Document:

EX-10.4

ENVIRONMENTAL INDEMNITY AGREEMENT

This ENVIRONMENTAL INDEMNITY AGREEMENT dated as of December 19, 2007 (the
“Agreement”), is executed by GRUBB & ELLIS HEALTHCARE REIT HOLDINGS, L.P. (formerly known
as NNN HEALTHCARE/OFFICE REIT HOLDINGS, L.P., a Delaware limited partnership) (the
“Borrower”), NNN HEALTHCARE/OFFICE REIT LIMA, LLC, a Delaware limited liability company
(“Lima”) and GRUBB & ELLIS HEALTHCARE REIT, INC., a Maryland corporation (the
“Guarantor”; the Borrower, Lima and the Guarantor each being referred to herein as an
“Indemnitor” and collectively as the “Indemnitors”) to and for the benefit of
LASALLE BANK NATIONAL ASSOCIATION, a national banking association, together with its successors and
assigns, individually and as agent for the Banks (as described in the Loan Agreement described
below) (individually, “LaSalle” and as agent, the “Agent”).

R E C I T A L S:

A. Pursuant to the terms of the Loan Agreement dated September 10, 2007 among the Agent, the
Banks and the Borrower (as amended, modified or restated from time, to time, the “Loan Agreement”),
the Banks have extended to the Borrower a credit facility providing for loans in the principal
amount of up to Eighty Million and 00/100 Dollars ($80,000,000.00) (subject to increase to One
Hundred Twenty Million and 00/100 Dollars [$120,000,000.00] under the terms set forth in the Loan
Agreement) (the “Loan”).

B. The Loan is evidenced by the Notes (as defined in the Loan Agreement) and are secured by,
among other things, those certain Open-End Revolving Mortgage, Security Agreement, Assignment of
Rents and Leases and Fixture Filing and Open-End Fee and Leasehold Revolving Mortgage, Security
Agreement, Assignment of Rents and Leases and Fixture Filing, each dated as of even date herewith
(jointly, the “Security Instrument”), executed by Lima to and for the benefit of the Agent,
encumbering real property described on Exhibit “A” attached hereto, together with the other
collateral as described in the Security Instrument (the real property and other collateral being
collectively referred to as the “Property”). Capitalized terms used and not specifically
defined herein shall bear the same meaning as in the Security Instrument.

C. As a condition to making an advance on the Loan, the Banks have required that the
Indemnitors indemnify the Agent and the Banks with respect to environmental conditions and
operations at the Property as set forth below.

NOW, THEREFORE, to induce the Banks to extend the Loan to the Borrower and in consideration of
the foregoing premises and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Indemnitors hereby covenant and agree for the benefit of the
Agent and the other Indemnified Parties (as defined below), as follows:

1

A G R E E M E N T S:

1. ENVIRONMENTAL MATTERS.

1.1 Definitions. For purposes of this Agreement the following terms have the
following meanings:

“Business Day” shall mean any day other than a Saturday, Sunday or a legal holiday
on which banks are authorized or required to be closed for the conduct of commercial banking
business in Chicago, Illinois.

“Environmental Laws” shall mean any and all federal, state and local laws (whether
under common law, statute, rule, regulation or otherwise), requirements under permits or
other authorizations issued with respect thereto, and other orders, decrees, judgments,
directives or other requirements of any governmental authority relating to or imposing
liability or standards of conduct (including disclosure or notification) concerning
protection of human health or the environment or Hazardous Substances or any activity
involving Hazardous Substances, all as previously and in the future to be amended.

“Hazardous Substance” shall mean, but is not limited to, any substance, chemical,
material or waste (a) which is regulated by any federal, state or local governmental
authority because of its toxic, flammable, corrosive, reactive, carcinogenic, mutagenic,
infectious, radioactive, or other hazardous property or because of its effect on the
environment, natural resources or human health and safety, including, but not limited to,
petroleum and petroleum products, asbestos-containing materials, polychlorinated biphenyls,
lead and lead-based paint, radon, radioactive materials, flammables and explosives; or (b)
which is designated, classified, or regulated as being a hazardous or toxic substance,
material, pollutant, waste (or a similar such designation) under any federal, state or local
law, regulation or ordinance, including under any Environmental Law such as the
Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C. §9601
et seq.), the Emergency Planning and Community Right-to-Know Act (42 U.S.C.
§11001 et seq.), the Hazardous Substances Transportation Act (49 U.S.C.
§1801 et seq.), or the Clean Air Act (42 U.S.C. §7401 et
seq.).

“Indemnified Parties” shall mean and includes LaSalle, Agent, the Banks and their
respective parents, subsidiaries, and affiliated companies, assignees of any of LaSalle’s or
any Banks’ interest in the Loan or the Loan Documents, any servicer or originator of the
Loan, and the officers, directors, employees, agents and contractors of any of the foregoing
parties.

“Loan Documents” shall mean the Notes evidencing the Loan or any portions thereof,
the Security Instrument, this Agreement, the Loan Agreement and any other document given by
any Indemnitor to evidence or secure the Loan, as amended from time to time.

“Release” shall mean any release, deposit, discharge, emission, leaking, leaching,
spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping,
disposing or other movement of Hazardous Substances.

“Reports” shall mean the environmental studies and reports identified on Exhibit
“B” attached hereto and made a part hereof.

1.2 Environmental Representations and Warranties. Except as otherwise fully disclosed
by the Indemnitors to the Indemnified Parties in writing detailing any exceptions to the following
environmental representations and warranties or fully disclosed to the Indemnified Parties in the
Reports, the Indemnitors hereby represent and warrant to the Indemnified Parties that, as of the
date hereof, to the best of Indemnitors’ knowledge:

(a) neither the Property nor any operations of the Borrower or Lima are in violation of
any Environmental Laws or any permit or other authorization issued pursuant thereto;

(b) no Hazardous Substances are, or to the Indemnitors’ knowledge and belief, have been
handled, generated, stored, processed or otherwise managed on or at the Property except for
those substances used by the Lima or tenants under leases at the Property in the ordinary
course of their businesses and in compliance with all Environmental Laws;

(c) there are not, to the Indemnitors’ knowledge, any past or present Releases of
Hazardous Substances in, on, under or from the Property;

(d) the Property is not subject to any private or governmental lien or judicial or
administrative notice or action relating to Hazardous Substances;

(e) there are no existing or closed underground storage tanks or other underground
storage receptacles for Hazardous Substances on the Property;

(f) the Borrower has received no notice of, and to the Borrower’s knowledge, there
exists no investigation, action, proceeding or claim by any agency, authority or unit of
government or by any third party which could result in any liability, penalty, sanction or
judgment under any Environmental Laws with respect to any condition, use or operation of the
Property or any of the Borrower’s operations, nor does the Borrower know of any basis for
such a claim;

(g) there has been no claim by any party that any use, operation or condition of the
Property or any of Lima’s operations has caused any nuisance or any other liability or
adverse condition on any other property nor does the Borrower know of any basis for such a
claim; and

(h) there are no agreements, consent orders, decrees, judgments, license or permit
conditions or other orders or directives of any federal, state or local court, governmental
agency or authority or agreements, whether settlement agreements or otherwise, with any
third parties relating to the ownership, use, operation, sale, transfer or conveyance of the
Property that require any change in the present condition of the Property or any work,
repairs, construction, containment, clean up, investigations, studies, removal or other
remedial action or capital expenditures with respect to the Property.

1.3 Environmental Covenants. Each Indemnitor covenants and agrees that it: (a) shall
keep or cause the Property to be kept free from Hazardous Substances (except those substances used
by the Borrower, priority owner or tenants under leases at the Property in the ordinary course of
their businesses and in compliance with all Environmental Laws); (b) shall not install or use any
underground storage tanks except in compliance with all Environmental Laws, shall not itself engage
in and shall expressly prohibit all tenants of space in the Improvements from engaging in the use,
generation, handling, storage, production, processing or management of Hazardous Substances in
violation of applicable Environmental Laws, except in the ordinary course of their businesses and
in compliance with all Environmental Laws ; (c) shall not itself cause or knowingly allow and shall
expressly prohibit the Release of Hazardous Substances in violation of applicable Environmental
Laws at, on, under, or from the Property; shall cause property owner and shall expressly require
property owner to require all tenants and any other persons who may come upon the Property to
comply with all applicable Environmental Laws; (d) shall cause property owner to keep the Property
free and clear of all liens and other encumbrances imposed pursuant to any Environmental Law,
whether due to any act or omission of the property owner, the Borrower or any other person or
entity (“Environmental Liens”); (e) without limiting the generality of the foregoing,
during the term of this Agreement, shall not permit property owner to use any construction
materials which contain asbestos nor install in the Improvements on the Property or permit to be
installed in the Improvements on the Property, any materials which contain asbestos.

1.4 Notice and Access. The Indemnitors shall promptly notify the Indemnified Agent
in writing if any of the Indemnitors knows, suspects or believes there is or are (a) any Hazardous
Substances, other than those used by the property owner or tenants under leases at the Property in
the ordinary course of their businesses and in compliance with all Environmental Laws, present on
the Property; (b) any Release of Hazardous Substances in, on, under, from or migrating towards the
Property; (c) any non-compliance with Environmental Laws related in any way to the Property; (d)
any actual or potential Environmental Liens; (e) any investigation or action or claim, whether
threatened or pending, by any governmental agency or third party pertaining to the Release of
Hazardous Substances in, on, under, from, or migrating towards the Property; and/or (f) any
installation of wells, piping, or other equipment at the Property to investigate, remediate or
otherwise address any Release of Hazardous Substances at, on, in or in the vicinity of the
Property. The Indemnitors shall promptly, to the extent required of Indemnitors under applicable
Environmental Laws and at the Indemnitors’ sole cost and expense, take all reasonable actions with
respect to any Hazardous Substances or other environmental condition at, on or under the Property
or other affected property, including all investigative, monitoring, removal, containment and
remedial actions in accordance with all applicable Environmental Laws, including the payment, at no
expense to the Indemnified Parties, of all clean-up, administrative and enforcement costs of
applicable governmental agencies which may be asserted against the Property in all instances as
necessary to comply with and as required of Indemnitors pursuant to all applicable Environmental
Laws; (ii) protect human health or the environment; (iii) allow continued use, occupation, or
operation of the Property; and/or (iv) maintain the fair market value of the Property
(collectively, the “Completion of the Clean-up”). In the event the Indemnitors fail to do
so, the Indemnified Parties may, but shall not be obligated or have any duty to, cause the
Completion of the Clean-up of the Property. Upon reasonable prior notice, the Indemnitors hereby
grant to the Indemnified Parties and their agents and employees access during normal business hours
to the Property as provided in Section 1.6 below, and a license to remove any items deemed by the
Indemnified Parties to be Hazardous Substances and to do all things the Indemnified Parties shall
deem necessary to cause the Completion of the Clean-up of the Property.

1.5 Indemnification. The Indemnitors covenant and agree, at the Indemnitors’ sole
cost and expense, to indemnify, defend (at trial and appellate levels, and with attorneys,
consultants and experts acceptable to the Indemnified Parties), and hold the Indemnified Parties
harmless from and against any and all liens, damages (including, without limitation, consequential
damages), losses, liabilities, obligations, settlement payments, penalties, claims, judgments,
suits, proceedings, costs, disbursements or expenses of any kind or of any nature whatsoever
(including reasonable attorneys’, consultants’ and experts’ fees and disbursements actually
incurred in investigating, defending, settling or prosecuting any claim, litigation or proceeding)
which may at any time be imposed upon, incurred by or asserted against the Indemnified Parties or
the Property, and arising directly or indirectly from or out of, and except to the extent directly
caused by the gross negligence or willful misconduct of Indemnitors:

(a) the past, present or future presence, Release or threat of Release of any Hazardous
Substances on, in, under or affecting all or any portion of the Property or any surrounding
areas, regardless of whether or not caused by or within the control of any Indemnitor;

(b) the past, present or future violation of any Environmental Laws, relating to or
affecting the Property or the Borrower’s operations, whether or not caused by or within the
control of any Indemnitor;

(c) the failure by the Indemnitors to comply fully with the terms and conditions of
this Section 1;

(d) any misrepresentation or inaccuracy in or the breach of any representation or
warranty contained in this Section 1; or

(e) the enforcement of this Section 1, including any liabilities that arise as a result
of the actions taken or caused to be taken by the Indemnified Parties under this Section 1,
the cost of assessment, containment and/or removal of any and all Hazardous Substances from
all or any portion of the Property or any surrounding areas, the cost of any actions taken
in response to the presence, Release or threat of Release of any Hazardous Substances on,
in, under or affecting any portion of the Property or any surrounding areas to prevent or
minimize such Release or threat of Release so that it does not migrate or otherwise cause or
threaten danger to present or future public health, safety, welfare or the environment, and
costs incurred to comply with the Environmental Laws in connection with all or any portion
of the Property or any surrounding areas. The Indemnified Parties’ rights under this
Section 1 shall survive payment in full of the Borrower’s obligations under the Loan
Documents and shall be in addition to all other rights of the Indemnified Parties under the
Security Instrument, the Notes and the other Loan Documents. The foregoing notwithstanding,
the Indemnitors’ obligations under this Section 1 with regard to any Post Transfer
Indemnification Responsibilities (as hereinafter defined) shall be limited to such
obligations directly or indirectly arising out of or resulting from any Hazardous Substances
that were present or released in, on, or around any part of the Property, or in the soil,
groundwater or soil vapor on or under the Property at any time before or while the Borrower
held title to or was in possession or control of the Property (the “Indemnitors’
Continuing Responsibility”); provided, however, that any Post Transfer Indemnification
Responsibilities incurred or suffered by the Indemnified Parties shall be presumed, unless
shown by a preponderance of the evidence to the contrary, to be the Indemnitors’ Continuing
Responsibility. “Post Transfer Indemnification Responsibilities” shall mean any
obligations hereunder to indemnify, defend, and hold the Indemnified Parties harmless
arising after the Indemnified Parties cease to hold a security interest in the Property or
acquire title to the Property as a result of foreclosure, deed in lieu of foreclosure, or
other transfer of the Property.

1.6 Site Visits, Observation and Testing. If Indemnified Parties have a reasonable
basis to suspect that Hazardous Materials in violation of the provisions of this Agreement are
present on the Property, the Indemnified Parties and their agents and representatives shall have
the right at any reasonable time upon prior notice and during normal business hours to enter and
visit the Property for the purposes of observing the Property, taking and removing soil or
groundwater samples, and conducting tests on any part of the Property; provided, however, that
there shall be no more than one such assessment per Property per 12-month period, unless Agent
reasonably believes a Material Adverse Changes has occurred which warrants a new assessment.
Indemnified Parties’ access and other rights shall be subject to the rights of tenants under leases
of the Property. The Indemnified Parties have no duty, however, to visit or observe the Property
or to conduct tests, and no site visit, observation or testing by any Indemnified Party shall
impose any liability on any Indemnified Party. In no event shall any site visit, observation or
testing by any Indemnified Party be a representation that Hazardous Substances are or are not
present in, on or under the Property, or that there has been or shall be compliance with any law,
regulation or ordinance pertaining to Hazardous Substances or any other applicable governmental
law. Neither the Borrower nor any other party is entitled to rely on any site visit, observation or
testing by any Indemnified Party. The Indemnified Parties owe no duty of care to protect the
Indemnitors or any other party against, or to inform the Indemnitors or any other party of, any
Hazardous Substances or any other adverse condition affecting the Property, provided the
Indemnified Parties shall make such environmental assessments available to Borrower. The
Indemnified Parties may in their discretion disclose to the Indemnitors or any other party any
report or findings made as a result of, or in connection with, any site visit, observation or
testing by the Indemnified Parties. The Indemnitors understand and agree that the Indemnified
Parties make no representation or warranty to the Indemnitors or any other party regarding the
truth, accuracy or completeness of any such report or findings that may be disclosed. The
Indemnitors also understand that, depending on the results of any site visit, observation or
testing by any Indemnified Party which are disclosed to the Indemnitors, the Indemnitors may have a
legal obligation to notify one or more environmental agencies of the results and that such
reporting requirements are site-specific and are to be evaluated by the Indemnitors without advice
or assistance from the Indemnified Parties. Any Indemnified Party shall give the Borrower
reasonable notice before entering the Property. Such Indemnified Party shall make reasonable
efforts to avoid interfering with the Borrower’s use of the Property in exercising any rights
provided in this Section 1.

2. REINSTATEMENT OF OBLIGATIONS. If at any time all or any part of any payment made
by the Borrower or received by the Indemnified Parties from the Borrower under or with respect to
this Agreement is or must be rescinded or returned for any reason whatsoever, including the
insolvency, bankruptcy or reorganization of any Indemnitor under any Debtor Relief Law (as defined
below), then the obligations of the Indemnitors hereunder shall, to the extent of the payment
rescinded or returned, be deemed to have continued in existence, notwithstanding such previous
payment made by the Indemnitors, or receipt of payment by an Indemnified Party, and the obligations
of the Indemnitors hereunder shall continue to be effective or be reinstated, as the case may be,
as to such payment, all as though such previous payment by the Indemnitors had never been made.

3. WAIVERS. To the extent permitted by law, each of the Indemnitors, for itself and
its successors, hereby waives and agrees not to assert or take advantage of:

(a) any right to require the Indemnified Parties to proceed against any other person or
to proceed against or exhaust any security held by the Indemnified Parties at any time or to
pursue any other remedy in the Indemnified Parties’ power or under any other agreement
before proceeding against the Indemnitors hereunder;

(b) any defense that may arise by reason of the incapacity, lack of authority, death or
disability of any other person or persons or the failure of the Indemnified Parties to file
or enforce a claim against the estate (in administration, bankruptcy or any other
proceedings) of any other person or person;

(c) demand, presentment for payment, notice of nonpayment, protest, notice of protest
and all other notices of any kind, or the lack of any thereof, including, without limiting
the generality of the foregoing, notice of the existence, creation or incurring of any new
or additional indebtedness or obligation or of any action or non-action on the part of the
Indemnified Parties, any endorser or creditor of any of the Indemnitor or any other person
whomsoever under this or any other instrument in connection with any obligation or evidence
of indebtedness held by the Indemnified Parties;

(d) any right or claim of right to cause a marshalling of the assets of the
Indemnitors;

(e) any principle or provision of law, statutory or otherwise, which is or might be in
conflict with the terms and provisions of this Agreement;

(f) any duty on the part of the Indemnified Parties to disclose to the Indemnitors any
facts the Indemnified Parties may now or hereafter know about the Property, regardless of
whether the Indemnified Parties have reason to believe that any such facts materially
increase the risk beyond that which the Indemnitors intend to assume or have reason to
believe that such facts are unknown to the Indemnitors or have a reasonable opportunity to
communicate such facts to the Indemnitors, it being understood and agreed that the
Indemnitors are fully responsible for being and keeping informed of the condition of the
Property and of any and all circumstances bearing on the risk that liability may be incurred
hereunder;

(g) any lack of notice of disposition or of manner of disposition of any collateral for
the Loan;

(h) any invalidity, irregularity or unenforceability, in whole or in part, of any one
or more of the Loan Documents;

(i) any lack of commercial reasonableness in dealing with the collateral for the Loan;

(j) any deficiencies in the collateral for the Loan or any deficiency in the ability of
the Indemnified Parties to collect or to obtain performance from any person or entities now
or hereafter liable for the payment and performance of any obligation hereby guaranteed;

(k) any assertion or claim that the automatic stay provided by 11 U.S.C. §362 (arising
upon the voluntary or involuntary bankruptcy proceeding of the Indemnitors) or any other
stay provided under any other debtor relief law (whether statutory, common law, case law or
otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which may be or
become applicable, shall operate or be interpreted to stay, interdict, condition, reduce or
inhibit the ability of the Indemnified Parties to enforce any of their rights, whether now
or hereafter required, which the Indemnified Parties may have against the Indemnitors or the
collateral for the Loan; and

(l) any modifications of the Loan Documents or any obligation of the Indemnitors
relating to the Loan by operation of law or by action of any court, whether pursuant to the
Bankruptcy Reform Act of 1978, as amended or recodified (the “Bankruptcy Code”), or
under any other present or future state or federal law regarding bankruptcy, reorganization
or other relief to debtors (collectively, the “Debtor Relief Law”), or otherwise.

4. GENERAL PROVISIONS.

4.1 Full Recourse. All of the terms and provisions of this Agreement are full
recourse obligations of the Indemnitors and not restricted by any limitation on personal liability.

4.2 Secured Obligations. The Indemnitors hereby acknowledge that the obligations of
the Indemnitors under this Agreement are secured by the lien of the Security Instrument and the
security interests and other collateral described in the Security Instrument and the other Loan
Documents.

4.3 Survival. This Agreement shall be deemed to be continuing in nature and shall
remain in full force and effect and shall survive the payment of the indebtedness evidenced and
secured by the Loan Documents and the exercise of any remedy by the Indemnified Parties under the
Security Instrument or any of the other Loan Documents, including any foreclosure or deed in lieu
thereof, even if, as a part of such remedy, the Loan is paid or satisfied in full.

4.4

2

No Recourse Against the Indemnified Parties. The Indemnitors shall not have any right
of recourse against the Indemnified Parties by reason of any action the Indemnified Parties may
take or omit to take under the provisions of this Agreement or under the provisions of any of the
Loan Documents.

4.5 Reservation of Rights. Nothing contained in this Agreement shall prevent or in
any way diminish or interfere with any rights or remedies, including the right to contribution,
which the Indemnified Parties may have against the Indemnitors or any other party under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (codified at Title 42
U.S.C. §9601 et seq.), as it may be amended from time to time, or any other
applicable federal, state or local laws, all such rights being hereby expressly reserved.

4.6 Rights Cumulative; Payments. The Indemnified Parties’ rights under this Agreement
shall be in addition to all rights of the Indemnified Parties under the Notes, the Security
Instrument and the other Loan Documents. Further, payments made by the Indemnitors under this
Agreement shall not reduce in any respect the Borrower’s obligations and liabilities under the
Notes, the Security Instrument and the other Loan Documents.

4.7 No Limitation on Liability. Each of the Indemnitors hereby consents and agrees
that the Indemnified Parties may at any time and from time to time without further consent from the
Indemnitors do, permit or cause any of the following events, and the liability of the Indemnitors
under this Agreement shall be unconditional and absolute and shall in no way be impaired or limited
by the occurrence of any of the following events, whether occurring with or without notice to the
Indemnitors, or with or without consideration: (a) any extensions of time for performance required
by any of the Loan Documents or extension or renewal of the Notes; (b) any sale, assignment or
foreclosure of the Notes, the Security Instrument or any of the other Loan Documents or any sale or
transfer of the Property; (c) any change in the composition of any of the Indemnitors; (d) the
accuracy or inaccuracy of the representations and warranties made by the Indemnitors herein or in
any of the Loan Documents; (e) the release of any of the Indemnitors or of any other person or
entity from performance or observance of any of the agreements, covenants, terms or conditions
contained in any of the Loan Documents by operation of law, the Indemnified Parties’ voluntary act
or otherwise; (f) the release or substitution in whole or in part of any security for the Loan; (g)
the Agent’s failure to record the Security Instrument or to file any financing statement (or the
Agent’s improper recording or filing thereof) or to otherwise perfect, protect, secure or insure
any lien or security interest given as security for the Loan; (h) the modification of the terms of
any one or more of the Loan Documents; or (i) the taking or failure to take any action of any type
whatsoever. No such action which the Indemnified Parties shall take or fail to take in connection
with the Loan Documents or any collateral for the Loan, nor any course of dealing with the
Indemnitors or any other person, shall limit, impair or release the Indemnitors’ obligations
hereunder, affect this Agreement in any way or afford the Borrower any recourse against the
Indemnified Parties. Nothing contained in this Paragraph shall be construed to require the
Indemnified Parties to take or refrain from taking any action referred to herein.

4.8 Entire Agreement; Amendment; Severability. This Agreement contains the entire
agreement between the parties respecting the matters herein set forth and supersedes (except as to
the Security Instrument) all prior agreements, whether written or oral, between the parties
respecting such matters. Any amendments or modifications hereto, in order to be effective, shall
be in writing and executed by the parties hereto. If any provision or obligation under this
Agreement or any of the other Loan Documents shall be determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable, that provision shall be deemed severed from
the Loan Documents and the validity, legality and enforceability of the remaining provisions or
obligations shall remain in full force as though the invalid, illegal or unenforceable provision
had never been a part of the Loan Documents.

4.9 Governing Law; Binding Effect. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio, except to the extent that the applicability of
any of such laws may now or hereafter be preempted by Federal law, in which case such Federal law
shall so govern and be controlling. The terms, covenants and conditions of this Agreement shall be
binding upon and inure to the benefit of the heirs, successors and assigns of the parties. The
Indemnified Parties and any successor may, at any time, sell, transfer, or assign their interest
under the Notes, the Security Instrument, the other Loan Documents, any or all servicing rights
with respect thereto, and this Agreement or grant participations. The Indemnified Parties may
forward to each purchaser, transferee, assignee, servicer, participant or investor (all of the
foregoing entities collectively referred to as an “Investor”) and each prospective
Investor, all documents, financial and other information which the Indemnified Parties now have or
may hereafter acquire relating to (a) the Loan; (b) the Property and its operation (including,
without limitation, copies of all leases, subleases or any other agreements concerning the use and
occupancy of the Property); and/or (c) any party connected with the Loan (including, without
limitation, the Borrower, any partner or member of the Borrower, any constituent partner or member
of the Borrower, and the Guarantor). The representations, warranties, obligations, covenants, and
indemnity obligations of the Indemnitors under this Agreement shall also benefit and apply with
respect to any purchaser, transferee, assignee, participant, servicer or investor.

4.10 Notices. All notices or other communications required or permitted to be given
pursuant hereto shall be given in the manner specified in the Security Instrument directed to the
parties at their respective addresses as provided therein.

4.11 No Waiver: Time of Essence; Interpretation; Counting of Days. The failure of any
party hereto to enforce any right or remedy hereunder, or to promptly enforce any such right or
remedy, shall not constitute a waiver thereof nor give rise to any estoppel against such party nor
excuse any of the parties hereto from their respective obligations hereunder. Any waiver of such
right or remedy must be in writing and signed by the party to be bound. Whenever used, the singular
number shall include the plural, the plural the singular, and the words “Indemnified Parties” and
“Indemnitors” shall include their respective successors, assigns, heirs, executors and
administrators. The word “include(s)” means “include(s), without limitation”, and the word
“including” means “including, but not limited to”. This Agreement is subject to enforcement at law
or in equity, including actions for damages or specific performance. Time is of the essence of
each and every term and condition of this Agreement. The term “days” when used herein shall mean
calendar days. If any time period ends on a Saturday, Sunday or holiday officially recognized by
the state within which the Property is located, the period shall be deemed to end on the next
succeeding Business Day.

4.12 Headings. The headings of the sections and paragraphs of this Agreement are for
convenience of reference only and shall not be construed in interpreting the provisions hereof.

4.13 Attorneys’ Fees. The Indemnitors agree to pay all of the Indemnified Parties’
costs and expenses, including reasonable attorneys’ fees, which may be incurred in enforcing or
protecting the Indemnified Parties’ rights or interests. From the time(s) incurred until paid in
full to the Indemnified Parties, all such sums shall bear interest at the Default Rate.

4.14 Successive Actions. A separate right of action hereunder shall arise each time
the Indemnified Parties acquires knowledge of any matter indemnified by the Indemnitors under this
Agreement. Separate and successive actions may be brought hereunder to enforce any of the
provisions hereof at any time and from time to time. No action hereunder shall preclude any
subsequent action, and the Indemnitors hereby waive and covenant not to assert any defense in the
nature of splitting of causes of action or merger of judgments.

4.15 Joint and Several Liability. If more than one person or entity is signing this
Agreement as the Indemnitors, their obligations under this Agreement will be joint and several. As
to any of the Indemnitors that is a partnership, the obligations of such Indemnitor under this
Agreement are the joint and several obligation of each general partner thereof. Any married person
signing this Agreement agrees that recourse may be had against community property assets and
against his or her separate property for the satisfaction of all obligations contained herein.

4.16 Reliance. The Indemnified Parties would not make the Loan to the Borrower
without this Agreement. Accordingly, the Indemnitors intentionally and unconditionally enter into
the covenants and agreements herein and understand that, in reliance upon and in consideration of
such covenants and agreements, the Loan shall be made and, as part and parcel thereof, specific
monetary and other obligations have been, are being and shall be entered into which would not be
made or entered into but for such reliance.

4.17 Counterparts. This Agreement may be executed in any number of counterparts, all
of which shall be taken to be one and the same instrument, for the same effect as if all parties
hereto had signed the same signature page. Receipt of an executed signature page to this Agreement
by facsimile or other electronic transmission shall constitute effective delivery thereof.

4.18 WAIVER OF TRIAL BY JURY. THE INDEMNITORS AND THE AGENT (BY ACCEPTANCE OF THIS
AGREEMENT), HAVING BEEN REPRESENTED BY COUNSEL, EACH KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHT TO
A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (a) UNDER THIS
AGREEMENT OR ANY RELATED AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH THIS AGREEMENT OR (b) ARISING
FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH
ACTION OR PROCEEDING WILL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THE INDEMNITORS AGREE
THAT THEY WILL NOT ASSERT ANY CLAIM AGAINST THE AGENT ON ANY THEORY OF LIABILITY FOR SPECIAL,
INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.

4.19 Waiver of Bankruptcy Stay. The Indemnitors covenant and agree that upon the
commencement of a voluntary or involuntary bankruptcy proceeding by or against any of the
Indemnitors, such Indemnitor shall not seek a supplemental stay or otherwise pursuant to 11 U.S.C.
§105 or any other provision of the Bankruptcy Code or any other Debtor Relief Law, to stay,
interdict, condition, reduce or inhibit the ability of the Indemnified Parties to enforce any
rights of the Indemnified Parties against such Indemnitor by virtue of this Agreement or otherwise.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

3

IN WITNESS WHEREOF, the Indemnitors have jointly and severally executed this
Environmental Indemnity Agreement as of the day and year first above written.

	 	 	 	 	 
	BORROWER:
	 	 	 	 
	 
	 	 	 	 
	GRUBB & ELLIS HEALTHCARE REIT HOLDINGS,
	 	LIMA:
	L.P., a Delaware limited partnership
	 	 	—	 
	By: Grubb & Ellis Healthcare REIT, Inc., a
	 	NNN HEALTHCARE/OFFICE REIT
	Maryland corporation, its General Partner
	 	LIMA, LLC, a Delaware limited
	By: /s/ Shannon K S Johnson
	 	liability company
	Name: Shannon K S Johnson
	 	By:  /s/ Shannon K S Johnson
	Title: Chief Financial Officer
	 	Its: Authorized Signatory
	 
	 	GUARANTOR:
	 
	 	GRUBB & ELLIS HEALTHCARE REIT,
	 
	 	INC., a Maryland corporation
	 
	 	By: /s/ Shannon K S Johnson
	 
	 	Name: Shannon K S Johnson
	 
	 	Title: Chief Financial Officer

4ex10-1.htm

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    KILROY
      REALTY CORPORATION STOCK AWARD

    DEFERRAL
      PROGRAM

     

     

    PREAMBLE

     

     

    Kilroy
      Realty Corporation (the “Company”) hereby establishes
      this Stock Award Deferral Program on December 26, 2007 (the “Effective Date”) as part of
      and subject to the terms of the Company’s 2006 Incentive Award Plan, as may be
      amended from time to time (the “Plan”), which is hereby
      incorporated herein by reference.  Capitalized terms not otherwise
      defined herein shall have the meanings ascribed to such terms in the
      Plan.  The purpose of this Program is to promote the success and
      enhance the value of the Company by linking the personal interests of Directors
      and eligible Employees to those of Company stockholders by providing such
      individuals with an incentive for outstanding performance to generate superior
      returns to Company stockholders and, further, to provide flexibility to the
      Company in its ability to motivate, attract and retain the services of Directors
      and Employees upon whose judgment, interest and special effort the successful
      conduct of the Company’s operation is largely dependent.

     

     

    ARTICLE
      I

     

     

    DEFINITIONS

     

    Section
      1.01 “Account”
      means an account created
      by the Company pursuant to Article IV of this Program.

    

    Section
      1.02 “Beneficiary”
      means the person or persons, including a trustee, personal representative or
      other fiduciary last designated in writing by a Participant in accordance with
      procedures established by the Committee to receive the benefits specified
      hereunder in the event of the Participant’s death.  No Beneficiary
      designation shall become effective until it is filed with the Company. If there
      is no Beneficiary designation in effect for a Participant, or if there is no
      surviving designated Beneficiary, then the benefits specified hereunder shall
      be
      distributed in accordance with the applicable laws of descent and
      distribution.

    

    Section
      1.03 “Company”
      shall have the meaning provided in the Preamble.

    

    Section
      1.04 “Company
      Account Plan” means any “account balance” nonqualified deferred
      compensation plan (within the meaning of Section 409A) maintained by the Company
      or any entity constituting a single employer with the Company within the meaning
      of Code Section 414(b) or (c).

    

    Section
      1.05 “Director”
      means a member of the
      Board.

    

    Section
      1.06 “Distribution
      Date” shall have the meaning provided in Section 5.01 below.

    

    Section
      1.07 “Effective
      Date” shall have the meaning provided in the Preamble.

    

    Section
      1.08 “Election”
      means an election under this Program (i) to receive Restricted Stock Units in lieu
      of a Stock Award, or (ii) to re-defer the delivery of shares under such Restricted Stock
      Units.

    

    

    Section
      1.09 “Election
      Form” means a form prescribed by the Committee (which may be in paper or
      electronic format) pursuant to which Eligible Service Providers may make Initial
      Deferral Elections and Re-Deferral Elections under the Program.

    

    Section
      1.10 “Eligible
      Service Provider” means (i) each Director, (ii) each Employee serving at
      the level of Vice President or higher, and (iii) each other Employee who is
      designated as an Eligible Service Provider in writing by the
      Committee.

    

    Section
      1.11 “ERISA”
      means the Employee Retirement Income Security Act, as amended.

    

    Section
      1.12 “Fixed-Date
      Distribution” means a distribution of the shares subject to Restricted
      Stock Units on a date specified by the Participant in an applicable Election
      Form in accordance with Section 2.02 below.

    

    Section
      1.13 “Initial
      Deferral Election” shall have the meaning provided in Section 2.01
      below.

    

    Section
      1.14 “Participant”
      means, for purposes of this Program, any Eligible Service Provider who elects
      to
      participate in the Program in accordance with the terms of the
      Program.

    

    Section
      1.15 “Performance-Based
      Compensation” shall mean “performance-based compensation” within the
      meaning of Section 409A.

    

    Section
      1.16 “Plan”
shall
      have
      the meaning provided in the Preamble.

    

    Section
      1.17 “Program”
      means this Kilroy Realty
      Corporation Stock Award Deferral Program.

    

    Section
      1.18 “Re-Deferral
      Election” shall have the
      meaning provided in Section 2.04 below.

    

    Section
      1.19 “Section
      409A” means Section 409A of the Internal Revenue Code of 1986, as
      amended, together with other interpretive guidance issued thereunder, including
      without limitation, any such regulations or other guidance that may be issued
      after the Effective Date.

    

    Section
      1.20 “Separation
      from Service”
      means a “separation from service” from the Company within the meaning of Section
      409A.

    

    Section
      1.21 “Specified
      Employee” shall mean any Participant who is, or was at any time during
      the twelve-month period ending on the Company’s “specified employee
      identification date,” a “specified employee” of the Company (each within the
      meaning of Section 409A).

    

    Section
      1.22 “Specified
      Employee Payment Date” shall have the meaning provided in Section 5.03
      below.

    

    Section
      1.23 “Stock
      Award” means an
      award of Restricted Stock under the Plan.

    

    Section
      1.24 “Trust”
      shall mean a “rabbi trust” satisfying the model trust conditions described in
      Treas. Rev. Proc. 92-64 and any subsequent Internal Revenue Service guidance
      affecting the validity of such ruling.

    

    Section
      1.25 “Unforeseeable
      Emergency” shall mean an “unforeseeable emergency” within the meaning of
      Section 409A.

    

    Section
      1.26 “Year”
      means a calendar
      year.

     

     

    ARTICLE
      II                               

     

     

    

     

     

    ELECTIONS
      TO DEFER

     

    Section
      2.01 Initial
      Deferral Elections.  In lieu of any Stock Award, an Eligible
      Service Provider may elect to receive an equivalent number of Restricted Stock Units by making
      an election in accordance with this Section 2.01 and Section 2.02
      below.  An Election with respect to a Stock Award for services
      performed in any given Year must be made on or before December 31 of the Year
      immediately preceding the Year in which such services are performed; provided, however, that an
      Election with respect to a Stock Award that constitutes Performance-Based
      Compensation may,
      to the extent permitted by Section
      409A, be made on or
      before the last date that is six months prior to the end of the applicable
      performance period.  Notwithstanding the foregoing, any individual who
      first becomes an Eligible Service Provider during any Year and who was not,
      prior to becoming an Eligible Service Provider, eligible to participate in
      any
      other Company Account Plan, may elect, no later than thirty days following
      the
      date such individual first becomes an Eligible Service Provider, to receive
      an
      equivalent number of Restricted
      Stock Units in lieu
      of the shares of Stock subject to any Stock Award for services performed by
      the
      Eligible Service Provider during the portion of such Year that follows such
      Election (any deferral made in accordance with this Section 2.01, an “Initial Deferral
      Election”).  

    

    Section
      2.02 Initial
      Election Procedure.  Eligible Service Providers may effectuate
      Initial Deferral Elections by timely completing and submitting to the Committee
      (or its designee) an Election
      Form specifying, at a minimum: (i) the Year and/or Stock Award to which
      the Initial Deferral Election pertains, as applicable; and (ii) if the
      Participant elects to receive a Fixed-Date Distribution, the specified date
      on
      which the Fixed-Date Distribution shall be made, which shall be no earlier
      than
      two years after the start of the Year in which the underlying Stock Award is
      earned.

    

    Section
      2.03 Subsequent-Year
      Stock Awards.  Each Election Form specifying an Initial
      Deferral Election shall apply only to Stock Awards earned in the Year
      next-following the submission of such Election Form or, in the case of
      Performance-Based Compensation, earned during the relevant performance
      period.  Any Participant who wishes to defer Stock Awards earned in a
      Year subsequent to such next-following Year must submit an Election Form to
      the
      Committee (or its designee) specifying such additional Initial Deferral Election
      during the Year immediately preceding that in which such subsequent Stock Awards
      will be earned.

    

    Section
      2.04 Re-Deferral
      Elections.  The Committee may, in its sole discretion and to
      the extent compliant with applicable laws (including without limitation, Section
      409A), permit Participants to re-defer some or all of the shares subject to
      Stock Awards previously deferred as Restricted Stock Units under this Program
      (a
“Re-Deferral
      Election”).  If so permitted, a Participant may effectuate a
      Re-Deferral Election by completing and submitting to the Committee (or its
      designee), no more frequently than once per Year with respect to each Deferral
      Election, a new Election Form in accordance with any rules or policies issued
      by
      the Committee with regard to Re-Deferral Elections, provided, however,
      that (i) a
      Re-Deferral Election may only be made prior to such time as a Participant ceases
      to be an Eligible Service Provider; (ii) any such Re-Deferral Election must
      be
      made at least one year prior to the first date on which any shares subject
      to
      the Re-Deferral Election would otherwise be delivered to the Participant, absent
      such Re-Deferral Election; (iii) such Re-Deferral Election shall not take effect
      until at least 12 months after the date on which the Re-Deferral Election is
      made; and (iv) delivery of the shares with respect to which such Re-Deferral
      Election is made must be deferred for an additional period of not less than
      five
      years from the date such shares would otherwise have been delivered to the
      Participant.  Election Forms specifying Re-Deferral Elections which
      comply with the foregoing may cover one or more existing Elections, as specified
      in the applicable Election Form.

    

    Section
      2.05 Deferrals
      Irrevocable.  Any Election that has not been revoked in a
      writing submitted to the Committee (or its designee) on or prior to the last
      day
      on which such Election could validly be made under the terms of this Program
      shall be irrevocable with respect to the shares of Stock deferred or re-deferred
      under such Election as of the first day on which such Election could no longer
      validly be made under the terms of this Program.  If an Eligible
      Service Provider or a Participant fails to make a timely Election for any
      reason, then such individual shall not be permitted to defer or re-defer any
      Stock Awards during the period to which such Election would have applied if
      validly made.

     

     

    ARTICLE
      III                                      

     

     

    DIVIDEND
      EQUIVALENTS; VESTING

     

    Section
      3.01 Dividend
      Equivalents.  Each Restricted Stock Unit awarded under this
      Program shall carry with it a right to receive Dividend Equivalents in respect
      of the share of Stock underlying such Restricted Stock Unit, which shall entitle
      the Participant to whom such Dividend Equivalents are granted to have such
      Participant’s Account credited in accordance with Section 4.02 below upon the
      Company’s payment of dividends.  To the extent that additional
      Restricted Stock Units are credited to a Participant’s Account in respect of
      such Participant’s Dividend Equivalents, such Restricted Stock Units shall also
      carry corresponding Dividend Equivalents.  Each Dividend Equivalent
      shall remain outstanding from the date of grant of such Dividend Equivalent
      through the earlier to occur of (i) the Participant’s forfeiture for any reason
      of the Restricted Stock Unit to which such Dividend Equivalent corresponds,
      or
      (ii) the delivery to the Participant of the shares of Stock underlying the
      Restricted Stock Unit to which such Dividend Equivalent
      corresponds.

    

    Section
      3.02 Vesting
      of Restricted Stock Units.  Unless determined otherwise by the
      Committee and except as provided in Section 3.03 below, Restricted Stock Units
      granted under this Program (other than Restricted Stock Units attributable
      to
      Dividend Equivalents) shall be subject to the same vesting conditions as would
      have applied to the shares underlying the Stock Awards in lieu of which such
      Restricted Stock Units are issued, as determined by the Committee and specified
      in an applicable Restricted Stock Unit grant agreement.  Any
      Restricted Stock Units credited to a Participant’s Account that do not vest
      prior to or in connection with the Participant’s termination of employment or
      directorship (taking into consideration any vesting that may occur in connection
      with such termination) shall be forfeited upon such termination.

    

    Section
      3.03 Vesting
      of Dividend Equivalents. Notwithstanding the foregoing, any Restricted
      Stock Units credited to a Participant’s Account in respect of Dividend
      Equivalents shall be fully vested on the date that such amounts are credited
      to
      such Account.

     

    ARTICLE
      IV

     

     

    ACCOUNTS

     

    Section
      4.01 Accounts.  The
      Company shall establish and maintain hypothetical bookkeeping accounts for
      Participants for purposes of tracking the number of Restricted Stock Units
      awarded under this Program, together with any additional Restricted Stock Units
      credited to such accounts in respect of Dividend Equivalents, in accordance
      with
      Section 4.02 below.  The Company may, in its sole discretion, create
      one or more subaccounts under any such bookkeeping account to reflect Restricted
      Stock Units whose underlying shares of Stock may be subject to different
      distribution schedules or otherwise as necessary or convenient to the
      administration of this Program (such hypothetical accounts, together with any
      subaccounts thereunder, the “Accounts”).  Except
      as expressly provided in Section 4.03 below (with regard to a Trust), neither
      this Program nor any of the Accounts established hereunder shall hold any shares
      of Stock or give any Participant or Beneficiary any right, interest or claim
      in
      any particular assets of the Company or any Trust, other than that of a general,
      unsecured creditor.

    

    Section
      4.02 Crediting
      of Accounts.  Participants’ Accounts shall be credited as
      follows:

    

    
      	
              a)  

            	
              Restricted
                Stock
                Units.  On the date that any Stock Award to which an
                Initial Deferral Election hereunder pertains would be
                granted
                (absent an applicable Election), the Company shall credit the
                Account of the deferring Participant with a number of Restricted
                Stock
                Units equal to the number of shares of Stock deferred under such
                Stock
                Award;

            

    

     

    
      	
              b)  

            	
              Cash
                Dividends.  On the date that the Company pays any cash
                dividend in respect of outstanding shares of Stock, the Company shall
                credit each Participant’s Account with a number of full and fractional
                Restricted Stock Units equal to the quotient of (i) the number of
                Restricted Stock Units credited to such Account but not yet distributed,
                multiplied by the per share dollar amount of such dividend, divided
                by
                (ii) the Fair Market Value of a share of Stock on the date such dividend
                is paid (credited proportionately over any subaccounts, if
                applicable);

            

    

     

    
      	
              c)  

            	
              Stock
                Dividends.  On the date that the Company pays any Stock
                dividend in respect of outstanding shares of Stock, the Company shall
                credit each Account with a number of shares of full and fractional
                Restricted Stock Units equal to the product of (i) the number of
                Restricted Stock Units credited to such Account but not yet distributed,
                multiplied by (ii) the number of shares of Stock distributed with
                respect
                to such dividend per share of Stock;
                and

            

    

     

    
      	
              d)  

            	
              Other
                Distributions.  On the date that the Company pays any
                other type of distribution in respect of outstanding shares of Stock,
                the
                Company shall credit each Participant’s Account in an equitable manner
                based on the number of Restricted Stock Units held in such Account,
                as
                determined in the sole discretion of the
                Committee.

            

    

     

    Section
      4.03 Trust.  The
      Company may, in its sole discretion, establish a Trust for purposes of
      allocating funds to satisfy obligations arising under this
      Program.  The rights of Participants and Beneficiaries (if any) with
      respect to any assets so held in Trust (if any) shall be governed by the terms
      and conditions of the document(s) creating such Trust.

     

    ARTICLE
      V                               

     

     

    DISTRIBUTION

     

    Section
      5.01 Distribution
      of Shares.  Subject to Sections 5.02 and 5.03 below, shares of
      Stock underlying Restricted Stock Units issued under this Program (including
      any
      Restricted Stock Units issued in respect of rights to Dividend Equivalents)
      shall, to the extent vested as of any such date, be distributed in a single
      distribution upon the earliest to occur of: (i) the Participant’s Separation
      from Service; (ii) the occurrence of a “change of control event” (within the
      meaning of Section 409A), (iii) to the extent so elected by the Participant,
      the
      applicable Fixed-Date Distribution date (as may be adjusted in respect of any
      Re-Deferral Election); and (iv) the occurrence of the Participant’s death or
      disability (within the meaning of Section 409A) (any such date, a “Distribution
      Date”).  To the extent that any fractional Restricted Stock
      Units become distributable on a Distribution Date, such fractional Restricted
      Stock Units shall be distributed in cash.  To the extent that any
      outstanding Restricted Stock Units remain unvested as of an applicable
      Distribution Date (after taking into consideration any vesting which may occur
      in connection with the occurrence of such Distribution Date), then such
      Restricted Stock Units shall, to the extent not forfeited in connection with
      such distribution, be distributed as Restricted Stock, and the vesting schedule
      that applied to such Restricted Stock Units immediately prior to such
      distribution shall continue to apply to such Restricted Stock.

    

    Section
      5.02 Unforeseeable
      Emergency.  If a Participant experiences an Unforeseeable
      Emergency, the Committee may, in its sole discretion, permit an early
      distribution of that portion of such Participant’s Account reasonably necessary
      to satisfy the emergency need giving rise to the Unforeseeable
      Emergency,  including any taxes or penalties reasonably anticipated to
      result from such distribution and taking into consideration any funds that
      may
      become available as a result of the termination of such Participant’s existing
      Election(s) in connection with such distribution.  If the
      Participant’s Account is comprised of one or more subaccounts, the Committee
      shall determine, in its sole discretion, from which subaccount such amounts
      shall be distributed.  If a Participant takes a distribution pursuant
      to this Section 5.02, any existing Elections by such Participant shall
      immediately terminate with regard to Stock Awards not yet earned at the time
      of
      such distribution and the Participant shall only be eligible to make future
      Elections under this Program as determined by the Committee, in its sole
      discretion and in accordance with Section 409A.

    

    Section
      5.03 Specified
      Employees. Notwithstanding
      anything
      in this Program or any Election Form to the contrary, with respect to any
      Participant who is a Specified Employee at the time of such Participant’s
      Separation from Service, as determined in the sole discretion of the Committee,
      the distribution of such Participant’s Account (and all subaccounts) upon such
      Separation from Service shall, to the extent that such distribution upon a
      Separation from Service would be a prohibited distribution under Section
      409A(a)(2)(b)(i) of the Code, be delayed until the date which is six months
      and
      one day after the date on which such Separation from Service occurs (such
      delayed payment date, the “Specified Employee Payment
      Date”), provided,
      however, that to the extent
      that all or any portion of such Participant’s Account would have been
      distributed during the six-month period following such Separation from Service
      without regard to such Separation from Service, such amounts shall continue
      be
      distributed in accordance with such schedule without regard to this Section
      5.02, and any remaining balance in such Participant’s Account shall be
      distributed on the Specified Employee Payment Date.

    

     

    ARTICLE
      VI

     

     

    ADMINISTRATION

     

    Section
      6.01 Administration.   This
      Program shall be administered by the Committee in accordance with the provisions
      of Article 12 of the Plan.  Without limiting the generality of the
      foregoing, the Committee may delegate the administration of ministerial duties
      to one or more individuals or sub-committees and, in the event of such delegation,
      references to "Committee" herein shall be deemed to refer to the individuals
      or
      subcommittees to whom such delegation has been
      made.  References to the Committee throughout this Program
      shall be understood to refer to the appropriate administrative body as provided
      under this Section 6.01.

    

    Section
      6.02 Powers
      and Duties of the Committee.  Without limiting the generality
      of Article 12 of the Plan, the Committee, on behalf of Participants and their
      Beneficiaries, shall administer this Program in accordance with its terms,
      and
      shall have all powers necessary to accomplish its purposes, including, but
      not
      by way of limitation, the following:

    

    
      	
              a)  

            	
              To
                construe and interpret the terms and provisions of this Program and
                to
                make all factual determinations relevant to this
                Program;

            

    

     

    
      	
              b)  

            	
              To
                direct and instruct the trustee of any Trust (if the Company establishes
                a
                Trust), to the extent the Company is authorized or required to do
                so under
                this Program; and

            

    

     

    
      	
              c)  

            	
              To
                take all actions set forth in this Program
                document.

            

    

     

    

    Section
      6.03 Construction
      and Interpretation.  The Committee
      shall
      have full discretion to construe and interpret the terms and provisions of
      this
      Program, which construction and interpretation shall be final and binding on
      all
      parties, including but not limited to the Company and all Participants and
      Beneficiaries.

     

     

    ARTICLE
      VII                               

     

     

    BENEFICIARIES

     

    Section
      7.01 Beneficiaries.
      Each Participant shall have the right to designate one or more Beneficiaries
      to
      succeed to such Participant’s right to receive distributions hereunder in the
      event of such Participant’s death.

     

     

    ARTICLE
      VIII

     

     

    MISCELLANEOUS

     

    Section
      8.01 Adjustments.  Without
      limiting the generality of any provision of this Program, Article 11 of the
      Plan
      (pertaining to adjustments upon changes in capital structure and corporate
      transactions) is hereby expressly incorporated by reference into this
      Program.

    

    Section
      8.02 Unsecured
      General Creditors.  Participants
      and
      their Beneficiaries, heirs, successors, and assigns shall have no legal or
      equitable rights, claims, or interest in any specific property or assets of
      the
      Company or any Trust.  Any and all of the Company’s assets and any
      Trust’s assets shall be, and remain, the general unpledged, unrestricted assets
      of the Company, which shall be subject to the claims of the Company’s general
      creditors.  The Company’s obligations under this Program shall be
      merely that of an unfunded and unsecured promise of the Company to pay shares
      of
      Stock in the future, and the rights of the Participants and Beneficiaries shall
      be no greater than those of unsecured general creditors. It is the intention
      of
      the Company that this Program (and any Trust established in connection herewith)
      be unfunded for purposes of the Code and for purposes of Title I of
      ERISA.

    

    Section
      8.03 Section
      409A.  To the extent applicable, this Program, the Plan, all
      Election Forms and all other instruments evidencing amounts subject to this
      Program shall be interpreted in accordance with Section
      409A.  Notwithstanding any provision of this Program, the Plan, any
      Election Form or any other instrument evidencing amounts subject to this Program
      to the contrary, if the Committee determines that any amounts subject to this
      Program may be or become subject to taxes under Section 409A, the Committee
      may
      adopt such amendments to this Program, the Plan, any Election Form(s) and any
      other instruments relating to this Program or the Plan, and/or adopt other
      policies and procedures (including amendments, policies and procedures with
      retroactive effect), or take any other actions as the Committee determines
      are
      necessary or appropriate to (i) exempt such amounts from Section 409A, or (ii)
      comply with the requirements of Section 409A, in any case, to preserve the
      intended tax treatment of the such amounts.

    

    Section
      8.04 Restriction
      Against Assignment.  Except as otherwise
      provided herein or by law, no right or interest of any Participant or
      Beneficiary under this Program shall be assignable or transferable, in whole
      or
      in part, either directly or by operation of law or otherwise, including without
      limitation by execution, levy, garnishment, attachment, pledge or in any manner;
      no attempted assignment or transfer thereof shall be effective; and no right
      or
      interest of any Participant or Beneficiary under this Program shall be liable
      for, or subject to, any obligation or liability of such Participant. When a
      payment is due under this Program to a Participant or Beneficiary who is unable
      to care for his or her affairs, payment may be made directly to his or her
      legal
      guardian or personal representative.

    

    Section
      8.05 Withholding.
The
      Company shall have
      the authority and the right to deduct, withhold or require a Participant or
      Beneficiary to remit to the Company an amount sufficient to satisfy federal,
      state, local and foreign taxes (including without limitation any income and
      employment tax obligations) required by law to be withheld with respect to
      amounts payable under this Program.

    

    Section
      8.06 Program
      Subject to the Plan.
This Program
      is established under and controlled by the
      Plan.  The Program and all Restricted Stock Units and Dividend
      Equivalents awarded hereunder shall be subject to the terms and conditions
      of
      the Plan.

    

    Section
      8.07 Expenses.  The
      expenses of administering this Program shall be borne by the
      Company.

    

    Section
      8.08 No
      Rights
      as Stockholder. Except as expressly provided herein with respect to
      dividends, the right to receive Stock at a later date under this Program shall
      not entitle any person to rights of a stockholder with respect to such Stock
      unless and until such shares of Stock have been issued to such
      Participant.

    

    Section
      8.09 Amendment,
      Suspension or Termination.  The Board may
      amend, suspend or terminate this Program in whole or in part, at any time,
      except that no amendment, suspension or termination shall have any retroactive
      effect to reduce any amounts allocated to a Participant’s Account.

    

    Section
      8.10 Additional
      Authority.  The Board may,
      in its
      sole discretion, with respect to this Program and all matters arising hereunder,
      take any action permitted under Treas. Reg. 1.409A-3(j) or any successor
      provision thereto, as such provisions may be amended from time to time,
      including without limitation, terminate or liquidate the Program, whether or
      not
      in connection with a Change in Control.

    

    Section
      8.11 Release.  Any
      payment
      to a Participant or Beneficiary in accordance with the provisions of this
      Program shall, to the extent thereof, be in full satisfaction of all claims
      arising under, or with respect to, this Program against the Committee and the
      Company. The Company may require such Participant or Beneficiary, as a condition
      precedent to such payment, to execute and release in a form prescribed by the
      Company.

    

    Section
      8.12 Captions.  The
      captions contained in this Program are for convenience only and shall have
      no
      bearing on the meaning, construction or interpretation of the Program’s
      provisions.

    

    Section
      8.13 Validity.
       The invalidity or
      unenforceability of any provision of this Program shall not affect the validity
      or enforceability of any other provision of this Program, which shall remain
      in
      full force and effect.

    **

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, Kilroy
      Realty Corporation has caused this Program to be executed on this 26th day
      of
      December, 2007.

    

    

    KILROY
      REALTY CORPORATION

    

    

    By:
      ____________________________

    Name:

    Title:

    

    

    

    By:
      ____________________________

    Name:

    Title:

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
      A

     

     

    [ELECTION
      FORM]

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