Guaranty Agreement

This Guaranty Agreement (this “Guaranty”) is made as of the 23^rd day of December, 2014, by KBS REIT PROPERTIES III, LLC, a Delaware limited liability company (“Guarantor”), in favor of Bank of America, N.A., a national banking association, as agent for Lenders as that term is defined below (in such capacity, “Administrative Agent”), and each of the Lenders (as defined below).

Administrative Agent and certain other lenders from time to time (each a “Lender” and collectively, “Lenders”), and KBSIII Towers at Emeryville, LLC, a Delaware limited liability company (“Borrower”), are entering into concurrently herewith that certain Loan Agreement dated as of the date hereof (herein called, as it may hereafter be modified, supplemented, restated, extended, or renewed and in effect from time to time, the “Loan Agreement”), which Loan Agreement sets forth the terms and conditions of a loan (the “Loan”) to Borrower.

A condition precedent to Lenders’ obligation to make the Loan to Borrower is Guarantor’s execution and delivery to Administrative Agent of this Guaranty.

The Loan will be evidenced by those certain Promissory Notes of even date herewith, executed by Borrower and payable to the order of Lenders in the aggregate original face principal amount of One Hundred Seventy-Five Million Dollars ($175,000,000) (such notes, as they may hereafter be renewed, extended, supplemented, increased or modified and in effect from time to time, and all other notes given in substitution therefor, or in modification, renewal, or extension thereof, in whole or in part, are herein called the “Note”).

Any capitalized term used and not defined in this Guaranty shall have the meaning given to such term in the Loan Agreement. This Guaranty is one of the Loan Documents described in the Loan Agreement.

For good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and in order to induce Lenders to make the Loan to Borrower, Guarantor hereby guarantees to Lender the prompt and full payment and performance of the indebtedness and obligations described below in this Guaranty (collectively called the “Guaranteed Obligations”), this Guaranty being upon the following terms and conditions:

Section 1.Guaranty of Payment.

(a)    Guarantor hereby unconditionally and irrevocably guarantees to Administrative Agent and Lenders the punctual payment when due, whether by lapse of time, by acceleration of maturity, or otherwise, of (i) subject to the provisions of Section 1(b), Section 1(c) and Section 1(d) below, all principal of the Loan now or hereafter due and owing, or which Borrower is obligated to pay, pursuant to the terms of the Note, the Loan Agreement, the Deed of Trust, any of the other Loan Documents, as the same may from time to time be amended,

supplemented, restated or otherwise modified, and (ii) 100% of all amounts owing under the Environmental Agreement by Borrower if (and only if) the Environmental Insurance Policy (as defined in and substantially and materially in the form approved by Administrative Agent pursuant to the Loan Agreement) is not then in place or, if not then in place, does not otherwise cover Borrower for claims relating to environmental matters when and if demand is made by Administrative Agent under the Environmental Agreement delivered by Borrower (i.e., Guarantor shall have no liability under this Guaranty for, and the Indebtedness (as hereinafter defined) shall not include, amounts owing under the Environmental Agreement so long as the Environmental Insurance Policy is in place or otherwise covers the liability of Borrower for environmental matters at the time demand is made by Administrative Agent or a Lender to Borrower under the Environmental Agreement, whether or not the claim relating to any such environmental matter is a covered claim under such Environmental Insurance Policy) (the amounts described in clauses (i) and (ii) above shall be referred to herein, collectively, as the “Indebtedness”). The Indebtedness shall also include all costs and expenses incurred by Administrative Agent or any Lender in seeking to enforce Administrative Agent’s or Lenders’ rights and remedies under this Guaranty, including court costs, costs of alternative dispute resolution and reasonable attorneys’ fees, whether or not suit is filed or other proceedings are initiated thereon. This Guaranty covers, subject to the other terms and conditions of this Guaranty, the Indebtedness presently outstanding and the Indebtedness arising subsequent to the date hereof, including all amounts advanced by Administrative Agent or Lenders in stages or installments. The guaranty of Guarantor as set forth in this Section 1 is a continuing guaranty of payment and not a guaranty of collection.

(b)    Notwithstanding anything stated to the contrary in Section 1(a) above, and subject to Section 1(c) below, Guarantor’s maximum liability under clause (i) of Section 1(a) of this Guaranty shall in no event exceed twenty-five percent (25%) (the “Repayment Guaranty Obligation”) of the then outstanding principal balance under the Loan that was disbursed by any Lender pursuant the terms of the Loan Agreement and that remains unpaid (which shall expressly exclude any other amounts that were not disbursed under such provisions notwithstanding that the same may be characterized as “principal” or amounts owing under the Loan or any Note (e.g., interest not paid when due, advances made by Administrative Agent or a Lender to protect its collateral, or advances to pay costs payable by Borrower under the Loan Documents or otherwise)) (the “Guaranteed Principal Amount”), such amount calculated as of the date the outstanding principal balance of the Loan becomes due and payable in full as a result of maturity or acceleration or otherwise. The Guaranteed Principal Amount shall only be reduced by payments actually received by Administrative Agent or a Lender from Guarantor, which are applied to the outstanding principal balance of the Loan. In no event shall any payment received by Administrative Agent or any Lender from any other party with respect to the Loan, or any amount received by Administrative Agent or any Lender as a result of any exercise of remedies by Administrative Agent or Lenders under any other Loan Document, reduce the Guaranteed Principal Amount or any other obligation of Guarantor hereunder.

(c)    Notwithstanding Section 1(b) above, Guarantor shall be liable for one hundred percent (100%) of the repayment obligations under clause (i) of Section 1(a) upon a Triggering Event (as hereinafter defined).

(d)    Administrative Agent shall grant a request by Guarantor to terminate the Guarantor’s obligations under clause (i) of Section 1(a) and Section 1(b) of this Guaranty (the “Repayment Guaranty Termination Event”), which shall be evidenced by a written confirmation by Administrative Agent in form and substance reasonably acceptable to Guarantor, upon and subject to the following terms and conditions:

(i)    Guarantor shall request the termination, if at all, by written notice to Administrative Agent not more than ninety (90) days, and not less than thirty (30) days, prior to the effective date of any proposed Repayment Guaranty Termination Event each, a “Termination Request Date”).

(ii)    The Repayment Guaranty Termination Event shall be effective no earlier than December 31, 2015 and, thereafter, the Repayment Guaranty Termination Event shall be effective as of June 30 or December 31 of the applicable year.

(iii)    At the time of the request and as of the effective date of any Repayment Guaranty Termination Event, there shall not exist any Default or Potential Default.

(iv)    Administrative Agent shall have received and approved an MAI appraisal of the Property then subject to the lien of the Deed of Trust meeting all applicable regulatory requirements, taking into account then-current market conditions.

(v)    Whether or not the termination becomes effective, Guarantor shall pay all reasonable out-of-pocket costs and expenses incurred by Administrative Agent in connection with the requested termination, including appraisal fees and reasonable attorneys’ fees actually incurred by Administrative Agent; all such reasonable costs and expenses incurred up to the time of Administrative Agent’s written agreement to the termination shall be due and payable on or prior to Administrative Agent’s execution of that agreement (or if the proposed termination does not become effective, then upon demand by Administrative Agent), and any future failure to pay such amounts within ten (10) Banking Days following written request of such payment, shall constitute a default under the Loan Documents.

(vi)    The Property shall have achieved a Loan-to-Value Ratio of less than or equal to sixty percent (60%). The conditions contained in this clause (v) may also be satisfied by, in Borrower’s sole discretion, a voluntary paydown of the Loan, without prepayment fees or premiums other than the payment of any Consequential Loss under Section 2.5 of the Loan Agreement in an aggregate amount sufficient to cause such Loan-to-Value Ratio to be met.

(vii)    The Property shall have an Ongoing Debt Service Coverage Ratio of at least 1.30 to 1.00. The conditions contained in this clause (vi) may also be satisfied by, in Borrower’s sole discretion, a voluntary paydown of the Loan, without prepayment fees or premiums other than the payment of any Consequential Loss under Section 2.5 of the Loan Agreement in an aggregate amount sufficient to cause such Ongoing Debt Service Coverage Ratio to be met.

Section 2.    Guaranty of Specific Obligations.

Guarantor also hereby unconditionally and irrevocably guarantees payment of, and agrees to protect, defend, indemnify and hold harmless Administrative Agent and each Lender for, from and against, 100% of any deficiency, loss or damage suffered by Administrative Agent or any Lender because of:

(a)    The intentional misapplication or misappropriation by Borrower of any funds derived from the Property, including the misapplication or misappropriation by Borrower of rent, security deposits, insurance proceeds, condemnation awards, or other income arising with respect to the Property;

(b)    Borrower's intentional commission of physical waste with respect to the Property;

(c)    The fraud or intentional misrepresentation by Borrower or Guarantor made in or in connection with the Loan Documents or the Loan;

(d)    Any voluntary transfer of the Property in violation of the terms of the Loan Documents; or

(e)    Borrower's voluntary filing of any proceeding for relief under any federal or state bankruptcy, insolvency or receivership laws or any assignment for the benefit of creditors made by Borrower, or the involuntary filing against Borrower by any member of Borrower, Guarantor or any Affiliate thereof of any proceeding for relief under any federal or state bankruptcy, insolvency or receivership laws, and such proceeding is not dismissed within ninety (90) days of the filing thereof (a “Triggering Event”).

Section 3.    Primary Liability of Guarantor.

(a)    This Guaranty is an absolute, irrevocable and unconditional guaranty of payment and performance. This Guaranty shall be effective as a waiver of, and Guarantor hereby expressly waives, any right to which Guarantor may otherwise have been entitled, whether existing under statute, at Law or in equity, to require Administrative Agent or any Lender to take prior recourse or proceedings against any collateral, security or Person. It shall not be necessary for Administrative Agent or any Lender, in order to enforce such payment or performance by Guarantor, first to institute suit or pursue or exhaust any rights or remedies against Borrower or other Person liable on such indebtedness or for such performance, or to enforce any rights against any security given to secure such indebtedness or performance, or to join Borrower or any other Person liable for the payment or performance of the Guaranteed Obligations or any part thereof in any action to enforce this Guaranty, or to resort to any other means of obtaining payment or performance of the Guaranteed Obligations; provided, however, that nothing herein contained shall prevent Administrative Agent or any Lender from foreclosing the Deed of Trust or exercising any other right under the Loan Documents.

(b)    Suit may be brought or demand may be made against Borrower or against any or all parties who have signed this Guaranty or any other guaranty covering all or any part of the

Guaranteed Obligations, or against any one or more of them, separately or together, without impairing the rights of Administrative Agent or any Lender against any party hereto.

Section 4.    Certain Agreements and Waivers by Guarantor.

(a)    Guarantor agrees that neither the rights or remedies of Administrative Agent and Lenders nor Guarantor’s obligations under the terms of this Guaranty shall be released, diminished, impaired, reduced or affected by any one or more of the following events, actions, facts, or circumstances, Guarantor waives any rights, claims or defenses arising from any such events, actions, facts, or circumstances, and the liability of Guarantor under this Guaranty shall be absolute, unconditional and irrevocable irrespective of:

(i)    any limitation on the liability of, or recourse against, any other Person in any Loan Document or arising under any Law;

(ii)    any claim or defense that this Guaranty was made without consideration or is not supported by adequate consideration or that the obligations of Guarantor hereunder exceed or are more burdensome than those of Borrower under the other Loan Documents;

(iii)    the release or taking or accepting of any other security or guaranty for, or right of recourse with respect to, any or all of the Guaranteed Obligations;

(iv)    the operation of any statutes of limitations or other Laws regarding the limitation of actions, all of which are hereby waived as a defense to any action or proceeding brought by Administrative Agent or any Lender against Guarantor, to the fullest extent permitted by Law;

(v)    any homestead exemption or any other exemption under applicable Law;

(vi)    any release, surrender, abandonment, exchange, alteration, sale or other disposition, subordination, deterioration, waste, failure to protect or preserve, impairment, or loss of, or any failure to create or perfect any lien or security interest with respect to, or any other dealings with, any collateral or security at any time existing or purported, believed or expected to exist in connection with any or all of the Guaranteed Obligations, or any impairment of Guarantor’s recourse against any Person or collateral;

(vii)    whether express or by operation of Law, any partial release of the liability of Guarantor hereunder (except to the extent expressly so released) or any complete or partial release of Borrower or any other Person liable, directly or indirectly, for the payment or performance of any or all of the Guaranteed Obligations;

(viii)    the death, insolvency, bankruptcy, disability, incapacity, dissolution, liquidation, termination, receivership, reorganization, merger, consolidation, change of form, structure or ownership, sale of all assets, or lack of corporate, partnership or other power of Borrower or any other Person at any time liable for the payment or performance of any or all of the Guaranteed Obligations;

(ix)    either with or without notice to or consent of Guarantor, any renewal, extension, modification, supplement, subordination or rearrangement of the terms of any or all of the Guaranteed Obligations and/or any of the Loan Documents, including material alterations of the terms of payment (including changes in maturity date(s) and interest rate(s)) or performance (including changes with respect to the construction of the Improvements) or any other terms thereof, or any waiver, termination, or release of, or consent to departure from, any of the Loan Documents or any other guaranty of any or all of the Guaranteed Obligations, or any adjustment, indulgence, forbearance, or compromise that may be granted from time to time by Administrative Agent or Lenders to Borrower or any other Person at any time liable for the payment or performance of any or all of the Guaranteed Obligations;

(x)    any neglect, lack of diligence, delay, omission, failure, or refusal of Administrative Agent or any Lender to take or prosecute (or in taking or prosecuting) any action for the collection or enforcement of any of the Guaranteed Obligations, or to foreclose or take or prosecute any action to foreclose (or in foreclosing or taking or prosecuting any action to foreclose) upon any security therefor, or to exercise (or in exercising) any other right or power with respect to any security therefor, or to take or prosecute (or in taking or prosecuting) any action in connection with any Loan Document, or any failure to sell or otherwise dispose of in a commercially reasonable manner any collateral securing any or all of the Guaranteed Obligations;

(xi)    any failure of Administrative Agent or any Lender to notify Guarantor of any creation, renewal, extension, rearrangement, modification, supplement, subordination, or assignment of the Guaranteed Obligations or any part thereof, or of any Loan Document, or of any release of or change in any security, or of the occurrence or existence of any Default or Potential Default, or of any other action taken or refrained from being taken by Administrative Agent or any Lender against Borrower or any security or other recourse, or of any new agreement between or among Administrative Agent, any Lender and Borrower, it being understood that Administrative Agent shall not be required to give Guarantor any notice of any kind under any circumstances with respect to or in connection with the Guaranteed Obligations, any and all rights to notice Guarantor may have otherwise had being hereby waived by Guarantor, and Guarantor shall be responsible for obtaining for itself information regarding Borrower and any collateral, including any changes in the business or financial condition of Borrower or any collateral, and Guarantor acknowledges and agrees that neither Administrative Agent nor any Lender shall have any duty to notify Guarantor of any information which Administrative Agent or such Lender may have concerning Borrower or any collateral;

(xii)    the existence of any claim, counterclaim, set off or other right that Guarantor may at any time have against Borrower, any failure of Administrative Agent or any Lender to notify Guarantor of any creation, renewal, extension, rearrangement, modification, supplement, subordination, or assignment of the Guaranteed Obligations or any part thereof, or of any Loan Document, or of any release of or change in any security, or of the occurrence or existence of any Default or Potential Default, or of any other action taken or refrained from being taken by Administrative Agent or any Lender against Borrower or any security or other recourse, or of any new agreement between or

among Administrative Agent, any Lender and Borrower, it being understood that Administrative Agent shall not be required to give Guarantor any notice of any kind under any circumstances with respect to or in connection with the Guaranteed Obligations, any and all rights to notice Guarantor may have otherwise had being hereby waived by Guarantor, and Guarantor shall be responsible for obtaining for itself information regarding Borrower and any collateral, including any changes in the business or financial condition of Borrower or any collateral, and Guarantor acknowledges and agrees that neither Administrative Agent nor any Lender shall have any duty to notify Guarantor of any information which Administrative Agent or such Lender may have concerning Borrower or any collateral;

(xiii)    , any Lender, or any other Person, whether or not arising in connection with this Guaranty, any Note, the Loan Agreement, the Environmental Agreement or any other Loan Document;

(xiv)    any order, ruling or plan of reorganization emanating from proceedings under Title 11 of the United States Code with respect to Borrower or any other Person, including any extension, reduction, composition, or other alteration of the Guaranteed Obligations, whether or not consented to by Administrative Agent or any Lender, or any action taken or omitted by Administrative Agent or any Lender in any such proceedings, including any election to have Administrative Agent’s or such Lender’s claim allowed as being secured, partially secured or unsecured, any extension of credit by Administrative Agent or such Lender in any such proceedings or the taking and holding by Administrative Agent or such Lender of any security for any such extension of credit;

(xv)    any other condition, event, omission, action or inaction that would in the absence of this Subsection result in the release or discharge of Guarantor from the performance or observance of any obligation, covenant or agreement contained in this Guaranty or any other agreement;

(xvi)    any early termination of any of the Guaranteed Obligations;

(xvii)    Administrative Agent’s or any Lender’s enforcement or forbearance from enforcement of the Guaranteed Obligations on a net or gross basis; or

(xviii)    any liability, irregularity or unenforceability in whole or in part (including with respect to any netting provision) of any Swap Contract or any confirmation, instrument or agreement required thereunder or related thereto, or any transaction entered into thereunder, or any limitation on the liability of Borrower thereunder or any limitation on the method or terms of payment thereunder which may now or hereafter be caused or imposed in any manner whatsoever.

(b)    In the event any payment by Borrower or any other Person to Administrative Agent or any Lender is held to constitute a preference, fraudulent transfer or other voidable payment under any bankruptcy, insolvency or similar Law, or if for any other reason Administrative Agent or any Lender is required to refund such payment or pay the amount

thereof to any other party, such payment by any Borrower or any other party to Administrative Agent or such Lender shall not constitute a release of Guarantor from any liability hereunder, and this Guaranty shall continue to be effective or shall be reinstated (notwithstanding any prior release, surrender or discharge by Administrative Agent of this Guaranty or of Guarantor), as the case may be, with respect to, and this Guaranty shall apply to, any and all amounts so refunded by Administrative Agent or any Lender or paid by Administrative Agent or any Lender to another Person (which amounts shall constitute part of the Guaranteed Obligations), and any interest paid by Administrative Agent or any Lender and any attorneys’ fees, costs and expenses paid or incurred by Administrative Agent or any Lender in connection with any such event.

(c)    It is the intent of Guarantor and Lender that the obligations and liabilities of Guarantor hereunder are absolute, irrevocable and unconditional under any and all circumstances and that until the Guaranteed Obligations are fully and finally paid and performed, and not subject to refund or disgorgement, the obligations and liabilities of Guarantor hereunder shall not be discharged or released, in whole or in part, by any act or occurrence that might, but for the provisions of this Guaranty, be deemed a legal or equitable discharge or release of a guarantor.

(d)    Guarantor’s obligations shall not be affected, impaired, lessened or released by loans, credits or other financial accommodations now existing or hereafter advanced by Administrative Agent or any Lender to Borrower in excess of the Guaranteed Obligations. All payments, repayments and prepayments of the Loan, whether voluntary or involuntary, received by Administrative Agent or any Lender from Borrower, any other Person or any other source (other than from Guarantor pursuant to a demand by Administrative Agent hereunder), and any amounts realized from any collateral for the Loan, shall be deemed to be applied first to any portion of the Loan which is not covered by this Guaranty, and last to the Guaranteed Obligations, and this Guaranty shall bind Guarantor to the extent of any Guaranteed Obligations that may remain owing to Administrative Agent or any Lender. Administrative Agent shall have the right to apply any sums paid by Guarantor to any portion of the Loan in Administrative Agent’s sole and absolute discretion.

(e)    If acceleration of the time for payment of any amount payable by Borrower under any Note, the Loan Agreement, or any other Loan Document is stayed or delayed by any Law or tribunal, all such amounts shall nonetheless be payable by Guarantor on demand by Administrative Agent.

(f)    Guarantor further waives: (i) any defense to the recovery by Administrative Agent or any Lender against Guarantor of any deficiency or otherwise to the enforcement of this Guaranty or any security for this Guaranty based upon Administrative Agent’s or any Lender’s election of any remedy against Guarantor or Borrower, including the defense to enforcement of this Guaranty (the so-called “Gradsky” defense) which, absent this waiver, Guarantor would have by virtue of an election by Administrative Agent or any Lender to conduct a non-judicial foreclosure sale (also known as a “trustee’s sale”) of any real property security for the Indebtedness, it being understood by Guarantor that any such non-judicial foreclosure sale will destroy, by operation of California Code of Civil Procedure (“CCP”) Section 580d, all rights of any party to a deficiency judgment against Borrower and, as a consequence, will destroy all rights that Guarantor would otherwise have (including the right of subrogation, the right of reimbursement, and the right of contribution) to proceed against Borrower; (ii) any defense or

benefits that may be derived from CCP Sections 580a, 580b, 580d or 726, or comparable provisions of the Laws of any other jurisdiction and all other anti-deficiency and one form of action defenses under the Laws of California and any other jurisdiction; and (iii) any right to a fair value hearing under CCP Section 580a, or any other similar Law, to determine the size of any deficiency owing (for which Guarantor would be liable hereunder) following a non-judicial foreclosure sale. Nothing in this subsection (f) shall operate to change, waive or affect the provisions of Section 19 hereof.

(g)    Without limiting any other provision of this Guaranty, Guarantor waives all rights and defenses that Guarantor may have because the Guaranteed Obligations are secured by real property. This means, among other things:

(i)    That Administrative Agent or Lenders may collect from Guarantor without first foreclosing on any real or personal property collateral pledged by Borrower; and

(ii)    If Administrative Agent forecloses on any real property collateral pledged by Borrower: (A) the amount of the Guaranteed Obligations may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price; and (B) Administrative Agent and Lenders may collect from Guarantor even if Administrative Agent, by foreclosing on the real property collateral, has destroyed any right Guarantor may have to collect from Borrower.

This is an unconditional and irrevocable waiver of any rights and defenses that Guarantor may have because the Guaranteed Obligations are secured by real property. These rights and defenses include, but are not limited to, any rights or defenses based upon CCP Sections 580a, 580b, 580d, or 726.

(h)    Guarantor waives all rights and defenses arising out of an election of remedies by Administrative Agent and Lenders, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for the Guaranteed Obligations, has destroyed Guarantor’s rights of subrogation and reimbursement against Borrower by operation of CCP Section 580d or otherwise.

(i)    Guarantor waives Guarantor’s rights of subrogation and reimbursement, including (i) any defenses Guarantor may have by reason of an election of remedies by Administrative Agent and Lenders, and (ii) any rights or defenses Guarantor may have by reason of protection afforded to Borrower with respect to the Guaranteed Obligations pursuant to the anti-deficiency or other Laws of California limiting or discharging Borrower’s obligations, including CCP Sections 580a, 580b, 580d or 726.

(j)    Guarantor waives notice of acceptance of this Guaranty, any rights, defenses and benefits that may be derived from Sections 2787 to 2855, inclusive, of the California Civil Code or comparable provisions of the Laws of any other jurisdiction, and all other suretyship defenses Guarantor would otherwise have under the Laws of California or any other jurisdiction.

(k)    No provision or waiver in this Guaranty shall be construed as limiting the generality of any other provision or waiver contained in this Guaranty. All of the waivers contained herein are irrevocable and unconditional and are intentionally and freely made by Guarantor.

Section 5.    Subordination.

If, for any reason whatsoever, Borrower is now or hereafter becomes indebted to Guarantor:

(a)    such indebtedness and all interest thereon and all liens, security interests and rights now or hereafter existing with respect to property of Borrower securing such indebtedness shall, at all times, be subordinate in all respects to the Guaranteed Obligations and to all liens, security interests and rights now or hereafter existing to secure the Guaranteed Obligations;

(b)    Guarantor shall not be entitled to enforce or receive payment, directly or indirectly, of any such indebtedness of Borrower to Guarantor until the Guaranteed Obligations have been fully and finally paid and performed; provided, however, that so long as no Default shall have occurred and be continuing, Guarantor shall not be prohibited from receiving such (i) reasonable management fees or reasonable salary from Borrower as Administrative Agent may find acceptable from time to time in its sole and absolute discretion, and (ii) distributions from Borrower in an amount equal to any income taxes imposed on Guarantor which are attributable to Borrower’s income from the Property;

(c)    Guarantor hereby assigns and grants to Administrative Agent a security interest in all such indebtedness and security therefor, if any, of Borrower to Guarantor now existing or hereafter arising, including any dividends and payments pursuant to debtor relief or insolvency proceedings referred to below. In the event of receivership, bankruptcy, reorganization, arrangement or other debtor relief or insolvency proceedings involving Borrower as debtor, Administrative Agent shall have the right to prove its claim in any such proceeding so as to establish its rights hereunder and shall have the right to receive directly from the receiver, trustee or other custodian (whether or not a Default or an Event of Default shall have occurred or be continuing under any of the Loan Documents), dividends and payments that are payable upon any obligation of Borrower to Guarantor now existing or hereafter arising, and to have all benefits of any security therefor, until the Guaranteed Obligations have been fully and finally paid and performed. If, notwithstanding the foregoing provisions, Guarantor should receive any payment, claim or distribution that is prohibited as provided above in this Section 5, Guarantor shall pay the same to Administrative Agent immediately, Guarantor hereby agreeing that it shall receive the payment, claim or distribution in trust for Administrative Agent and shall have absolutely no dominion over the same except to pay it immediately to Administrative Agent; and

(d)    Guarantor shall promptly upon written request of Administrative Agent from time to time execute such documents and perform such acts as Administrative Agent may reasonably require to evidence and perfect its interest and to permit or facilitate exercise of its rights under this Section 5, including execution and delivery of proofs of claim, further assignments and security agreements, and delivery to Administrative Agent of any promissory notes or other instruments evidencing indebtedness of Borrower to Guarantor. All promissory notes, accounts

receivable ledgers or other evidences, now or hereafter held by Guarantor, of obligations of such Borrower to Guarantor shall contain a specific written notice thereon that the indebtedness evidenced thereby is subordinated under and is subject to the terms of this Guaranty.

Section 6.    Other Liability of Guarantor or Borrower.

If Guarantor is or becomes liable, by endorsement or otherwise, for any indebtedness owing by Borrower to Administrative Agent or any Lender other than under this Guaranty, such liability shall not be in any manner impaired or affected hereby, and the rights of Administrative Agent and Lenders hereunder shall be cumulative of any and all other rights that Administrative Agent or any Lender may have against Guarantor. If Borrower is or becomes indebted to Administrative Agent or any Lender for any indebtedness other than or in excess of the Guaranteed Obligations, any payment received or recovery realized upon such other indebtedness of Borrower to Administrative Agent or such Lender may be applied to such other indebtedness. This Guaranty is independent of (and shall not be limited by) any other guaranty now existing or hereafter given. Further, Guarantor’s liability under this Guaranty is in addition to any and all other liability Guarantor may have in any other capacity, including, if applicable, its capacity as a general partner.

Section 7.    Lender Assigns; Disclosure of Information.

This Guaranty is for the benefit of Administrative Agent and Lenders and the permitted successors and assigns of each of them. Administrative Agent and any Lender may, at any time, sell, transfer or assign all or a portion of its interest in the Guaranteed Obligations and the Loan Documents, on and subject to the terms and conditions of the Loan Agreement. In the event of any such permitted sale, transfer or assignment of the Guaranteed Obligations or any part thereof, the rights and benefits under this Guaranty, to the extent applicable to the Guaranteed Obligations so sold, transferred or assigned, may be transferred with such obligations. Subject to the provisions of Section 9.5 of the Loan Agreement, Guarantor waives notice of any sale, transfer or assignment of the Guaranteed Obligations and/or this Guaranty or any part thereof, and agrees that failure to give notice of any such sale, transfer or assignment will not affect the liability of Guarantor hereunder. Subject to the terms and conditions of the Loan Agreement, including, without limitation, Section 9.6 thereof, Administrative Agent and each Lender are hereby authorized to disseminate any information they now have or hereafter obtain pertaining to the Guaranteed Obligations or this Guaranty, including credit or other information on Borrower, Guarantor and/or any party liable, directly or indirectly, for any part of the Guaranteed Obligations, to any actual or prospective assignee or participant with respect to the Guaranteed Obligations, to any of the affiliates of Administrative Agent or such Lender, including Merrill Lynch, Pierce, Fenner & Smith Incorporated, to any regulatory body having jurisdiction over Administrative Agent or such Lender, and to any other parties as necessary or appropriate in the reasonable judgment of Administrative Agent or such Lender.

Section 8.    Binding Effect; Joint and Several Liability.

This Guaranty is binding not only on Guarantor, but also on Guarantor’s heirs, personal representatives, successors and assigns. Upon the death of Guarantor, if Guarantor is a natural person, this Guaranty shall continue against Guarantor’s estate as to all of the Guaranteed

Obligations, including that portion incurred or arising after the death of Guarantor and shall be provable in full against Guarantor’s estate, whether or not the Guaranteed Obligations are then due and payable. If this Guaranty is signed by more than one Person, then all of the obligations of Guarantor arising hereunder shall be jointly and severally binding on each of the undersigned, and their respective heirs, personal representatives, successors and assigns, and the term “Guarantor” shall mean all of such Persons and each of them individually.

Section 9.    Governing Law.

The validity, enforcement, and interpretation of this Guaranty, shall for all purposes be governed by and construed in accordance with the laws of the State of California and applicable United States federal law, and is intended to be performed in accordance with, and only to the extent permitted by, such laws. All obligations of Guarantor hereunder are payable and performable at the place or places where the Guaranteed Obligations are payable and performable.

Section 10.    Invalidity of Certain Provisions.

If any provision of this Guaranty or the application thereof to any Person or circumstance shall, for any reason and to any extent, be declared to be invalid or unenforceable, neither the remaining provisions of this Guaranty nor the application of such provision to any other Person or circumstance shall be affected thereby, and the remaining provisions of this Guaranty, or the applicability of such provision to other Persons or circumstances, as applicable, shall remain in effect and be enforceable to the maximum extent permitted by applicable Law.

Section 11.    Costs and Expenses of Enforcement.

Guarantor shall pay on demand all reasonable attorneys’ fees and all other costs and expenses incurred by Administrative Agent in the enforcement of or preservation of Administrative Agent or Lenders’ rights under this Guaranty including all attorneys’ fees and expenses, investigation costs, and all court costs, whether or not suit is filed hereon, or whether at maturity or by acceleration, or whether before or after maturity, or whether in connection with bankruptcy, insolvency or appeal.

Section 12.    No Usury.

It is not the intention of Administrative Agent, any Lender or Guarantor to obligate Guarantor to pay interest in excess of that lawfully permitted to be paid by Guarantor under applicable Law. Should it be determined that any portion of the Guaranteed Obligations or any other amount payable by Guarantor under this Guaranty constitutes interest in excess of the maximum amount of interest that Guarantor, in Guarantor’s capacity as guarantor, may lawfully be required to pay under applicable Law, the obligation of Guarantor to pay such interest shall automatically be limited to the payment thereof in the maximum amount so permitted under applicable Law. The provisions of this Section shall override and control all other provisions of this Guaranty and of any other agreement between Guarantor, Administrative Agent and Lenders.

Section 13.    Representations, Warranties, and Covenants of Guarantor.

Guarantor hereby represents, warrants, and covenants that: (a) Guarantor has a financial interest (indirectly) in Borrower and will derive a material and substantial benefit, directly or indirectly, from the making of the Loan to Borrower and from the making of this Guaranty by Guarantor; (b) this Guaranty is duly authorized and valid, and is binding upon and enforceable against Guarantor; (c) Guarantor is not, and the execution, delivery and performance by Guarantor of this Guaranty will not cause Guarantor to be, in violation of or in default with respect to any law or in default (or at risk of acceleration of indebtedness) under any agreement or restriction by which Guarantor is bound or affected; (d) unless Guarantor is a natural person, Guarantor is duly organized, validly existing, and in good standing under the laws of the state of its organization and has full power and authority to enter into and perform this Guaranty; (e) there is no material litigation pending with respect to which process has been served or, to the knowledge of Guarantor, threatened by or before any tribunal against or affecting Guarantor which, if adversely determined, would have a material adverse effect on Guarantor’s ability to perform its obligations hereunder; (f) all financial statements and information heretofore furnished to Administrative Agent by Guarantor do, and all financial statements and information hereafter furnished to Administrative Agent by Guarantor will, fully and accurately present the condition (financial or otherwise) of Guarantor as of their dates and the results of Guarantor’s operations for the periods therein specified, and, since the date of the most recent financial statements of Guarantor heretofore furnished to Administrative Agent, no material adverse change has occurred in the financial condition of Guarantor, nor, except as heretofore disclosed in writing to Administrative Agent, has Guarantor incurred any material liability, direct or indirect, fixed or contingent; (g) after giving effect to this Guaranty, Guarantor is solvent, is not engaged or about to engage in business or a transaction for which the property of Guarantor is an unreasonably small capital, and does not intend to incur or believe that it will incur debts that will be beyond its ability to pay as such debts mature; and (h) Guarantor has read and fully understands the provisions contained in the Note, the Loan Agreement, the Deed of Trust, the Environmental Agreement and the other Loan Documents. Guarantor’s representations, warranties and covenants are a material inducement to Administrative Agent to enter into the other Loan Documents and any Swap Contract, and shall survive the execution hereof and any bankruptcy, foreclosure, transfer of security or other event affecting Borrower, Guarantor, any other party, or any security for all or any part of the Guaranteed Obligations.

Section 14.    Notices.

All notices, requests, consents, demands and other communications required or which any party desires to give hereunder or under any other Loan Document shall be in writing and, unless otherwise specifically provided in such other Loan Document, shall be deemed sufficiently given or furnished if delivered by personal delivery, by nationally recognized overnight courier service, or by certified United States mail, postage prepaid, addressed to the party to whom directed at the addresses specified in this Guaranty (unless changed by similar notice in writing given by the particular party whose address is to be changed) or by facsimile. Any such notice or communication shall be deemed to have been given either at the time of personal delivery or, in the case of courier or mail, as of the date of first attempted delivery at the address and in the manner provided herein, or, in the case of facsimile, upon receipt; provided that service of a notice required by any applicable statute shall be considered complete when the

requirements of that statute are met. Notwithstanding the foregoing, no notice of change of address shall be effective except upon actual receipt. This Section shall not be construed in any way to affect or impair any waiver of notice or demand provided in this Guaranty or in any other Loan Document or to require giving of notice or demand to or upon any Person in any situation or for any reason.

Section 15.    Cumulative Rights.

All of the rights and remedies of Administrative Agent and Lenders under this Guaranty and the other Loan Documents are cumulative of each other and of any and all other rights at law or in equity, and the exercise by Administrative Agent or any Lender of any one or more of such rights and remedies shall not preclude the simultaneous or later exercise by Administrative Agent or any Lender of any or all such other rights and remedies. No single or partial exercise of any right or remedy shall exhaust it or preclude any other or further exercise thereof, and every right and remedy may be exercised at any time and from time to time. No failure by Administrative Agent or Lenders to exercise, nor delay in exercising, any right or remedy shall operate as a waiver of such right or remedy or as a waiver of any Default. No notice to or demand on Guarantor in any case shall of itself entitle Guarantor to any other or further notice or demand in similar or other circumstances. No provision of this Guaranty or any right or remedy of Administrative Agent or any Lender with respect hereto, or any default or breach, can be waived, nor can this Guaranty or Guarantor be released or discharged in any way or to any extent, except specifically in each case by a writing intended for that purpose (and which refers specifically to this Guaranty) executed and delivered by Administrative Agent to Guarantor.

Section 16.    Term of Guaranty.

This Guaranty shall continue in effect until all the Guaranteed Obligations and all of the obligations of Guarantor to Administrative Agent and Lenders under this Guaranty are fully and finally paid, performed and discharged and are not subject to any bankruptcy preference period or any other disgorgement.

Notwithstanding anything stated to the contrary in this Guaranty, in the event that Administrative Agent or its nominee or any third party takes record title to any portion of the Property following the exercise of Administrative Agent’s rights and remedies under the Loan Documents, Guarantor shall nonetheless have the right to terminate its continuing liability under clause (ii) of Section 1 of this Guaranty with respect to Borrower’s obligations under the Environmental Agreement (and only as to such obligations) with respect to such portion of the Property, upon fulfillment of each of the following conditions to the reasonable satisfaction of Administrative Agent with respect to such portion of the Property:

(a)    Guarantor or Borrower shall have delivered to Administrative Agent a new environmental insurance policy which insures Administrative Agent and Lenders (“New Environmental Insurance Policy”) and which:

(i)    is comparable to the existing Environmental Insurance Policy approved by Lender except the policy limits shall be at least $5,000,000 for each occurrence and in the aggregate with a retention of no greater than $100,000; and

(ii)    is issued by the same company as the existing Environmental Insurance Policy or a replacement company with an AM Best's Rating equivalent or better than A‑ (Excellent)/IX; and

(iii)    has a term of three (3) years from the date of issuance; and

(b)    Administrative Agent shall have received evidence that all premiums for three (3) years coverage under such New Environmental Insurance Policy have been prepaid in full.

Such termination of Guarantor’s liability under clause (ii) of Section 1 of this Guaranty with respect to Borrower’s obligations under the Environmental Agreement, shall become effective only upon the delivery by Administrative Agent to Guarantor of a specific written acknowledgment of the satisfaction of all of the foregoing conditions and the termination of such obligations, which acknowledgement Administrative Agent agrees to provide unless any of the conditions to such termination have not been satisfied. This Section 16 shall under no circumstance be interpreted to terminate or limit any of Guarantor’s liabilities in Section 1 of this Guaranty except to the extent such liabilities relate to Borrower’s obligations under the Environmental Agreement.

Notwithstanding anything stated to the contrary in this Guaranty, in the event that Borrower successfully exercises its right to terminate its continuing liability under the Environmental Agreement pursuant to and in accordance with the terms and conditions of Section 7 thereof, Guarantor’s liability under clause (ii) of Section 1 of this Guaranty with respect to its guaranty of Borrower’s obligations under the Environmental Agreement (and only as to such obligations) shall automatically terminate.

Section 17.    Financial Statements.

Guarantor agrees to provide to Administrative Agent, as and when required, the Financial Statements and other financial information required to be delivered to Administrative Agent with respect to Guarantor pursuant to the terms of the Loan Agreement and the other Loan Documents, in the form and detail required by the Loan Documents. Guarantor also agrees to provide to Administrative Agent such other and further financial information with respect to Guarantor as Administrative Agent shall from time to time reasonably request. Acceptance of any Financial Statement by Administrative Agent, whether or not in the form prescribed herein, shall be relied upon by Administrative Agent in the administration, enforcement, and extension of the Guaranteed Obligations.

Section 18.    Subrogation.

Guarantor shall not have any right of subrogation under any of the Loan Documents or any right to participate in any security for the Guaranteed Obligations or any right to reimbursement, exoneration, contribution, indemnification or any similar rights, until the Guaranteed Obligations have been fully and finally paid, performed and discharged in accordance with Section 17 above, and Guarantor hereby waives all of such rights.

Section 19.    Time of Essence.

Time shall be of the essence in this Guaranty with respect to all of Guarantor’s obligations hereunder.

Section 20.    Entire Agreement; Counterparts; Construction.

This Guaranty embodies the entire agreement between Administrative Agent and Lenders and Guarantor with respect to the guaranty by Guarantor of the Guaranteed Obligations. This Guaranty supersedes all prior agreements and understandings, if any, with respect to the guaranty by Guarantor of the Guaranteed Obligations. This Guaranty shall be effective upon execution by Guarantor and delivery to Administrative Agent. This Guaranty may not be modified, amended or superseded except in a writing signed by Administrative Agent and Guarantor referencing this Guaranty by its date and specifically identifying the portions hereof that are to be modified, amended or superseded. If this Guaranty has been executed in one or more identical counterparts, then each such counterpart shall be deemed an original for all purposes, and all will constitute, collectively, one agreement. The lack of genuineness or authority of any signature of, or signator for, any Guarantor shall not affect the obligations hereunder of any other Guarantor. As used herein, the words “include” and “including” shall be interpreted as if followed by the words “without limitation.”

Section 21.    Financial Covenants.

Unless and until a Repayment Guaranty Termination Event shall occur, Guarantor shall comply with the financial covenants set forth in Exhibit “J” of the Loan Agreement.

Section 22.    WAIVER OF JURY TRIAL.

Section 23.    Forum.

Guarantor hereby irrevocably submits generally and unconditionally for itself and in respect of its property to the jurisdiction of any state court or any United States federal court sitting in the State specified in the governing law section of this Guaranty and to the jurisdiction of any state court or any United States federal court sitting in the state in which any of the Property is located, over any Dispute. Guarantor hereby irrevocably waives, to the fullest extent permitted by Law, any objection that Guarantor may now or hereafter have to the laying of venue in any such court and any claim that any such court is an inconvenient forum. Guarantor hereby agrees and consents that, in addition to any methods of service of process provided for under applicable Law, all service of process in any such suit, action or proceeding in any state court or any United States federal court sitting in the state specified in the governing law section of this Guaranty may be made by certified or registered mail, return receipt requested, directed to Guarantor at its address for notice set forth in this Guaranty, or at a subsequent address of which Administrative Agent received actual notice from Guarantor in accordance with the notice section of this Guaranty, and service so made shall be complete five (5) days after the same shall have been so mailed. Nothing herein shall affect the right of Administrative Agent or any Lender to serve process in any manner permitted by Law or limit the right of Administrative Agent or any Lender to bring proceedings against Guarantor in any other court or jurisdiction.

Section 24.    Credit Verification.

Each legal entity and individual obligated on this Guaranty, whether as a Guarantor, a general partner of a Guarantor or in any other capacity, hereby authorizes Administrative Agent and each Lender to check any credit references, verify his/her employment and obtain credit reports from credit reporting agencies of Administrative Agent’s or such Lender’s choice in connection with any monitoring, collection or future transaction concerning the Loan, including any modification, extension or renewal of the Loan. Also in connection with any such monitoring, collection or future transaction, Administrative Agent and each Lender is hereby authorized to check credit references, verify employment and obtain a third party credit report for the spouse of any married person obligated on this Guaranty, if such person lives in a community property state.

Section 25.    Limited Recourse Provision.

Administrative Agent and Lenders shall have no recourse against, nor shall there be any personal liability to, the members of Guarantor, or to any shareholders, members, partners, beneficial interest holders or any other entity or person in the ownership (directly or indirectly) of Guarantor with respect to the obligations of Guarantor under this Guaranty. For purposes of clarification, in no event shall the above language limit, reduce or otherwise affect any Borrower’s liability or obligations under the Loan Documents, Guarantor’s liability or obligations under the Guaranty, or Administrative Agent’s or any Lender’s right to exercise any rights or remedies against any collateral securing the Loan.

Section 26.    Additional Representations.

On each date on which a Swap Transaction is entered into (but not on any other day even

if such Swap Obligations continue to exist on any such day), Guarantor will be deemed to represent to Administrative Agent and Lenders that Guarantor is an “eligible contract participant” as such term is defined in the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute (the “Commodity Exchange Act”). For purposes of this provision, “Swap Obligation” means any obligation to pay or perform under any Swap Contract, or any other agreement, contract or transaction entered into in connection with a Swap Transaction.

IN WITNESS WHEREOF, Guarantor has duly executed this Guaranty under seal as of the date first written above.