knowledge) and the projections and budgets to be delivered to Lender pursuant to Section 6.1(d) (x) has been, or will be, as
applicable, prepared for the Property in light of the past business and performance of the Property and (y) represents or will represent, as of the date thereof, the reasonable good faith estimates of the financial personnel of Borrower.

 5.11 Litigation; Adverse Effects. 
 (a) To the best of Borrower’s knowledge, there is no Proceeding, pending or threatened, against Borrower or any property of Borrower (including the Property), which, if adversely determined, would result in a
Material Adverse Effect. 
 (b) Except as disclosed on Schedule 5.11 hereto, Borrower is not (i) in violation of
any applicable law, which violation has a Material Adverse Effect, or (ii) subject to or in default with respect to any Court Order which has a Material Adverse Effect. 
 5.12 No Material Adverse Change. 
 With respect to any
and all information contained in those materials delivered to Lender pursuant to Sections 5.1 through Section 5.11, there has occurred no event which has a Material Adverse Effect. 
 5.13 Payment of Taxes. 
 All tax returns and reports
to be filed by Borrower have been timely filed, and all taxes, assessments, fees and other governmental charges shown on such returns or otherwise payable by Borrower have been paid when due and payable (other than real property taxes, which may be
paid prior to delinquency so long as no penalty or interest shall attach thereto), except such taxes, if any, as are reserved against in accordance with GAAP and are being contested in good faith by appropriate proceedings or such taxes, the failure
to make payment of which when due and payable will not have, in the aggregate, a Material Adverse Effect. Borrower has no knowledge of any proposed tax assessment against Borrower that will have a Material Adverse Effect, which is not being actively
contested in good faith by Borrower. 
  

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 5.14 Material Adverse Agreements. 
 Borrower is not a party to or subject to any Contractual Obligation or other restriction contained in its organizational documents which has a Material Adverse Effect. 
 5.15 Performance. 
 Borrower is not in default in the
performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Contractual Obligation applicable to it, and no condition exists which, with the giving of notice or the lapse of time or both, would
constitute a default under such Contractual Obligation in each case, except where the consequences, direct or indirect, of such default or defaults, if any, will not have a Material Adverse Effect. 
 5.16 Federal Reserve Regulations. 
 No part of the
proceeds of the Loan hereunder will be used to purchase or carry any “margin security” as defined in Regulation G or for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry any margin
security or for any other purpose which might constitute this transaction a “purpose credit” within the meaning of said Regulation G. Borrower is not engaged primarily in the business of extending credit for the purpose of purchasing or
carrying out any “margin stock” as defined in Regulation U. No part of the proceeds of the Loan hereunder will be used for any purpose that violates, or which is inconsistent with, the provisions of Regulation X or any other regulation of
the Federal Reserve Board. 
 5.17 Disclosure. 
 The representations and warranties of Borrower contained in the Loan Documents and all certificates, financial statements and other documents prepared by or on behalf Borrower and delivered to Lender by or on behalf of Borrower in
connection therewith, taken as a whole, do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they
were made, not misleading. Borrower has given to Lender true, correct and complete copies (which representation, with respect to any of the following items made available to Borrower by Persons other than Affiliates of Borrower, is made to the best
of Borrower’s knowledge) of all Leases, organizational documents, Financial Statements, Operating Statements, and all other documents and instruments referred to in the Loan Documents as having been delivered to Lender. Borrower has not
intentionally withheld from Lender, in regard to any matter raised in the Loan Documents, any fact deemed by Borrower to be material. Notwithstanding the foregoing, with respect to projections of Borrower’s future performance such
representations and warranties are made in good faith and to the best judgment of Borrower. 
 5.18 Requirements of Law; ERISA.

 Borrower is in compliance with all Requirements of Law applicable to it and its respective businesses, in each case, where the failure to so comply will
have a Material Adverse Effect. Borrower is not, and does not hold plan assets of, an employee benefit plan subject to Title I of ERISA or Section 4975 of the Internal Revenue Code. 
  

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 5.19 Environmental Matters. 
 Except as disclosed in the environmental report(s) set forth on Schedule 5.19, to the best of Borrower’s knowledge, (a) the operations of Borrower comply in all material respects with all applicable
local, state and federal environmental, health and safety Requirements of Law (“Environmental Laws”); (b)the Property is not subject to any Remedial Action or other Liabilities and Costs arising from the Release or threatened
Release of a Contaminant into the environment in violation of any Environmental Laws; (c) Borrower has not filed any notice under applicable Environmental Laws reporting a Release of a Contaminant into the environment in violation of any
Environmental Laws, except as the same may have been heretofore remedied; (d) there is not now on or in the Property: (i) any underground storage tanks, (ii) any asbestos-containing material, or (iii) any polychlorinated
biphenyls (PCBs) used in hydraulic oils, electrical transformers or other equipment; and (e) Borrower has not received any notice or claim to the effect that it is or may be liable to any Person as a result of the Release or threatened Release
of a Contaminant into the environment. 
 5.20 Major Agreements; Leases. 
 (a) With respect to the Property, Borrower has provided to Lender copies of each Major Agreement and all Leases. 
 (b) (i) All Major Agreements with respect to the Property are, to the best of Borrower’s knowledge, in full force and effect and have
not been and will not be modified or terminated (except for modifications which comply with Section 3.3(d), and terminations by reason of a material default), and (ii) (in each case, other than any such default or event of default
that, had the effect thereof been taken into account by Lender in determining the Appraised Value of the Property, would not have resulted in such Appraised Value of the Property being less than ninety-five percent (95%) of the Appraised Value
of the Property actually determined by Lender) no default or event of default (or event or occurrence which with the passage of time or the giving of notice, or both, will constitute a default or event of default) exists under any such Major
Agreement on the part of Borrower, or will exist thereunder on the part of Borrower as a result of the consummation of the transactions contemplated by the Loan Documents, or, to the best of Borrower’s knowledge, exists thereunder on the part
of any other party thereto, or will exist thereunder on the part of any other party thereto as a result of the consummation of the transactions contemplated by the Loan Documents. 
 (c) To the best knowledge of Borrower, (i) except as reflected on the most current rent rolls delivered to Lender, all Leases are in
full force and effect, and have not been and, as to Major Leases, will not be modified or terminated (except for modifications which comply with Section 3.3(b) or that do not require the approval of Lender), and terminations by reason of
a material default) and (ii) no default or event or default (or event or occurrence which upon with the passage of time or the giving of notice, or both, will constitute a default or event of default) exists thereunder on the part of Borrower,
or will exist thereunder on the part of Borrower as a result of the consummation of the transactions contemplated by the Loan Documents, or, to the best of 

  

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Borrower’s knowledge, exists thereunder on the part of any other party thereto, or will exist thereunder on the part of any other party thereto as a
result of the consummation of the transactions contemplated by the Loan Documents. Notwithstanding that the representations in this subsection (c) are made to the best of Borrower’s knowledge, Borrower will be deemed to have breached this
representation if (A) as of any date on which such representations are made, the statements in either clause (i) or clause (ii) hereof are inaccurate, regardless of whether Borrower had knowledge of such inaccuracy, and
(B) if either (1) Borrower had knowledge of such inaccuracy, or (2) had the effect thereof been taken into account by Lender in determining the Appraised Value of the Property, such Appraised Value of the Property would have been less
than ninety-five percent (95%) of the Appraised Value of the Property actually determined by Lender). 
 5.21 Solvency.

 Borrower is and will be Solvent after giving effect to each disbursement of the Loan and the payment and accrual of all fees then payable. 
 5.22 Title to Property; No Liens. 
 As of the Closing
Date, to the best of Borrower’s knowledge, Borrower has good, indefeasible and merchantable title to the Property, free and clear of all Liens except Permitted Liens. 
 5.23 Use of Proceeds. 
 Borrower’s use of the
proceeds of the Loan are, and will continue to be, legal and proper uses (and to the extent necessary, duly authorized by Borrower’s constituent shareholders, partners or members, as the case may be) and such uses are consistent with all
applicable laws and statutes. 
 5.24 Property Management Agreements. 
 Except as disclosed on Schedule 5.24, Borrower is not a party or subject to any property management or leasing agreement with respect to the Property. 
 5.25 Single Purpose Entity. 
 Borrower is a Single
Purpose Entity. 
 5.26 Tax Shelter Regulations. 
 Borrower does not intend to treat the Loan or the transactions contemplated by this Agreement and the other Loan Documents as being a “reportable transaction” (within the meaning of Treasury Regulation Section 1.6011-4). If
Borrower, or any other party to the Loan determines to take any action inconsistent with such intention, Borrower will promptly notify Lender thereof. If Borrower so notifies Lender, Borrower acknowledges that Lender may treat the Loan as part of a
transaction that is subject to Treasury Regulation Section 301.6112-1, and Lender will maintain the lists and other records, including the identity of the applicable party to the Loan as required by such Treasury Regulation. 
  

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 5.27 Organizational Documents. 
 The organizational documents of each entity owning a direct or indirect ownership interest in Borrower (expressly excluding any entity owning a direct or indirect interest in KBS REIT), as shown on Schedule
5.3, have not been modified since previously delivered to Lender, or if such documents have been modified, then such modifications have been provided to Lender. 
 ARTICLE VI 
 REPORTING COVENANTS 
 Borrower covenants and agrees that, on and after the date hereof, until payment in full of all of the Obligations, and termination of this Agreement:

 6.1 Financial Statements and Other Financial and Operating Information (Borrower). 
 Borrower shall maintain or cause to be maintained a system of accounting established and administered in accordance with sound business practices and consistent with past
practice to permit preparation of quarterly and, to the extent applicable, annual financial statements, each in conformity with GAAP, and each of the financial statements described below shall be prepared for Borrower from such system and records.
Borrower shall deliver or cause to be delivered to Lender: 
 (a) Operating Statements and Operating Results. 
 As soon as practicable, and in any event within forty-five (45) days after the end of the each Fiscal Quarter commencing with the Fiscal Quarter
ending December 31, 2007, quarterly operating statements, in such form as may be approved by Lender from time to time, which operating statements shall include actual quarterly and year-to-date net operating income and net cash flow results,
rent rolls (on Borrower’s detailed form of rent roll), current and prospective lease status reports and occupancy summaries in the form customarily generated by Borrower for the Property dated as of the last day of such Fiscal Quarter, in form
and substance satisfactory to Lender, certified on behalf of Borrower by Borrower’s advisor’s portfolio account controller. In addition, as soon as practicable, and in any event within forty-five (45) days after the end of the fourth
Fiscal Quarter, a year-end operating statement, in such form as may be approved by Lender from time to time (collectively with the quarterly statements, the “Operating Statements”). 
 (b) Quarterly Financial Statements. 
 As soon as practicable, and in any event within forty-five (45) days after the end of each Fiscal Quarter, (i) balance sheets, statements of operations and statements of cash flow for Borrower (collectively, “Financial
Statements”), and (ii) a Borrower’s Certificate in the form of Exhibit C or otherwise in form and substance satisfactory to Lender, in each case certified on behalf of Borrower by Borrower’s advisor’s portfolio
account controller. 
  

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 (c) Borrower’s Certificate. 
 (i) Together with each delivery of any Operating Statement or Financial Statement pursuant to subsections (a) and (b) above, a
Borrower’s Certificate, stating that the individual who is the signatory thereto (which individual shall be the controller of KBS REIT) has reviewed, or caused under his or her supervision to be reviewed, the terms of this Agreement and the
other principal Loan Documents, and has made, or caused to be made under his or her supervision, a review in reasonable detail of the transactions and condition of Borrower during the accounting period covered by such Operating Statements or
Financial Statements, and that such review has not disclosed the existence during or at the end of such accounting period, and that the signer does not have knowledge of the existence as of the date of the Borrower’s Certificate, of any
condition or event which constitutes an Event of Default or Unmatured Event of Default, or, if any such condition or event existed or exists, specifying the nature and period of existence thereof and what action has been taken, is being taken and is
proposed to be taken with respect thereto. 
 (ii) Together with each delivery of any Operating Statement or Financial
Statement pursuant to subsections (a) and (b) above with respect to the last Fiscal Quarter of any Fiscal Year, a Borrower’s Certificate, stating that the individual who is the signatory thereto (which individual shall be an
authorized signatory of Borrower having authority over Borrower’s affairs comparable to that of the chief executive officer, the chief operating officer, or the chief financial officer of a corporation) has reviewed, or caused under his or her
supervision to be reviewed, the terms of this Agreement and the other principal Loan Documents, and has made, or caused to be made under his or her supervision, a review in reasonable detail of the transactions and condition of Borrower during the
Fiscal Year then most recently ended, and that such review has not disclosed the existence during or at the end of such Fiscal Year, and that the signer does not have knowledge of the existence as of the date of the Borrower’s Certificate, of
any condition or event which constitutes an Event of Default or Unmatured Event of Default, or, if any such condition or event existed or exists, specifying the nature and period of existence thereof and what action has been taken, is being taken
and is proposed to be taken with respect thereto. 
 (iii) Each Borrower’s Certificate referenced in subsections
(i) and (ii) above shall also (A) contain a certification by the individual who is the signatory thereto the Borrower is in compliance with all covenants contained herein, and (B) without limiting the provisions of
Section 9.2, shall provide a schedule of contingent liabilities of Borrower consisting of letters of credit and guaranties of debt, together with a listing of contingent liabilities arising from trade payables and leases if such
contingent liabilities arising from the items listed in clauses (ii) and (v) of Section 9.2 below exceed $500,000 (in the aggregate) per Parcel. 
  

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 (d) Budgets. 
 Not later than February 28 of each Fiscal Year, annual operating and capital budgets for the Property for such Fiscal Year, prepared on an fiscal basis, in such form as may be approved by Lender from time to
time, together with all supporting details reasonably requested by Lender, and certified, under a Borrower’s Certificate, as being based upon Borrower’s reasonable good faith estimates, upon information and assumptions at the time.

 (e) Knowledge of Event of Default. 
 Promptly upon Borrower obtaining knowledge (i) of any condition or event which constitutes an Event of Default or Unmatured Event of Default (including, without limitation, KBS REIT’s failure to satisfy any
covenant contained in Exhibit F), or becoming aware that any Lender has given notice or taken any other action with respect to a claimed Event of Default or Unmatured Event of Default or (ii) of any condition or event which has a
Material Adverse Effect, a Borrower’s Certificate specifying the nature and period of existence of any such condition or event, or specifying the notice given or action taken by such Lender and the nature of such claimed Event of Default,
Unmatured Event of Default, event or condition, and what action Borrower has taken, is taking and proposes to take with respect thereto. 
 (f) Litigation, Arbitration or Government Investigation. 
 Promptly upon Borrower obtaining knowledge of (i) the
institution of, or written threat of, any material Proceeding against or affecting Borrower or the Property not previously disclosed in writing by Borrower to Lender pursuant to this Section 6.1(f), including any eminent domain or other
condemnation proceedings affecting the Property, or (ii) any material development in any Proceeding already disclosed, which, in either case, has a Material Adverse Effect, a notice thereof to Lender and such other information as may be
reasonably available to it to enable Lender and its counsel to evaluate such matters. 
 (g) ERISA Matters. 
 As soon as possible, and in any event within thirty (30) days after Borrower knows or has reason to know that Borrower or any of its ERISA Affiliates
has or is likely to incur any liability with respect to any Benefit Plan, or any withdrawal liability with respect to any Multiemployer Plan, which would have a Material Adverse Effect, a written statement of the chief financial officer of Borrower
describing such occurrence and the action, if any, which Borrower or any ERISA Affiliate of Borrower has taken, is taking or proposes to take, with respect thereto, and, when known, any action taken or threatened by the IRS, the DOL or the PBGC with
respect thereto. 
 (h) Other Information. 
 Such other information, reports, contracts, schedules, lists, documents, agreements and instruments in the possession or under the control of Borrower with respect to (i) the Property, (ii) any material
change in Borrower’s investment, finance or operating policies, or (iii) Borrower’s business, condition (financial or otherwise), operations, performance, properties or prospects as Lender may from time to time reasonably request,
including, without limitation, 

  

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annual information with respect to cash flow projections, budgets, operating statements (current year and immediately preceding year), rent rolls, lease
expiration reports and leasing status reports. Provided that Lender gives Borrower reasonable prior notice and an opportunity to participate, Borrower hereby authorizes Lender to communicate with the Accountants and authorizes the Accountants to
disclose to Lender any and all financial statements and other information of any kind, including copies of any management letter or the substance of any oral information, that such accountants may have with respect to the Collateral or
Borrower’s condition (financial or otherwise), operations, properties, performance and prospects. Concurrently therewith, Lender will notify Borrower of any such communication. At Lender’s request, Borrower shall deliver a letter addressed
to the Accountants instructing them to disclose such information in compliance with this Section 6.1(h). 
 (i) Accountant
Reports. 
 (1) If at any time Borrower causes audited financial statements to be prepared with respect to any Fiscal Year, then, within
ten (10) Business Days after receipt thereof from the Accountants: copies of such audited financial statements, together with all reports prepared by the Accountants and submitted to Borrower in connection therewith, including the comment
letter submitted by the Accountants in connection with such audit; and (2) copies of all reports prepared by the Accountants and submitted to Borrower in connection with any other annual, interim or special audit or review of the financial
statements or practices of Borrower. 
 6.2 Financial Statements and Other Financial and Operating Information (KBS REIT). 

Borrower shall deliver, or cause KBS REIT to deliver, to Lender: 
 (a) Quarterly Financial Statements. 
 As soon as practicable, and in any event within forty-five (45) days after the end
of each Fiscal Quarter, balance sheets, statements of operations and statements of cash flow for KBS REIT, and (ii) a KBS REIT Compliance Certificate in the form of Exhibit C-2 or otherwise in form and substance satisfactory to Lender,
in each case certified on behalf of KBS REIT by the controller of KBS REIT. 
 (b) Additional Reporting. 
 Upon Lender’s request therefor, any additional financial information prepared by or for KBS REIT, including reporting relating to individual real
estate assts owned by KBS REIT, including, without limitation, property cash flow projections, property budgets, operating statements and leasing status reports. 
 6.3 Environmental Notices. 
 Borrower shall notify Lender, in writing, as soon as practicable, and in any event within
ten (10) days after Borrower’s learning thereof, of any: (a) written notice or claim to the effect that Borrower is or may be liable to any Person as a result of any material Release or threatened Release of any Contaminant into the
environment; (b) written notice that Borrower is subject to 

  

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investigation by any Governmental Authority evaluating whether any Remedial Action is needed to respond to the Release or threatened Release of any
Contaminant into the environment; (c) written notice that the Property is subject to an Environmental Lien; (d) written notice of violation to Borrower or awareness of a condition which might reasonably result in a notice of violation of
any Environmental Laws by Borrower; (e) commencement or written threat of any Proceeding alleging a violation of any Environmental Laws by Borrower or with respect to the Property; or (f) written notice from a Governmental Authority of any
changes to any existing Environmental Laws that will have a Material Adverse Effect. 
 6.4 Confidentiality. 
 Confidential information obtained by Lender pursuant to this Agreement or in connection with the Loan shall not be disseminated by Lender and shall not be disclosed to
third parties except to regulators, taxing authorities and other governmental agencies having jurisdiction over Lender or otherwise in response to Requirements of Law, to Lender’s auditors and legal counsel and in connection with regulatory,
administrative and judicial proceedings as necessary or relevant including enforcement proceedings relating to the Loan Documents, and to any prospective assignee of or participant in Lender’s interest under this Agreement or any prospective
purchaser of the assets or a controlling interest in Lender, provided that such prospective assignee, participant or purchaser first agrees to be bound by the provisions of this Section 6.4. In connection with disclosures of
confidential information to any non-governmental third-party, Lender shall, to the extent feasible and permitted, give prior notice of such request to Borrower; however, Lender shall incur no liability to Borrower for failure to do so. For purposes
hereof, “confidential information” shall mean all nonpublic information obtained by Lender, unless and until such information becomes publicly known, other than as a result of unauthorized disclosure by Lender of such information.

 ARTICLE VII 
 AFFIRMATIVE COVENANTS 
 Borrower covenants and agrees that, on and after the date hereof, until payment in full of
all of the Obligations, and termination of this Agreement: 
 7.1 Existence. 
 Borrower shall at all times maintain its existence as a limited liability company and preserve and keep in full force and effect its rights and franchises unless the
failure to maintain such rights and franchises does not have a Material Adverse Effect. 
 7.2 Qualification, Name. 
 Borrower shall qualify and remain qualified to do business in each jurisdiction in which the nature of its business requires it to be so qualified except for those
jurisdictions where failure to so qualify does not have a Material Adverse Effect. Borrower will transact business solely in its own name. 
  

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 7.3 Compliance with Laws, Etc. 
 Borrower shall (a) comply with all Requirements of Law, and all restrictive covenants affecting Borrower or the properties, performance, prospects, assets or operations of Borrower, and (b) obtain as needed
all Permits necessary for its operations and maintain such in good standing, except in each of the foregoing cases where the failure to do so will not have a Material Adverse Effect. 
 7.4 Payment of Taxes and Claims. 
 Borrower shall pay
(a) all taxes, assessments and other governmental charges imposed upon it or on any of its properties or assets or in respect of any of its franchises, business, income or property before any penalty or interest accrues thereon, the failure to
make payment of which will have a Material Adverse Effect, and (b) all claims (including, without limitation, claims for labor, services, materials and supplies) for sums, material in the aggregate to Borrower, which have become due and payable
and which by law have or may become a Lien other than a judgment lien upon any of Borrower’s properties or assets, prior to the time when any penalty or fine shall be incurred with respect thereto. Notwithstanding the foregoing, Borrower may
contest by appropriate legal proceedings conducted in good faith and with due diligence, the amount, validity or application, in whole or in part, of any taxes, assessments, other governmental charges or claims described above, provided that
Borrower shall provide such security as may be required by Lender to insure ultimate payment of the same and to prevent any sale or forfeiture of any of Borrower’s properties or assets, provided, however, that the provisions of
this Section 7.4 shall not be construed to permit Borrower to contest the payment of any Obligations or any other sums payable by Borrower to Lender hereunder or under any other Loan Document. Notwithstanding any of the foregoing,
Borrower shall indemnify, defend and save Lender harmless from and against any liability, cost or expense of any kind that may be imposed on Lender in connection with any such contest and any loss resulting therefrom. 
 7.5 Maintenance of Property; Insurance. 
 Borrower
shall maintain the Property in good repair, working order and condition, excepting ordinary wear and tear and will make or cause to be made all appropriate repairs, renewals and replacements thereof. Borrower shall maintain (a) insurance
policies with respect to the Property in accordance with Section 3.3(a) and (b) commercially reasonable and appropriate amounts of insurance against such other risks as would be maintained by a prudent Person engaged in a business
such as that in which Borrower is engaged. 
 7.6 Inspection of Property; Books and Records; Discussions. 
 Borrower shall permit any authorized representative(s) designated by Lender to visit and inspect the Property, to inspect financial and accounting records and leases, and
to make copies and take extracts therefrom, all at such times during normal business hours and as often as Lender may reasonably request. In connection therewith, Borrower shall pay all expenses of the types described in Section 11.1.
Borrower will keep proper books of record and account in which entries, in conformity with GAAP and as otherwise required by this Agreement and applicable Requirements of Law, shall be made of all dealings and transactions in relation to its
businesses and activities and as otherwise required under Section 6.1. 
  

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 7.7 Maintenance of Permits, Etc. 
 Borrower will maintain in full force and effect all Permits, franchises, patents, trademarks, trade names, copyrights, authorizations or other rights necessary for the operation of its business, except where the
failure to obtain any of the foregoing would not have a Material Adverse Effect; and notify Lender in writing, promptly after learning thereof, of the suspension, cancellation, revocation or discontinuance of or of any pending or threatened action
or proceeding seeking to suspend, cancel, revoke or discontinue any material Permit, patent, trademark, trade name, copyright, governmental approval, franchise authorization or right. 
 7.8 Single Purpose Entity. 
 Borrower shall at all
times be a Single Purpose Entity. 
 7.9 Subordination of Property Management Agreements. 
 Within thirty (30) days following the Closing Date, Borrower shall deliver to Lender an estoppel and subordination of each property management and leasing agreement
identified on Schedule 5.24. 
 7.10 SNDAs. 
 Borrower shall use commercially reasonable efforts to obtain SNDAs from each of the tenants occupying more than fifteen percent (15%) of the net rentable area of the Property within sixty (60) days after the
Closing Date. 
 7.11 KBS REIT Covenants. 
 At all times while the Compliance Ratio is greater than fifty percent (50%), KBS REIT (on a consolidated basis) shall comply with the covenants set forth on Exhibit F attached hereto. As of the date of this Agreement, the Compliance
Ratio is approximately sixty percent (60%). 
 7.12 Property Condition. 
 Borrower shall perform the following work at the Property within the time period specified: 
 (a) Thirty
Day Work. 
 Within thirty (30) days following the Closing Date, Borrower shall have completed, to Lender’s satisfaction, the
items shown on Schedule 7.12(a). 
 (b) Sixty Day Work. 
 Within sixty (60) days following the Closing Date, Borrower shall have completed, to Lender’s satisfaction, the items shown on Schedule
7.12(b). 
  

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 (c) Ninety Day Work. 
 Within ninety (90) days following the Closing Date, Borrower shall have completed, to Lender’s satisfaction, the items shown on Schedule 7.12(c). 
 ARTICLE VIII 
 NEGATIVE COVENANTS

 Borrower covenants and agrees that, on and after the date hereof, until payment in full of all of the Obligations, and termination
of this Agreement: 
 8.1 Operating Restrictions: 
 Borrower shall not: 
 (a) Indebtedness; Liens. 
 Directly or indirectly create, incur, assume or permit to exist (i) any Indebtedness other than as specifically permitted in Section 9.2, or (ii) any Lien on or with respect to any Collateral,
except (A) Liens in favor of Lender securing the Obligations and (B) Permitted Liens. Nothing contained in this Agreement or in any of the other Loan Documents shall limit or impair the right of Borrower’s constituent members or
partners to directly or indirectly create, incur, assume or permit to exist any Indebtedness of, or any Lien upon any property of, such member or partner. 
 (b) Transfers of Collateral. 
 Transfer, directly or indirectly, all or any interest in the Property
or the Collateral. Notwithstanding the foregoing, Borrower shall be permitted to transfer the Property to a Single Purpose Entity wholly owned, directly or indirectly, by KBS REIT, subject to prior written consent by Lender, not to be unreasonably
withheld, which approval may include, without limitation, the following requirements: (1) execution of such loan documentation as Lender determines necessary (including, without limitation, an assumption of the Loan Documents and any new
Deed(s) of Trust to ensure Lender’s continued first priority lien on the Property), (2) Lender’s receipt of title insurance, (3) payment of reasonable costs and expenses of Lender, and (4) there shall be no Event of Default.

 (c) Restrictions on Fundamental Changes. 
 (i) Enter into any merger or consolidation or liquidate, wind-up or dissolve (or suffer any liquidation or dissolution); or 
 (ii) Engage in any line of business other than as expressly permitted under Section 7.8; or 
 (iii) Except upon prior written notice to Lender, move its chief executive office from the State of California. 
  

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 (d) Loans to Other Persons; Investments. 
 Borrower shall not make any direct or indirect purchase or other acquisition of securities or other interests, or of a beneficial interest in securities
or other interests, of any other Person, or make any direct or indirect loan, advance (other than deposits with financial institutions available for withdrawal on demand, prepaid expenses, advances to employees and similar items made or incurred in
the ordinary course of business, but excluding any other Indebtedness and all accounts owed to Borrower that are not current assets or that did not arise from sales of goods or services to another Person in the ordinary course of business), or
capital contribution, to any other Person. 
 8.2 Amendment of Constituent Documents. 
 Except with Lender’s prior written consent, which shall not be unreasonably withheld, Borrower shall not amend its organizational documents (including, without
limitation, as to the admission of any new equity owner, directly or indirectly). 
 8.3 Margin Regulations. 
 No portion of the proceeds of the Loan shall be used in any manner which might cause the extension of credit or the application of such proceeds to violate Regulation G,
U or X or any other regulation of the Federal Reserve Board or other applicable law. 
 8.4 Ownership; Management. 
 (a) Ownership of Borrower. 
 Except as
otherwise permitted in Exhibit F attached hereto, Borrower shall be wholly owned, either directly or indirectly, by KBS REIT. Notwithstanding anything stated to the contrary in this Agreement, the Security Instrument or in any of the
other Loan Documents, any transfers of equity interests or other interests in KBS REIT Properties, LLC or in any of the direct or indirect owners of KBS REIT Properties, LLC shall not be prohibited (and shall be expressly permitted) provided that
KBS REIT continues to directly or indirectly wholly own Borrower. 
 (b) Management. 
 The asset manager of KBS REIT shall not at any time be any Person other than Manager (with either Charles J. Schreiber, Jr. or Peter M. Bren at all times
as an active principal and senior manager thereof) acting pursuant to the Management Agreement. 
 ARTICLE IX 
 FINANCIAL COVENANT 
 Borrower
covenants and agrees that, on and after the date of this Agreement and until payment in full of all the Obligations, and the termination of this Agreement: 
  

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 9.1 Distributions. 
 In general, no Distributions by Borrower shall be made during the continuance of any Event of Default, provided, however, that so long as Borrower remains current with respect to its obligation to pay
accrued and unpaid interest due and owing under the Loan, at any time prior to the initial stated Maturity Date (including during the continuance of an Event of Default or following an acceleration of the Loan) Borrower may distribute funds from the
operation of the Property (other than Termination Payments referred to in Section 3.3 above) to KBS REIT in order to pay Permitted REIT Distributions. 
 9.2 Incurrence of Additional Indebtedness. 
 Borrower shall not incur any Indebtedness or other liabilities other than
(i) the Obligations, (ii) operating and equipment leases entered into in the ordinary course of Borrower’s business, (iii) tenant security deposits, (iv) non-delinquent, accrued but unpaid real estate taxes and insurance
premiums, (v) other trade payables in respect of operating expenses incurred in the ordinary course and (vi) any indebtedness, obligations or other liabilities (other than interest expense liability) in respect of interest rate swap,
collar, cap or similar agreements providing interest rate protection and foreign currency exchange agreements. Further, the sum of the liabilities referred to in clauses (ii) and (v) shall at no time exceed $500,000 in the aggregate per
Parcel. 
 ARTICLE X 
 EVENTS OF DEFAULT; RIGHTS AND REMEDIES 
 10.1 Events of Default. 
 Each of the following occurrences shall constitute an Event of Default under this Agreement: 
 (a) Failure to Make Payments When Due. 
 Borrower shall fail to pay (i) any amount due on the
Maturity Date, (ii) any principal when due, or (iii) any interest on the Loan (or any fee or other amount payable under any Loan Documents) within five (5) days after the date such interest, fee or other amount first became due.

 (b) Distributions; Additional Indebtedness. 
 Borrower shall breach either covenant set forth in Article IX. 
 (c) Other Defaults.

 Borrower shall fail duly and punctually to perform or observe any agreement, covenant or obligation binding on Borrower under this
Agreement or under any of the other Loan Documents (other than as described in any other provision of this Section 10.1), and (with respect to agreements, covenants or obligations for which no time period for performance is
otherwise provided and for which cure is possible), such failure shall continue for fifteen (15) days after the earlier of (i) the date as of which Borrower had actual knowledge of such failure, and (ii) the date on which Lender gives
Borrower notice of such failure (or, in either such case, 

  

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such lesser period of time as is mandated by applicable Requirements of Law); provided, however, if such failure is not capable of cure within such
fifteen (15) day period, but is capable of cure and the grant of additional time to cure would not result in a Material Adverse Effect, then if Borrower promptly undertakes action to cure such failure and thereafter diligently prosecutes such
cure to completion within ninety (90) days after the earlier of the two dates described in the preceding clauses (i) and (ii), then Borrower shall not be in default hereunder. 
 (d) Breach of Representation or Warranty. 
 Any representation or warranty made or deemed made by Borrower to Lender herein or in any of the other Loan Documents or in any statement, certificate or financial statements at any time given by Borrower pursuant to any of the Loan
Documents shall be false or misleading in any material respect on the date as of which made. 
 (e) Involuntary Bankruptcy; Appointment of
Receiver, Etc. 
 (i) An involuntary case shall be commenced against Borrower and the petition shall not be dismissed
within sixty (60) days after commencement of the case, or a court having jurisdiction shall enter a decree or order for relief in respect of any such Person in an involuntary case, under any applicable bankruptcy, insolvency or other similar
law now or hereinafter in effect; or any other similar relief shall be granted under any applicable federal, state or foreign law; or 
 (ii) A decree or order of a court (or courts) having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over the
Borrower, or over all or a substantial part of the property of any such Person, shall be entered; or an interim receiver, trustee or other custodian of any such Person or of all or a substantial part of the property of any such Person, shall be
appointed or a warrant of attachment, execution or similar process against any substantial part of the property of any such Person, shall be issued and any such event shall not be stayed, vacated, dismissed, bonded or discharged within sixty
(60) days of entry, appointment or issuance. 
 (f) Voluntary Bankruptcy; Appointment of Receiver, Etc. 
 Borrower shall have an order for relief entered with respect to it or commence a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or
taking of possession by a receiver, trustee or other custodian for all or a substantial part of its property; any such Person shall make any assignment for the benefit of creditors or shall be unable or fail, or admit in writing its inability, to
pay its debts as such debts become due; or any member, shareholder or manager of Borrower adopts any resolution or otherwise authorizes any action to approve any of the foregoing. 
  

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 (g) Judgments and Attachments. 
 Any money judgment (other than a money judgment covered by insurance but only if the insurer has admitted liability with respect to such money judgment),
writ or warrant of attachment, or similar process involving in any case an amount in excess of One Million Dollars ($1,000,000) shall be entered or filed against Borrower or its assets and shall remain undischarged, unvacated, unbonded or unstayed
for a period of thirty (30) days. 
 (h) Dissolution. 
 Any order, judgment or decree shall be entered against Borrower decreeing its involuntary dissolution or split up and such order shall remain undischarged
and unstayed for a period in excess of thirty (30) days; or Borrower shall otherwise dissolve or cease to exist. 
 (i) Loan
Documents; Failure of Security. 
 If for any reason any Loan Document shall cease to be in full force and effect or any Lien intended to
be created thereby shall cease to be or is not valid or perfected; or any Lien in favor of Lender contemplated by this Agreement or any Loan Document shall, at any time, be invalidated or otherwise cease to be in full force and effect; or any such
Lien or any Obligation shall be subordinated or shall not have the priority contemplated by this Agreement or the Loan Documents for any reason, and, in the case of any of the foregoing, such condition or event shall continue for fifteen
(15) days after Borrower knew of such condition or event. 
 (j) ERISA Liabilities. 
 Any Termination Event occurs which will or is reasonably likely to subject Borrower to a liability which Lender reasonably determines will have a Material
Adverse Effect, or the plan administrator of any Benefit Plan applies for approval under Section 412(d) of the Internal Revenue Code for a waiver of the minimum funding standards of Section 412(a) of the Internal Revenue Code and Lender
reasonably determines that the business hardship upon which the Section 412(d) waiver was based will or would reasonably be anticipated to subject Borrower to a liability which Lender determines will have a Material Adverse Effect. 

(k) Environmental Liabilities. 
 Borrower becomes subject to any Liabilities and Costs, which Lender reasonably deems to have a Material Adverse Effect, arising out of or related to (i) the Release or threatened Release at the Property of any Contaminant into the
environment, or any Remedial Action in response thereto, or (ii) any violation of any Environmental Laws. 
 (l) Solvency; Material
Adverse Change. 
 Borrower shall cease to be Solvent, or there shall have occurred any event or circumstance having a Material Adverse
Effect. 
  

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 (m) Interest Rate Management Agreement. 
 Borrower shall default under any swap, cap, collar, or any other rate management agreement. 
 (n) Default under any Other Security Instrument. 
 The occurrence of a monetary or other material default (and the expiration of any applicable notice and cure period) under any Other Security Instrument. 
 (o) KBS REIT Covenant Compliance. 
 KBS REIT’s failure to satisfy any covenant contained in Exhibit F shall constitute an Event of Default hereunder unless within thirty (30) days after the earlier of the date on which (i) written notice of such
failure is delivered by Lender to Borrower, or (ii) Borrower fails to deliver a KBS REIT Compliance Certificate when and as required by Section 6.2(a) above, which certificate (if delivered) would have indicated that KBS REIT was
not in compliance with one or more of such covenants, either (A) KBS REIT corrects any non-compliance issues to Lender’s satisfaction, or (B) Borrower repays principal outstanding under the Loan in an amount necessary to cause
Compliance Ratio to be less than or equal to fifty percent (50%); provided that Borrower acknowledges a cure under this subsection (o) shall not obviate any Borrower obligation to comply with similar covenants under loans secured by the Other
Security Agreements. 
 An Event of Default shall be deemed “continuing” until cured or waived in writing in accordance with
Section 11.4. 
 10.2 Rights and Remedies. 
 (a) Acceleration, Etc. 
 Upon the occurrence of any Event of Default described in the foregoing
Section 10.1(e) or 10.1(f), the Loan shall automatically and immediately terminate and the unpaid principal amount of and any and all accrued interest on the Loan shall automatically become immediately due and payable, with all
additional interest from time to time accrued thereon and without presentment, demand or protest or other requirements of any kind (including, without limitation, valuation and appraisement, diligence, presentment, notice of intent to demand or
accelerate or notice of acceleration), all of which are hereby expressly waived by Borrower, and the obligations of Lender to make any further disbursement of the Loan shall thereupon terminate; and upon the occurrence and during the continuance of
any other Event of Default, Lender may, by written notice to Borrower, (i) declare that the Loan is terminated, whereupon the Loan and the obligation of Lender to make any further disbursement of the Loan shall immediately terminate, and/or
(ii) declare the unpaid principal amount of, any and all accrued and unpaid interest on the Loan and all of the other Obligations to be, and the same shall thereupon be, immediately due and payable with all additional interest from time to time
accrued thereon and without presentment, demand, or protest or other requirements of any kind (including without limitation, valuation and appraisement, diligence, presentment, notice of intent to demand or accelerate and of acceleration), all of
which are hereby expressly waived by 

  

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Borrower. Without limiting Lender’s authority hereunder, on or after the Maturity Date, Lender may exercise any or all rights and remedies under the
Loan Documents or applicable law, including, without limitation, foreclosure upon the Property or any additional collateral. 
 (b) Access
to Information. 
 If an Event of Default then exists, Lender shall have, in addition to and not by way of a limitation of any other
rights and remedies contained in this Agreement or in the other Loan Documents, the right within forty-eight (48) hours after notice to Borrower to obtain access to Borrower’s records (including computerized information, files and
supporting software) relating to the Property, and its accounting information relating thereto, and to use all of the foregoing and the information contained therein in any manner Lender deems appropriate which is related to the preservation or
disposition of the Property or to the collection of the Obligations. Borrower hereby authorizes any accountant or management company employed by Borrower to deliver such items and information to Lender. Notwithstanding anything to the contrary
contained in the Loan Documents, upon the occurrence of and during the continuance of an Event of Default, Lender shall be entitled to request and receive, by or through Borrower or appropriate legal process, any and all information concerning
Borrower or any property of Borrower, which is reasonably available to or obtainable by Borrower. 
 (c) Use of Intangibles.

 To the extent Borrower has the power, without violating the terms of any agreement existing as of the Closing Date, to grant such a
license, Lender is hereby granted a license or other right to use, without charge, in connection with the exercise of Lender’s rights and remedies under the Loan Documents, Borrower’s copyrights, rights of use of any name, trade secrets,
trade names, tradestyles, trademarks, service marks and advertising matter, or any property of a similar nature, as it pertains to the Collateral. 
 (d) Waiver of Demand. 
 Demand, presentment, protest and notice of nonpayment are hereby waived by Borrower. Borrower also
waives, to the extent permitted by law, the benefit of all valuation, appraisal and exemption laws. 
 (e) Waivers, Amendments and
Remedies. 
 No delay or omission of Lender to exercise any right under any Loan Document shall impair such right or be construed to be a
waiver of any Event of Default or an acquiescence therein, and any single or partial exercise of any such right shall not preclude other or further exercise thereof or the exercise of any other right, and no waiver, amendment or other variation of
the terms, conditions or provisions of the Loan Documents whatsoever shall be valid unless in a writing signed by Lender, and then only to the extent in such writing specifically set forth. All remedies contained in the Loan Documents or by law
afforded shall be cumulative and all shall be available to Lender until the Obligations have been paid in full, the Loan has expired or terminated and this Agreement has been terminated. 
  

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 10.3 Permitted REIT Distributions. 
 Notwithstanding anything stated to the contrary in this Agreement or in any of the other Loan Documents, Borrower shall under all circumstances be entitled to receive income (other than Lease Termination Payments
referred to in Section 3.3 above) generated from the Property (including while an Event of Default may exist) to cover Permitted REIT Distributions, except that, while an Event of Default continues in existence, Borrower’s right to
receive such income to cover Permitted REIT Distributions shall be conditioned upon such income first being used (i) to cover accrued and unpaid interest due and owing under the Loan, and (ii) if such Event of Default is the failure to
repay principal on or after the stated Maturity Date of the Loan (without any accelleration), to repay principal outstanding under the Loan. In addition, notwithstanding anything stated to the contrary in this Agreement, in the Security Instrument
or in any of the other Loan documents, Lender agrees that at all times prior to the stated Maturity Date (without acceleration) the funding of all reserves and other amounts under the Loan are subject to the provisions contained in this Agreement
permitting disbursement to Borrower of cash flow from the Property (other than Lease Termination Payments referred to in Section 3.3 above) to make Permitted REIT Distributions. 
 ARTICLE XI 
 MISCELLANEOUS 
 11.1 Expenses. 
 (a) Generally.

 Borrower agrees upon demand to pay, or reimburse Lender for, all of Lender’s reasonable external audit, legal, appraisal, valuation
and investigation expenses and for all other reasonable out-of-pocket costs and expenses of every type and nature (including, without limitation, the reasonable fees, expenses and disbursements of Lender’s internal appraisers, environmental
advisors or legal counsel) incurred by Lender at any time (whether prior to, on or after the date of this Agreement) in connection with (i) its own audit and investigation of Borrower and the Property; (ii) the negotiation, preparation and
execution of this Agreement (including, without limitation, the satisfaction or attempted satisfaction of any of the conditions set forth in Article IV), the Security Instrument and the other Loan Documents and the making of the Loan;
(iii) any Appraisals; (iv) the creation, perfection or protection of Lender’s Lien on the Property and any additional collateral (including, without limitation, any fees and expenses for title and lien searches, local counsel in
various jurisdictions, filing and recording fees and taxes, duplication costs and corporate search fees); (v) administration of this Agreement, the other Loan Documents, the Loan and the Collateral; and (vi) the protection, collection or
enforcement of any of the Obligations or the Collateral, including Protective Advances. Lender shall endeavor in good faith to provide Borrower with written notice of any expected increased costs and expenses before incurring them. 
  

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 (b) After Event of Default. 
 Borrower further agrees to pay, or reimburse Lender, for all reasonable out-of-pocket costs and expenses, including without limitation reasonable
attorneys’ fees and disbursements incurred by Lender after the occurrence of an Event of Default (i) in enforcing any Obligation or in foreclosing against the Collateral or exercising or enforcing any other right or remedy available by
reason of such Event of Default; (ii) in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a “work-out” or in any insolvency or bankruptcy proceeding;
(iii) in commencing, defending or intervening in any litigation or in filing a petition, complaint, answer, motion or other pleadings in any legal proceeding relating to Borrower and related to or arising out of the transactions contemplated
hereby; (iv) in taking any other action in or with respect to any suit or proceeding (whether in bankruptcy or otherwise); (v) in protecting, preserving, collecting, leasing, selling, taking possession of, or liquidating any of the
Collateral; or (vi) in attempting to enforce or enforcing any Lien in any of the Collateral or any other rights under the Security Instrument. 
 11.2 Indemnity. 
 Borrower further agrees to defend, protect, indemnify and hold harmless Lender and each of its Affiliates and participants
and each of the respective officers, directors, employees, agents, attorneys and consultants (including, without limitation, those retained in connection with the satisfaction or attempted satisfaction of any of the conditions set forth in
Article IV) of each of the foregoing (collectively called the “Indemnitees”) from and against any and all Liabilities and Costs imposed on, incurred by, or asserted against such Indemnitees (whether based on any federal or
state laws or other statutory regulations, including, without limitation, securities and commercial laws and regulations, under common law or in equity, and based upon contract or otherwise, including any Liabilities and Costs arising as a result of
a “prohibited transaction” under ERISA to the extent arising from or in connection with the past, present or future operations of Borrower) in any manner relating to or arising out of this Agreement, the Security Instrument or the other
Loan Documents, or any act, event or transaction related or attendant thereto, the making of and participation in the Loan and the management of the Loan, or the use or intended use of the proceeds of the Loan (collectively, the “Indemnified
Matters”); provided, however, that Borrower shall not have any obligation to an Indemnitee hereunder with respect to (a) matters for which such Indemnitee has been compensated pursuant to or for which an exemption is
provided in any provision of this Agreement, and (b) Indemnified Matters to the extent caused by or resulting from the willful misconduct or gross negligence of that Indemnitee, as determined by a court of competent jurisdiction. To the extent
that the undertaking to indemnify, pay and hold harmless set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, Borrower shall contribute the maximum portion which it is permitted to pay and
satisfy under applicable law, to the payment and satisfaction of all Indemnified Matters incurred by the Indemnitees. 
 11.3 Change in
Accounting Principles. 
 Except as otherwise provided herein, if any changes in accounting principles from those used in the preparation of the most
recent financial statements delivered to Lender pursuant to the terms hereof are hereinafter required or permitted by the rules, regulations, pronouncements and opinions of the Financial Accounting Standards Board or the American Institute of
Certified 

  

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Public Accountants (or successors thereto or agencies with similar functions) and are adopted by Borrower with the agreement of its independent certified
public accountants and such changes result in a change in the method of calculation of any of the financial covenants, standards or terms found herein, the parties hereto agree to enter into negotiations in order to amend such provisions so as to
equitably reflect such changes with the desired result that the criteria for evaluating the financial condition of Borrower shall be the same after such changes as if such changes had not been made; provided, however, that no change in
GAAP that would affect the method of calculation of any of the financial covenants, standards or terms shall be given effect in such calculations until such provisions are amended, in a manner satisfactory to Lender, to so reflect such change in
accounting principles. 
 11.4 Amendments and Waivers. 
 (a) No amendment or modification of any provision of this Agreement shall be effective without the written agreement of Lender and Borrower, and (b) no termination or waiver of any provision of this Agreement, or
consent to any departure by Borrower therefrom, shall in any event be effective without the written concurrence of Lender, which Lender shall have the right to grant or withhold at its sole discretion. Any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was given. No notice to or demand on Borrower in any case shall entitle Borrower to any other further notice or demand in similar or other circumstances. 
 11.5 Independence of Covenants. 
 All covenants
hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or be otherwise within the limitations of, another covenant
shall not avoid the occurrence of an Event of Default or Unmatured Event of Default if such action is taken or condition exists, and if a particular action or condition is expressly permitted under any covenant, unless expressly limited to such
covenant, the fact that it would not be permitted under the general provisions of another covenant shall not constitute an Event of Default or Unmatured Event of Default if such action is taken or condition exists. 
 11.6 Notices and Delivery. 
 Unless otherwise
specifically provided herein, any consent, notice or other communication herein required or permitted to be given shall be in writing and may be personally served, telecopied or sent by courier service or United States mail and shall be deemed to
have been given when delivered in person or by courier service, upon receipt of a telecopy (or on the next Business Day if such telecopy is received on a non-Business Day or after 5:00 p.m. (at the office of the recipient) on a Business Day) or
delivery by the United States mail (registered or certified). Any party delivering a communication by telecopy shall also send a copy thereof by one of the other means provided in this Section 11.6. Notices to Lender pursuant to
Article II or the Note shall not be effective until received by Lender. For the purposes hereof, the addresses of the parties hereto (until notice of a change thereof is delivered as provided in this Section 11.6) shall be as set
forth below each party’s name on the signature pages hereof, or, as to each party, at such other address as may be designated by such party in a written notice to all of the other parties. 
  

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 11.7 Survival of Warranties, Indemnities and Agreements. 
 All agreements, representations, warranties and indemnities made or given herein shall survive the execution and delivery of this Agreement and the other Loan Documents
and the making and repayment of the Loan, and such indemnities shall survive termination hereof. 
 11.8 Failure or Indulgence Not Waiver;
Remedies Cumulative. 
 No failure or delay on the part of Lender in the exercise of any power, right or privilege under any of the Loan Documents shall
impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other
right, power or privilege. All rights and remedies existing under the Loan Documents are cumulative to and not exclusive of any rights or remedies otherwise available. 
 11.9 Marshalling; Payments Set Aside. 
 Lender shall not be under any obligation to marshal any assets in favor of
Borrower or any other Person or against or in payment of any or all of the Obligations. To the extent that Borrower makes a payment or payments to Lender or enforces its Liens or exercise its rights of setoff, and such payment or payments or the
proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or
federal law, common law or equitable cause, then to the extent of such recovery, the Obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor, shall be revived and continued in full force and effect
as if such payment had not been made or such enforcement or setoff had not occurred. 
 11.10 Severability. 
 In case any provision in or obligation under this Agreement or the other Loan Documents shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby, provided, however, that if the rates of
interest or any other amount payable hereunder, or the collectibility thereof, are declared to be or become invalid, illegal or unenforceable, Lender’s obligations to make the Loan shall not be enforceable. 
 11.11 Headings. 
 Section headings in this
Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. 
  

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 11.12 Governing Law; Waiver. 
 THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA. 
 11.13 Limitation of Liability. 
 To the extent permitted by applicable law, no claim may be made by Borrower or any
other Person against Lender, or the affiliates, directors, officers, employees, attorneys of Lender, for any special or punitive damages (as opposed to direct, indirect or consequential damages) in respect of any claim for breach of contract or any
other theory of liability arising out of or related to the transactions contemplated by this Agreement, or any act, omission or event occurring in connection therewith; and Borrower hereby waives, releases and agrees not to sue upon any claim for
any such damages, whether or not accrued and whether or not known or suspected to exist in its favor. 
 11.14 Successors and Assigns.

 This Agreement and the other Loan Documents shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the
benefit of the parties hereto and the successors and permitted assigns of Lender. Subject to Section 11.20, the terms and provisions of this Agreement shall inure to the benefit of any assignee or transferee of the Loan and the
commitment of Lender under this Agreement or any portion thereof, and in the event of any permitted such transfer or assignment, the rights and privileges herein conferred upon Lender shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. Borrower’s rights or any interest therein hereunder, and Borrower’s duties and Obligations hereunder, shall not be assigned without the consent of Lender. 
 11.15 Consent to Jurisdiction and Service of Process; Waiver of Jury Trial. 
 ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST BORROWER WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE AND ALL JUDICIAL PROCEEDINGS BROUGHT BY BORROWER WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION HAVING SITUS WITHIN THE BOUNDARIES OF THE FEDERAL COURT DISTRICT OF THE CENTRAL DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, BORROWER
ACCEPTS, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS
AVAILABLE. BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS NOTICE ADDRESS
SPECIFIED ON THE SIGNATURE PAGES HEREOF. TO THE EXTENT PERMITTED BY THEN APPLICABLE LAW, BORROWER 

  

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AND LENDER IRREVOCABLY WAIVE (A) TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, AND (B) ANY
OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF LENDER TO BRING PROCEEDINGS AGAINST BORROWER IN THE
COURTS OF ANY OTHER JURISDICTION. 
 11.16 Counterparts; Effectiveness; Inconsistencies. 
 This Agreement and any amendments, waivers, consents or supplements may be executed in counterparts, each of which when so executed and delivered shall be deemed an
original, but all such together shall constitute but one and the same instrument. This Agreement shall become effective when Borrower and Lender have duly executed and delivered signature pages of this Agreement to each other. This Agreement and
each of the other Loan Documents shall be construed to the extent reasonable to be consistent one with the other, but to the extent that the terms and conditions of this Agreement are actually and directly inconsistent with the terms and conditions
of any other Loan Document, this Agreement shall govern. 
 11.17 Performance of Obligations. 
 Borrower agrees that Lender may, but shall have no obligation to, make any payment or perform any act required of Borrower under any Loan Document or take any other
action which Lender in its discretion deems necessary or desirable to protect or preserve the Collateral, including without limitation, any action to (a) pay or discharge taxes, liens, security interests or other encumbrances levied or placed
on or threatened against any Collateral, and (b) effect any repairs or obtain any insurance called for by the terms of any of the Loan Documents and to pay all or any part of the premiums therefor and the costs thereof. 
 11.18 Construction. 
 The parties acknowledge that
each party and its counsel have reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this
Agreement or any amendments or exhibits hereto. 
 11.19 Entire Agreement. 
 This Agreement, taken together with all of the other Loan Documents and all certificates and other documents delivered by Borrower to Lender (including documents
incorporating separate agreements relating to the payment of fees), embodies the entire agreement and supersede all prior agreements, written and oral, relating to the subject matter hereof. 
  

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 11.20 Assignments and Participations. 
 (a) After first obtaining the approval of Borrower (other than upon the occurrence and during the continuance of any Event of Default),
which approval will not be unreasonably withheld, Lender may assign, to one or more banks or other institutional lenders, all or a portion of its rights and obligations under this Agreement and other Loan Documents; provided, however,
that (i) after giving effect to such assignment, the aggregate amount of the Loan Commitment retained by Lender and not participated out shall in no event be less than twenty percent (20%) thereof and (ii) subject to the rights that
an assignee of Lender may have to remove Lender, Lender shall at all times act as administrative agent with respect to the Loan. Borrower agrees to pay to Lender, for any such administrative agent services, a reasonable administrative fee not to
exceed $20,000 per annum. Without restricting the right of Borrower to reasonably object to any bank or other institutional lender becoming an assignee of an interest of Lender hereunder, each proposed assignee must be a bank or other institutional
lender which (A) has (or, in the case of a lender which is a subsidiary, such lender’s parent has) a rating of its senior unsecured debt obligations of not less than Baa-2 by Moody’s Investors Services or a comparable rating by a
rating agency acceptable to Lender and (B) has total assets in excess of Ten Billion Dollars ($10,000,000,000). Unless Borrower gives written notice to Lender that it objects to the proposed assignment (together with a written explanation of
the reasons behind such objection) within ten (10) days following receipt of Lender’s written request for approval of the proposed assignment, Borrower shall be deemed to have approved such assignment. Upon the effective date specified in
the applicable assignment and assumption agreement, (X) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such assignment and assumption, have the
rights and obligations of Lender hereunder, and (Y) Lender shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such assignment and assumption agreement, relinquish its rights and be released from its
obligations under this Agreement. 
 (b) Lender may sell participations to one or more financial institutions, private
investors, and/or other entities in or to all or a portion of its rights and obligations under this Agreement and other Loan Documents; provided, however, that (i) Lender’s obligations under this Agreement shall remain
unchanged, (ii) Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) Borrower shall continue to deal solely and directly with Lender in connection with Lender’s rights and
obligations under this Agreement and with regard to any and all payments to be made under this Agreement, (iv) after giving effect to such participation, the aggregate amount of the Loan Commitment retained by Lender that has not been assigned
or participated out shall in no event be less than twenty percent (20%) thereof, and (v) the holder of any such participation shall not be entitled to voting rights under their participation agreement except for voting rights with respect
to (A) increases in the Loan Commitment; (B) extensions of the Maturity Date not expressly provided for in Section 2.1(c) above; (C) decreases in the interest rates or fees except as described in this Agreement; and
(D) the release of all or any portion of any Property. 
  

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 (c) In the event of any such sale, assignment or participation, Lender and the parties to
such transaction shall share in the rights and obligations of Lender as set forth in the Loan Documents only as and to the extent they agree among themselves. Borrower will use reasonable efforts to cooperate with Lender in connection with the
assignment of interests under this Agreement or the sale of participations herein, and, upon written request by Lender, Borrower shall enter into such amendments or modifications to the Loan Documents as may be reasonably required in order to
evidence any such sale, assignment or participation, including separate Notes, so long as (i) Borrower’s obligations are not increased thereunder in any material respect and (ii) Borrower incurs no additional costs or additional
liabilities in connection therewith. 
 (d) Anything in this Agreement to the contrary notwithstanding, and without the need
to comply with any of the formal or procedural requirements of this Agreement, including the other provisions of this Section 11.20, Lender may at any time and from time to time pledge and assign all or any portion of its rights under
all or any of the Loan Documents to a Federal Reserve Bank; provided that no such pledge or assignment shall release Lender from its obligations thereunder. 
 11.21 Limitation on Personal Liability of Shareholders, Partners and Members. 
 Anything to the contrary contained in
any Loan Document, none of the constituent shareholders, partners or members in Borrower shall have any liability whatsoever for the payment or performance of any of the Obligations. Without limiting in any manner the generality of the foregoing,
Lender shall have no right to recover from any constituent shareholder, partner or member in Borrower any Distribution from Borrower; provided, however, that nothing in this Section 11.21 is intended, or shall be deemed, to
constitute a waiver of any rights Lender may have under the United States Bankruptcy Code or other applicable law with respect to fraudulent transfers or conveyances. 
 11.22 Cross-Default; Cross-Collateralization. 
 Borrower hereby acknowledges that, as consideration for Lender making
the Loan to Borrower, the Loan shall be cross-defaulted and cross-collateralized with the loans set forth on Schedule 11.22 attached hereto. Borrower further acknowledges that Lender would be unwilling to make the Loan if Borrower did not
agree to cooperate with Lender in executing any and all documents that Lender requests that Borrower execute in order to evidence such cross-defaults and cross-collateralization, including, without limitation, one or more modification agreements in
the form attached hereto as Exhibit E, or any additional mortgages or deeds of trust to be recorded against the Property. Notwithstanding anything to the contrary contained in any of the Loan Documents, any and all costs incurred by Lender
with respect to the foregoing shall be reimbursed by Borrower to Lender, including, without limitation, the costs of any amendments or endorsements to Lender’s policy of title insurance. 
  

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 11.23 USA Patriot Act Notice, Compliance. 
 The USA Patriot Act of 2001 (Public Law 107-56) and federal regulations issued with respect thereto require all financial institutions to obtain, verify and record
certain information that identifies individuals or business entities which open an “account” with such financial institution. Consequently, Lender may from time-to-time request, and Borrower shall provide to Lender, Borrower’s name,
address, tax identification number and/or such other identification information as shall be necessary for Lender to comply with federal law. An “account” for this purpose may include, without limitation, a deposit account, cash management
service, a transaction or asset account, a credit account, a loan or other extension of credit, and/or other financial services product. 
 11.24 Electronic Document Deliveries. 
 Unless otherwise directed by Lender, documents required to be delivered to Lender pursuant to the
Loan Documents shall be delivered by electronic communication and delivery, including, the Internet, e-mail or intranet websites to which Lender has access (including a commercial, third-party website such as www.Edgar.com
<http://www.Edgar.com> or a website sponsored or hosted by Lender or the Borrower) provided that the foregoing shall not apply to notices delivered to Lender pursuant to the Note. Borrower may, in its discretion, but shall not be required to,
agree to accept notices and other communications to it hereunder by electronic delivery pursuant to procedures approved by it for all or particular notices or communications. Documents or notices delivered electronically shall be deemed to have been
delivered twenty-four (24) hours after the date and time on which Lender or Borrower posts such documents or the documents become available on a commercial website and Lender or Borrower notifies the other party of said posting and provides a
link thereto provided if such notice or other communication is not sent or posted during the normal business hours of the recipient, said posting date and time shall be deemed to have commenced as of 9:00 a.m. on the opening of business on the next
business day for the recipient. Notwithstanding anything contained herein, Borrower shall deliver paper copies of any documents to the Lender, if Lender requests such paper copies, until a written request to cease delivering paper copies is given by
Lender. Lender shall have no obligation to request the delivery of or to maintain paper copies of the documents delivered electronically. For purposes of this Section 11.24, “Lender” shall mean Wells Fargo Bank, National
Association and any successors or assigns. 
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 IN WITNESS WHEREOF, this Agreement has been duly executed on the date set forth above. 
  

					
		 	LENDER:
		
		 	 WELLS FARGO BANK, NATIONAL ASSOCIATION

			
		 	By:	 	 /s/ John A. Ferguson

		 	Name:	 	John A. Ferguson
		 	Title:	 	Senior Vice President
		
		 	ADDRESS FOR NOTICE AND DELIVERY:
		
		 	Real Estate Group
		 	Orange County
		 	2030 Main Street, Suite 800
		 	Irvine, CA 92614
		 	Attn:	 	John Ferguson
		 		 	Senior Vice President
		 	Tel:	 	(949) 251-4310
		 	Fax:	 	(949) 851-9728

 [Signatures Continue on Next Page] 
  

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		 		 	BORROWER:
			
		 		 	 KBS NASHVILLE PORTFOLIO I, LLC,
 a
Delaware limited liability company

				
		 		 	By:	 	KBS REIT ACQUISITION XXVIII, LLC, 
		 		 		 	 a Delaware limited liability company,
 its
sole member

					
		 		 		 	By:	 	KBS REIT PROPERTIES, LLC,
		 		 		 		 	 a Delaware limited liability company,
 its
sole member

						
		 		 		 		 	By:	 	KBS LIMITED PARTNERSHIP,
		 		 		 		 		 	 a Delaware limited partnership,
 its sole
member

							
		 		 		 		 		 	By:	 	KBS REAL ESTATE INVESTMENT TRUST, INC.,
		 		 		 		 		 		 	 a Maryland corporation,
 general
partner

								
		 		 		 		 		 		 	By:	 	 /s/ Charles J. Schreiber, Jr.

		 		 		 		 		 		 		 	Charles J. Schreiber, Jr.
		 		 		 		 		 		 		 	Chief Executive Officer

  

					
	ADDRESS FOR NOTICE AND DELIVERY:	  		  	
			
	c/o KBS Capital Advisors LLC	  		  	With a copy to:
	620 Newport Center Drive, Suite 1300	  		  	Morgan, Lewis & Bockius LLP
	Newport Beach, CA 92660	  		  	5 Park Plaza, Suite 1750
	Attention: Stacie Yamane	  		  	Irvine, CA 92614
	Tel: (949) 417-6560	  		  	Attention: L. Bruce Fischer, Esq.
	Fax: (949) 417-6520	  		  	Tel: (949) 399-7145
		  		  	Fax: (949) 399-7001

  

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