Document:

exv10w3

Exhibit 10.3

Grubb & Ellis Healthcare REIT II, Inc.

2009 Incentive Plan

 

 

GRUBB & ELLIS HEALTHCARE REIT II, INC.

2009 INCENTIVE PLAN

     Grubb & Ellis Healthcare REIT II, Inc., a Maryland corporation, has adopted the Grubb & Ellis
Healthcare REIT II, Inc. 2009 Incentive Plan, for the benefit of its Eligible Recipients and the
Eligible Recipients of its Subsidiaries.

1 Purpose

     The purposes of the Plan are as follows:

     1.1 To provide an additional incentive for Eligible Recipients to further the growth,
development and financial success of the Company by personally benefiting through the ownership of
Company stock and/or rights which recognize such growth, development and financial success.

     1.2 To enable the Company to obtain and retain the services of Eligible Recipients considered
essential to the long range success of the Company by offering them an opportunity to own stock in
the Company and/or rights which will reflect the growth, development and financial success of the
Company.

2 Definitions

     Wherever the following terms are used in the Plan they shall have the meanings specified
below, unless the context clearly indicates otherwise. The singular pronoun shall include the
plural where the context so indicates.

     2.1 Administrator shall mean the entity that conducts the general administration of the Plan
as provided herein. With reference to the administration of the Plan with respect to Options and
Restricted Stock granted to Independent Directors, the term “Administrator” shall refer to the
Board. With reference to the administration of the Plan with respect to any other Award, the term
“Administrator” shall refer to the Committee unless the Board has assumed the authority for
administration of the Plan generally as provided in Article 11.

     2.2 Award shall mean an Option, a Restricted Stock award, a Performance Award, a Dividend
Equivalents award, a Deferred Stock award, a Stock Payment award or a Stock Appreciation Right
which may be awarded or granted under the Plan.

     2.3 Award Agreement shall mean a written agreement executed by an authorized Officer of the
Company and the Holder which shall contain such terms and conditions with respect to an Award as
the Administrator shall determine, consistent with the Plan.

     2.4 Board shall mean the Board of Directors of the Company.

     2.5 Change of Control means either of the following:

     (a) Any transaction or series of transactions pursuant to which the Company sells,
transfers, leases, exchanges, or disposes of substantially all (i.e., at least eighty-five
percent (85%)) of its assets for cash or property, or for a combination of cash and
property, or for other consideration; or

     (b) Any transaction pursuant to which persons who are not current shareholders of the
Company acquires by merger, consolidation, reorganization, division, or other business
combination or transaction, or by a purchase of an interest in the Company, an interest in
the Company so that after such transaction, the shareholders of the Company immediately
prior to such transaction no longer have a controlling (i.e., 50% or more) voting interest
in the Company.

     2.6 Code shall mean the Internal Revenue Code of 1986, as amended.

     2.7 Committee shall mean the Compensation Committee of the Board, or another committee or
subcommittee of the Board, appointed as provided in Section 11.1.

     2.8 Common Stock shall mean the common stock of the Company.

     2.9 Company shall mean Grubb & Ellis Healthcare REIT II, Inc., a Maryland corporation.

     2.10 Consultant shall mean any consultant or adviser if:

 

 

     (a) The consultant or adviser renders bona fide services to the Company or any
Subsidiary;

     (b) The services rendered by the consultant or adviser are not in connection with the
offer or sale of securities in a capital-raising transaction and do not directly or
indirectly promote or maintain a market for the Company’s securities within the meaning of
the general instructions to SEC Form S-8; and

     (c) The consultant or adviser is a natural person who has contracted directly with the
Company to render such services.

     2.11 Deferred Stock means an award of a contractual right to Common Stock in the future made
to an Eligible Recipient pursuant to Section 9.5 of the Plan, but subject to such terms and
conditions as may be established by the Administrator.

     2.12 Director shall mean a member of the Board.

     2.13 Dividend Equivalent shall mean a right awarded under Section 9.3 of the Plan to receive
the equivalent value (in cash or Common Stock) of dividends paid on Common Stock.

     2.14 DRO shall mean a domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder.

     2.15 Effective Date shall mean the date on which this Plan is adopted by the Board, or such
delayed effective date as the Board may specify, as noted in resolutions effectuating such
adoption.

     2.16 Eligible Recipient shall mean an Officer, Employee, Consultant or Independent Director.

     2.17 Employee shall mean any common law employee of the Company or of any Subsidiary.

     2.18 Exchange Act shall mean the Securities Exchange Act of 1934, as amended.

     2.19 Fair Market Value of a share of Common Stock as of a given date shall be (a) the closing
price of a share of Common Stock on the principal exchange on which shares of Common Stock are then
trading, if any (or as reported on any composite index which includes such principal exchange), on
the trading day previous to such date, or if shares were not traded on the trading day previous to
such date, then on the next preceding date on which a trade occurred, or (b) if Common Stock is not
traded on an exchange but is quoted on Nasdaq or a successor quotation system, the mean between the
closing representative bid and asked prices for the Common Stock on the trading day previous to
such date as reported by Nasdaq or such successor quotation system, or (c) if Common Stock is not
publicly traded on an exchange and not quoted on Nasdaq or a successor quotation system, the Fair
Market Value of a share of Common Stock as established by the Administrator in its complete and
absolute discretion.

     2.20 Holder shall mean a person who has been granted or awarded an Award.

     2.21 ISO shall mean an option which conforms to the applicable provisions of Code §422 and
which is designated as an ISO by the Administrator.

     2.22 Independent Director shall mean a member of the Board who is not an Officer or Employee.

     2.23 Insider shall mean an individual who is, on the relevant date, an Officer, Director or
ten percent (10%) beneficial owner of any class of the Company’s equity securities that is
registered pursuant to Section 12 of the Exchange Act, all as defined under Section 16 of the
Exchange Act.

     2.24 NQSO shall mean an Option which is not designated as an ISO by the Administrator or which
does not conform to the applicable provisions of Code §422.

     2.25 Officer shall mean any officer of the Company, or of any Subsidiary.

     2.26 Option shall mean a stock option granted under Section 5 of the Plan. An Option granted
under the Plan shall, as determined by the Administrator, be either a NQSO or an ISO; provided,
however, that Options granted to Eligible Recipients who are Independent Directors and Consultants
at the time of grant shall be NQSO’s.

     2.27 Performance Award shall mean a cash bonus, stock bonus or other performance or incentive
award that is paid in cash, Common Stock or a combination of both, awarded under Section 9.2 of the
Plan.

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     2.28 Performance Criteria shall mean the following business criteria with respect to the
Company, any Subsidiary or any division or operating unit: (a) net income; (b) pre-tax income; (c)
operating income; (d) cash flow; (e) earnings per share; (f) return on equity; (g) return on
invested capital or assets or equity or sales; (h) cost reductions or savings; (i) funds from
operations; (j) appreciation in the fair market value of Common Stock; (k) earnings before or after
any one or more of the following items: interest, taxes, depreciation or amortization; (l) net
income; (m) cash flow return on investments which equals net cash flows divided by owners’ equity;
(n) gross revenues; (o) total shareholder returns; (p) achievement of sales targets; (q) completion
of acquisitions; (r) cash generation, profit and/or revenue targets; (s) growth measures, including
revenue growth, as compared with a peer group or other benchmark; each as determined in accordance
with generally accepted accounting principles or subject to such adjustments as may be specified by
the Committee with respect to an Award.

     2.29 Plan shall mean the Grubb & Ellis Healthcare REIT II, Inc. 2009 Incentive Plan.

     2.30 Restricted Stock shall mean an award of Common Stock awarded under Section 8 of the Plan,
whereby the Holder has immediate rights of ownership in the Common Stock underlying the Award, but
such Common Stock is subject to restrictions in accordance with the terms and provisions of this
Plan and the Award Agreement pertaining to the Award and may be subject to forfeiture by the Holder
until the earlier of (a) the time such restrictions lapse or are satisfied, or (b) the time such
shares are forfeited, pursuant to the terms of the Award Agreement pertaining to the Award.

     2.31 Rule 16b-3 shall mean Rule 16b-3 promulgated under the Exchange Act, as such Rule may be
amended from time to time.

     2.32 Code §162(m) Participant shall mean any Officer or Employee designated by the
Administrator as an Officer or Employee whose compensation for the fiscal year in which the Officer
or Employee is so designated or a future fiscal year may be subject to the limit on deductible
compensation imposed by Code §162(m).

     2.33 Securities Act shall mean the Securities Act of 1933, as amended.

     2.34 Stock Appreciation Right shall mean a stock appreciation right granted under Section 10
of the Plan whereby the Holder, without payment to the Company (except for any applicable
withholding or other taxes), receives cash, Common Stock, a combination thereof, or such other
consideration as the Board may determine, in an amount equal to the excess of the Fair Market Value
per share of Common Stock on the date on which the Stock Appreciation Right is exercised over the
Stock Appreciation Right exercise price noted in the Award Agreement for each share of Common Stock
subject to the Stock Appreciation Right.

     2.35 Stock Payment shall mean (a) a payment in the form of shares of Common Stock, or (b) an
option or other right to purchase shares of Common Stock, as part of a deferred compensation
arrangement, made in lieu of all or any portion of the compensation, including without limitation,
salary, bonuses and commissions, that would otherwise become payable to an Eligible Recipient in
cash, awarded under Section 9.4 of the Plan.

     2.36 Subsidiary shall mean any corporation in an unbroken chain of corporations beginning with
the Company if each of the corporations other than the last corporation in the unbroken chain then
owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain. “Subsidiary” shall also mean any
partnership or limited liability company in which the Company, or any Subsidiary, owns a
partnership or membership interest representing fifty percent (50%) or more of the capital or
profit interests of such partnership or limited liability company.

     2.37 Ten Percent Shareholder shall mean a person who owns (after taking into account the
attribution rules of Code §424(d)) more than ten percent (10%) of the total combined voting power
of all classes of stock of either the Company or a Subsidiary. For purposes of the preceding
sentence, shares of stock owned (directly or indirectly) by or for a person’s brothers and sisters
(whether by the whole or half blood), spouse, ancestors and lineal descendants will be considered
to be owned by the person, and if a domestic or foreign corporation, partnership, estate or trust
owns (directly or indirectly) shares of stock, those shares are considered to be owned
proportionately by or for the stockholders, partners, or beneficiaries of the corporation,
partnership, estate or trust. The extent to which stock held by a person as a trustee of a voting
trust is considered owned by such person is determined under all of the facts and circumstances.
Stock that a person

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may purchase under outstanding options is not treated as stock owned by such person. In
interpreting the foregoing, the provisions of Treas. Reg. §1.422-2(f)(2) shall govern.

3 Shares Subject to Plan

     3.1 Shares Subject to Plan.

     (a) Overall Limitation. The shares of stock subject to Awards initially shall be
Common Stock. Subject to adjustment as provided in Section 12.4, the aggregate number of
such shares which may be issued upon exercise of such Options or rights or upon any such
Awards under the Plan shall not exceed two million (2,000,000). The shares of Common Stock
issuable upon exercise of such Options or rights or upon any such awards may be either
previously authorized but unissued shares or treasury shares or shares paid to or reacquired
by the Company.

     (b) Individual Limitation. The maximum number of shares which may be subject to Awards
granted under the Plan to any individual in any calendar year shall not exceed two hundred
fifty thousand (250,000), subject to adjustment as provided in Section 12.4. To the extent
required by Code §162(m), shares subject to Options which are canceled continue to be
counted against this limitation.

     (c) Maximum Aggregate Shares Issuable ISO Limitation. The total maximum number
of shares of Common Stock that may be issued pursuant to the exercise of ISO’s under this Plan
shall at all time be exactly the same as the total maximum number of shares that may be
issued pursuant to Awards pursuant to Section 3.1(a) above.

     3.2 Add-back of Options and Other Rights. If any Option, or other right to acquire shares of
Common Stock under any other Award under the Plan, expires or is canceled without having been fully
exercised, or is exercised in whole or in part for cash as permitted by the Plan, the number of
shares subject to such Option or other right but as to which such Option or other right was not
exercised prior to its expiration, cancellation or exercise may again be optioned, granted or
awarded hereunder, subject to the limitations of Section 3.1. Furthermore, any shares subject to
Awards which are adjusted pursuant to Section 12.4 and become exercisable with respect to shares of
stock of another corporation shall be considered cancelled and may again be optioned, granted or
awarded hereunder, subject to the limitations of Section 3.1. Shares of Common Stock which are
delivered by the Holder or withheld by the Company upon the exercise of any Award under the Plan,
in payment of the exercise price thereof or tax withholding thereon, may again be optioned, granted
or awarded hereunder, subject to the limitations of Section 3.1. If any shares of Restricted Stock
are surrendered by the Holder or repurchased by the Company pursuant to Section 8.4 hereof, such
shares may again be optioned, granted or awarded hereunder, subject to the limitations of Section
3.1. Notwithstanding the provisions of this Section 3.2, no shares of Common Stock may again be
optioned, granted or awarded if such action would cause an ISO to fail to qualify as an incentive
stock option under Code §422.

4 Granting of Awards

     4.1 Award Agreement. Each Award shall be evidenced by an Award Agreement. Award Agreements
evidencing Awards intended to qualify as performance-based compensation as described in Code
§162(m)(4)(C) shall contain such terms and conditions as may be necessary to meet the applicable
provisions of Code §162(m). Award Agreements evidencing Awards intended to be ISO’s shall contain
such terms and conditions as may be necessary to meet the applicable provisions of Code §422.

     4.2 Provisions Applicable to Code §162(m) Participants.

     (a) The Committee, in its discretion, may determine whether an Award is to qualify as
performance-based compensation as described in Code §162(m)(4)(C).

     (b) Notwithstanding anything in the Plan to the contrary, the Committee may grant any
Award to a Code §162(m) Participant, including Restricted Stock, the restrictions with
respect to which lapse upon the attainment of performance goals which are related to one or
more of the Performance Criteria, and any performance or incentive award described in
Section 9 that vests or becomes exercisable or payable upon the attainment of performance
goals which are related to one or more of the Performance Criteria.

     (c) To the extent necessary to comply with the performance-based compensation
requirements of Code §162(m)(4)(C), with respect to any Award granted under Sections 8 and 9
which

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may be granted to one or more Code §162(m) Participants, no later than ninety (90) days
following the commencement of any fiscal year in question or any other designated fiscal
period or period of service (or such other time as may be required or permitted by Code
§162(m)), the Committee shall, in writing, (i) designate one or more Code §162(m)
Participants, (ii) select the Performance Criteria applicable to the fiscal year or other
designated fiscal period or period of service, (iii) establish the various performance
targets, in terms of an objective formula or standard, and amounts of such Awards, as
applicable, which may be earned for such fiscal year or other designated fiscal period or
period of service, and (iv) specify the relationship between Performance Criteria and the
performance targets and the amounts of such Awards, as applicable, to be earned by each Code
§162(m) Participant for such fiscal year or other designated fiscal period or period of
service. Following the completion of each fiscal year or other designated fiscal period or
period of service, the Committee shall certify in writing whether the applicable performance
targets have been achieved for such fiscal year or other designated fiscal period or period
of service. In determining the amount earned by a Code §162(m) Participant, the Committee
shall have the right to reduce (but not to increase) the amount payable at a given level of
performance to take into account additional factors that the Committee may deem relevant to
the assessment of individual or corporate performance for the fiscal year or other
designated fiscal period or period of service.

     (d) Furthermore, notwithstanding any other provision of the Plan or any Award which is
granted to a Code §162(m) Participant and is intended to qualify as performance-based
compensation as described in Code §162(m)(4)(C) shall be subject to any additional
limitations set forth in Code §162(m) (including any amendment to Code §162(m)) or any
regulations or rulings issued thereunder that are requirements for qualification as
performance-based compensation as described in Code §162(m)(4)(C), and the Plan shall be
deemed amended to the extent necessary to conform to such requirements.

     4.3 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the
Plan, the Plan, and any Award granted or awarded to any individual who is then subject to Section
16 of the Exchange Act, shall be subject to any additional limitations set forth in any applicable
exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the
Exchange Act) that are requirements for the application of such exemptive rule. To the extent
permitted by applicable law, the Plan and Awards granted or awarded hereunder shall be deemed
amended to the extent necessary to conform to such applicable exemptive rule.

     4.4 No Guarantee of Continued Relationship. Nothing in the Plan or in any Award Agreement
hereunder shall confer upon any Holder any right to continue in the employ of, or as a Consultant
for, the Company or any Subsidiary, or as a director of the Company, or shall interfere with or
restrict in any way the rights of the Company and any Subsidiary, which are hereby expressly
reserved, to discharge any Holder at any time for any reason whatsoever, with or without cause,
except to the extent expressly provided otherwise in a written employment agreement between the
Holder and the Company and any Subsidiary. The grant of an Award to a Holder under this Plan shall
not constitute a contract of employment or a contract to perform services and shall not confer on a
Holder any rights upon his or her termination of employment or other relationship with the Company
in addition to those rights, if any, expressly set forth in the Award Agreement that evidences his
or her Award.

5 Granting of Options to Eligible Recipients

     5.1 Eligibility. Any Eligible Recipient selected by the Administrator pursuant to Section
5.3(a) shall be eligible to be granted an Option.

     5.2 Qualification of ISO’s. Only Officers or Employees are eligible to receive an Option
which is an ISO.

     5.3 Granting of Options to Eligible Recipients.

     (a) The Committee shall from time to time, in its absolute discretion, and subject to
applicable limitations of the Plan, select from among the Eligible Recipients (including
Eligible Recipients who have previously received Awards under the Plan) such of them as in
its opinion should be granted Options; determine the number of shares to be subject to such
Options granted to the selected Eligible Recipient; determine whether such Options for
Officers or Employees are to be ISO’s

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or NQSO’s (subject to Section 5.2 above) and whether such Options are to qualify as
performance-based compensation as described in Code §162(m)(4)(C); and determine the terms
and conditions of such Options, consistent with the Plan; provided, however, that the terms
and conditions of Options intended to qualify as performance-based compensation as described
in Code §162(m)(4)(C) shall include, but not be limited to, such terms and conditions as may
be necessary to meet the applicable provisions of Code §162(m).

     (b) Upon the selection of an Eligible Recipient to be granted an Option, the Committee
shall instruct the Secretary of the Company to issue the Option and may impose such terms
and conditions on the Option as it deems appropriate.

6 Terms of Options

     6.1 Option Price. The price per share of the shares subject to each Option granted to
Eligible Recipients shall be set by the Committee; provided, however, that such price shall be no
less than 100% of the Fair Market Value of a share of Common Stock on the date the Option is
granted, and, in the case of ISO’s granted to a Ten Percent Shareholder, such price shall not be
less than 110% of the Fair Market Value of a share of Common Stock on the date the Option is
granted (or the date the Option is modified, extended or renewed for purposes of Code §424(h)).
Notwithstanding the foregoing, the exercise price of an Option granted in substitution of an
existing option pursuant to Treas. Reg. §1.424-1(a) or Treas. Reg. §1.409A-1(b)(5)(v)(D) may be
established under the requirements of those provisions without regard to the foregoing (see Section
6.4 below).

     6.2 Option Term. The term of an Option granted to an Eligible Recipient shall be set by the
Committee in its discretion; provided, however, that, in the case of ISO’s, the term shall not be
more than 10 years from the date the ISO is granted, or five years from the date the ISO is granted
if the ISO is granted to a Ten Percent Shareholder. Upon consideration of Code §§409A and 422, the
Committee may extend the term of any outstanding Option.

     6.3 Option Vesting.

     (a) The period during which the Holder of an Option shall be entitled to exercise, in
whole or in part, an Option shall be set by the Committee and stated in the Award Agreement.
At any time after grant of an Option, the Committee may, in its sole and absolute
discretion and subject to whatever terms and conditions it selects, accelerate the period
during which an Option granted to an Eligible Recipient vests. However, if the Holder of an
Option receives a hardship distribution from a Code §401(k) plan of the Company or a
Subsidiary, the Option may not be exercised during the six (6) month period following the
hardship distribution, unless the Company determines that such exercise would not jeopardize
the tax-qualification of the Code §401(k) plan. The Committee may impose such restrictions
on any Shares acquired pursuant to the exercise of an Option as it may deem advisable,
including, without limitation, vesting or performance-based restrictions, voting
restrictions, investment intent restrictions, restrictions on transfer, restrictions or
limitations or other provisions that would be applied to shareholders under any applicable
agreement among the shareholders, and restrictions under applicable federal securities laws,
under the requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and/or under any blue sky or state securities laws applicable to such
Shares.

     (b) To the extent that the aggregate Fair Market Value of stock with respect to which
“incentive stock options” (within the meaning of Code §422, but without regard to Code
§422(d)) are exercisable for the first time by a Holder during any calendar year (under the
Plan and all other incentive stock option plans of the Company and any parent or subsidiary
corporation, within the meaning of Code §422) of the Company, exceeds $100,000, such Options
shall be treated as NQSO’s to the extent required by Code §422. The rule set forth in the
preceding sentence shall be applied in accordance with regulations issued under Code §422.
For purposes of this Section 6.3(b), the Fair Market Value of stock shall be determined as
of the time the Option with respect to such stock is granted.

     6.4 Substitute Awards. Notwithstanding anything to the contrary in this Section, any Option
in substitution for a stock option previously issued by another entity, which substitution occurs
in connection with a transaction to which Code §424(a) is applicable, may provide for an exercise
price computed in accordance

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with Code §424(a) and the regulations thereunder and may contain such other terms and
conditions as the Committee may prescribe to cause such substitute Option to contain as nearly as
possible the same terms and conditions (including the applicable vesting and termination
provisions) as those contained in the previously issued stock option being replaced thereby.

7 Exercise of Options

     7.1 Partial Exercise. An exercisable Option may be exercised in whole or in part. However,
an Option shall not be exercisable with respect to fractional shares and the Administrator may
require that, by the terms of the Option, a partial exercise be with respect to a minimum number of
shares.

     7.2 Manner of Exercise. All or a portion of an exercisable Option shall be deemed exercised
upon delivery of all of the following to the Secretary of the Company or his or her office:

     (a) A written notice complying with the applicable rules established by the
Administrator stating that the Option, or a portion thereof, is exercised. The notice shall
be signed by the Holder or other person then entitled to exercise the Option or such portion
of the Option;

     (b) Such representations and documents as the Administrator, in its absolute
discretion, deems necessary or advisable to effect compliance with all applicable provisions
of the Securities Act and any other federal or state securities laws or regulations. The
Administrator may, in its absolute discretion, also take whatever additional actions it
deems appropriate to effect such compliance including, without limitation, placing legends
on share certificates and issuing stop-transfer notices to agents and registrars;

     (c) In the event that the Option shall be exercised pursuant to Section 12.1 by any
person or persons other than the Holder, appropriate proof of the right of such person or
persons to exercise the Option; and

     (d) Full cash payment to the Secretary of the Company for the shares with respect to
which the Option, or portion thereof, is exercised. However, the Administrator may, in its
discretion, (i) allow a delay in payment up to 30 days from the date the Option, or portion
thereof, is exercised; (ii) allow payment, in whole or in part, through the delivery
of shares of Common Stock duly endorsed for transfer to the Company with a Fair Market Value on
the date of delivery equal to the aggregate exercise price of the Option or exercised
portion thereof; (iii) allow payment, in whole or in part, through the surrender of shares
of Common Stock then issuable upon exercise of the Option having a Fair Market Value on the
date of Option exercise equal to the aggregate exercise price of the Option or exercised
portion thereof; (iv) allow payment, in whole or in part, through the delivery of property
of any kind which constitutes good and valuable consideration; (v) allow payment, in whole
or in part, through the delivery of a full recourse promissory note bearing interest (at no
less than such rate as shall then preclude the imputation of interest under the Code) and
payable upon such terms as may be prescribed by the Administrator; (vi) allow payment, in
whole or in part, through the delivery of a notice that the Holder has placed a market sell
order with a broker with respect to shares of Common Stock then issuable upon exercise of
the Option, and that the broker has been directed to pay a sufficient portion of the net
proceeds of the sale to the Company in satisfaction of the Option exercise price, provided
that payment of such proceeds is then made to the Company upon settlement of such sale; or
(vii) allow payment through any combination of the consideration provided in the foregoing
subparagraphs (ii), (iii), (iv), (v) and (vi). In the case of a promissory note, the
Administrator may also prescribe the form of such note and the security to be given for such
note. The Option may not be exercised, however, by delivery of a promissory note or by a
loan from the Company when or where such loan or other extension of credit is prohibited by
law. However, notwithstanding the foregoing, with respect to any Holder who is an Insider,
a tender of shares or a “cashless” or “net share” exercise must (1) have met the
requirements of an exemption under Rule 16b-3 promulgated under the Exchange Act, or (2) be
a subsequent transaction the terms of which were provided for in a transaction initially
meeting the requirements of an exemption under Rule 16b-3 promulgated under the Exchange
Act. Unless the Award Agreement provides otherwise, the foregoing exercise payment methods
shall be subsequent transactions approved by the original grant of an Option.

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     7.3 Conditions to Issuance of Stock Certificates. The Company shall not be required to issue
or deliver any certificate or certificates for shares of stock purchased upon the exercise of any
Option or portion thereof prior to fulfillment of all of the following conditions:

     (a) The admission of such shares to listing on all stock exchanges on which such class
of stock is then listed;

     (b) The completion of any registration or other qualification of such shares under any
state or federal law, or under the rulings or regulations of the Securities and Exchange
Commission or any other governmental regulatory body which the Administrator shall, in its
absolute discretion, deem necessary or advisable;

     (c) The obtaining of any approval or other clearance from any state or federal
governmental agency which the Administrator shall, in its absolute discretion, determine to
be necessary or advisable;

     (d) The lapse of such reasonable period of time following the exercise of the Option as
the Administrator may establish from time to time for reasons of administrative convenience;
and

     (e) The receipt by the Company of full payment for such shares, including payment of
any applicable withholding tax, which in the discretion of the Administrator may be in the
form of consideration used by the Holder to pay for such shares under Section 7.2(d).

     7.4 Rights as Shareholders. Holders shall not be, nor have any of the rights or privileges
of, shareholders of the Company in respect of any shares purchasable upon the exercise of any part
of an Option unless and until certificates representing such shares have been issued by the Company
to such Holders.

     7.5 Ownership and Transfer Restrictions. The Administrator, in its absolute discretion, may
impose such restrictions on the ownership and transferability of the shares purchasable upon the
exercise of an Option as it deems appropriate. Any such restriction shall be set forth in the
respective exercise documentation provided to the Holder upon exercise and may be referred to on
the certificates evidencing such shares. The Holder shall give the Company prompt notice of any
disposition of shares of Common Stock acquired by exercise of an ISO within (a) two years from the
date of granting (including the date the Option is modified, extended or renewed for purposes of
Code §424(h)) such Option to such Holder, or (b) one year after the transfer of such shares to such
Holder.

     7.6 Additional Limitations on Exercise of Options. Holders may be required to comply with any
timing or other restrictions with respect to the settlement or exercise of an Option, including a
window-period limitation, as may be imposed in the discretion of the Administrator.

8 Award of Restricted Stock

     8.1 Eligibility. Subject to the terms and provisions of this Plan, Restricted Stock may be
awarded to any Eligible Recipient who the Committee determines should receive such an Award.

     8.2 Award of Restricted Stock to Eligible Recipients.

     (a) The Committee may from time to time, in its absolute discretion, select from among
the Eligible Recipients (including Eligible Recipients who have previously received other
awards under the Plan) such of them as in its opinion should be awarded Restricted Stock;
and determine the purchase price, if any, and other terms and conditions applicable to such
Restricted Stock, consistent with the Plan.

     (b) The Committee shall establish the purchase price, if any, and form of payment for
Restricted Stock; provided, however, that such purchase price shall be no less than the par
value of the Common Stock to be purchased, unless otherwise permitted by applicable state
law. In all cases, legal consideration shall be required for each issuance of Restricted
Stock.

     (c) Upon the selection of an Eligible Recipient to be awarded Restricted Stock, the
Committee shall instruct the Secretary of the Company to issue such Restricted Stock and may
determine and impose such conditions, limitations, restrictions and other terms and
conditions on the issuance of such Restricted Stock as it deems appropriate, including, but
not limited to, vesting or performance-based restrictions, voting restrictions, investment
intent restrictions, restrictions on

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transfer, rights of the Company to re-purchase Shares acquired pursuant to the
Restricted Stock Award, “first refusal” rights of the Company to purchase Shares acquired
pursuant to the Restricted Stock Award prior to their sale to any other person, restrictions
or limitations or other provisions that would be applied to shareholders under any
applicable agreement among the shareholders, and restrictions under applicable federal
securities laws, under the requirements of any stock exchange or market upon which such
Shares are then listed and/or traded, and/or under any blue sky or state securities laws
applicable to such Shares.

     8.3 Rights as Shareholders. Subject to Section 8.4, upon delivery of the shares of Restricted
Stock to the escrow holder pursuant to Section 8.5, the Holder shall have, unless otherwise
provided by the Administrator in the Award Agreement, all the rights of a shareholder with respect
to said shares, subject to the restrictions in his or her Award Agreement, including the right to
receive all dividends and other distributions paid or made with respect to the shares; provided,
however, that in the discretion of the Administrator, any extraordinary distributions with respect
to the Common Stock shall be subject to the restrictions set forth in Section 8.4.

     8.4 Restriction. All shares of Restricted Stock issued under the Plan (including any shares
received by Holders thereof with respect to shares of Restricted Stock as a result of stock
dividends, stock splits or any other form of recapitalization) shall, in the terms of each
individual Award Agreement, be subject to such terms, conditions and restrictions, if any, as the
Administrator shall provide; provided, however, that, except with respect to shares of Restricted
Stock granted to Code §162(m) Participants, by action taken after the Restricted Stock is issued,
the Administrator may, on such terms and conditions as it may determine to be appropriate, remove
any or all of the restrictions imposed by the terms of the Award Agreement. Restricted Stock may
not be sold or encumbered until all restrictions are terminated or expire.

     8.5 Escrow. If desired by the Administrator, the Secretary of the Company or such other
escrow holder as the Administrator may appoint shall retain physical custody of each certificate
representing Restricted Stock until all of the restrictions imposed under the Award Agreement with
respect to the shares evidenced by such certificate expire or shall have been removed. With
respect to shares of Restricted Stock granted or awarded to an Eligible Recipient, upon the
expiration or removal of such restrictions, the Secretary of the Company, or other escrow holder,
shall transfer the shares to the Holder.

     8.6 Legend. In order to enforce the restrictions imposed upon shares of Restricted Stock
hereunder, the Administrator shall cause a legend or legends to be placed on certificates
representing all shares of Restricted Stock that are still subject to restrictions under Award
Agreements, which legend or legends shall make appropriate reference to the conditions imposed
thereby.

     8.7 Section 83(b). If desired by the Administrator, a Holder may not make an
election under Code §83(b) with respect to any share of Restricted Stock granted or awarded
hereunder without the consent of the Company, which the Company may grant or withhold in its sole
discretion, and, upon a failure of a Holder to refrain from making such an election without Company
consent, the Restricted Stock granted shall immediately be forfeited and the Holder shall receive
only the purchase price, if any, for such forfeited Restricted Stock.

9 Performance Awards, Dividend Equivalents, Deferred Stock, Stock Payments

     9.1 Eligibility. Subject to the terms and provisions of this Plan, one or more Performance
Awards, Dividend Equivalents, awards of Deferred Stock and/or Stock Payments may be granted to any
Eligible Recipient whom the Committee determines should receive such an Award.

     9.2 Performance Awards.

     (a) Any Eligible Recipient selected by the Committee may be granted one or more
Performance Awards. The value of such Performance Awards may be subject to the achievement
of performance goals which are related to any one or more of the Performance Criteria or
other specific performance criteria determined appropriate by the Committee, in each case on
a specified date or dates or over any period or periods determined by the Committee. In
making such determinations, the Committee shall consider (among such other factors as it
deems relevant in light of the specific type of award) the contributions, responsibilities
and other compensation of the particular Eligible Recipient.

     (b) Without limiting Section 9.2(a), the Committee may grant Performance Awards to any
Code §162(m) Participant in the form of a cash bonus payable upon the attainment of
objective

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performance goals which are established by the Committee and relate to one or more of
the Performance Criteria, in each case on a specified date or dates or over any period or
periods determined by the Committee. Any such bonuses paid to Code §162(m) Participants
shall be based upon objectively determinable bonus formulas established in accordance with
the provisions of Section 4.2. The maximum amount of any Performance Award payable to a
Code §162(m) Participant under this Section 9.2(b) shall not exceed one million dollars
($1,000,000) with respect to any calendar year of the Company. Unless otherwise specified
by the Committee at the time of grant, the Performance Criteria with respect to a
Performance Award payable to a Code §162(m) Participant shall be determined on the basis of
generally accepted accounting principles.

     9.3 Dividend Equivalents.

     (a) Any Eligible Recipient selected by the Committee may be granted Dividend
Equivalents based on the dividends declared on Common Stock, to be credited as of dividend
payment dates, during the period between the date a Stock Appreciation Right, Deferred Stock
or Performance Award is granted, and the date such Stock Appreciation Right, Deferred Stock
or Performance Award is exercised, vests or expires, as determined by the Committee. Such
Dividend Equivalents shall be converted to cash or additional shares of Common Stock by such
formula and at such time and subject to such limitations as may be determined by the
Committee. If the credit of Dividend Equivalents is keyed to the date such Stock
Appreciation Right, Deferred Stock, or Performance Award is exercised, such credit should be
made with consideration of and in compliance with the requirements of Code §409A with
respect to such credit.

     (b) Any Holder of an Option selected by the Committee may be granted Dividend
Equivalents based on the dividends declared on Common Stock, to be credited as of dividend
payment dates, during the period between the date an Option is granted, and the date such
Option is exercised, vests or expires, as determined by the Committee. Such Dividend
Equivalents shall be converted to cash or additional shares of Common Stock by such formula
and at such time and subject to such limitations as may be determined by the Committee. If
the credit of Dividend Equivalents is keyed to the date such Option is exercised, such
credit should be made with consideration of the requirements of Code §409A with respect to
such credit.

     (c) Dividend Equivalents granted with respect to Options intended to be qualified
performance-based compensation for purposes of Code §162(m) shall be payable, with respect
to pre-exercise periods, regardless of whether such Option is subsequently exercised.

     9.4 Stock Payments. Any Eligible Recipient selected by the Committee may receive Stock
Payments in the manner determined from time to time by the Committee. The number of shares shall
be determined by the Committee and may be based upon the Performance Criteria or other specific
performance criteria determined appropriate by the Committee, determined on the date such Stock
Payment is made or on any date thereafter.

     9.5 Deferred Stock. Any Eligible Recipient selected by the Committee may be granted an award
of Deferred Stock in the manner determined from time to time by the Committee. The number of
shares of Deferred Stock shall be determined by the Committee and may be linked to the Performance
Criteria or other specific performance criteria determined to be appropriate by the Committee, in
each case on a specified date or dates or over any period or periods determined by the Committee.
Common Stock underlying a Deferred Stock award will not be issued until the Deferred Stock award
has vested, pursuant to a vesting schedule or performance criteria set by the Committee, and thus,
Deferred Stock may not be sold or otherwise hypothecated or transferred until vesting conditions
are removed or expire. Unless otherwise provided by the Committee, a Holder of Deferred Stock
shall have no rights as a Company shareholder with respect to such Deferred Stock until such time
as the Award has vested and the Common Stock underlying the Award has been issued. Deferred Stock
must meet certain restrictions contained in Code §409A if it is to avoid taxation under Code §409A
as a “nonqualified deferred compensation plan.” Grants of Deferred Stock under this Plan should be
made with consideration of the impact of Code §409A with respect to such grant upon both the
Company and the recipient of such Deferred Stock.

     9.6 Term. The term of a Performance Award, Dividend Equivalent, award of Deferred Stock
and/or Stock Payment shall be set by the Committee in its discretion.

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     9.7 Exercise or Purchase Price. The Committee may establish the exercise or purchase price of
a Performance Award, shares of Deferred Stock or shares received as a Stock Payment; provided,
however, that such price shall not be less than the par value of a share of Common Stock, unless
otherwise permitted by applicable state law.

     9.8 Terms and Provisions. The Administrator shall determine the terms and provisions of
Performance Awards, Dividend Equivalents, awards of Deferred Stock and/or Stock Payments in his
complete and absolute discretion subject to the terms and provisions of this Plan.

     9.9 Form of Payment. Payment of the amount determined under Section 9.2 or 9.3 above shall be
in cash, in Common Stock or a combination of both, as determined by the Committee. To the extent
any payment under this Section 9 is effected in Common Stock, it shall be made subject to
satisfaction of all provisions of Section 7.4.

10 Stock Appreciation Rights

     10.1 Grant of Stock Appreciation Rights. A Stock Appreciation Right may be granted to any
Eligible Recipient selected by the Committee. A Stock Appreciation Right may be granted (a) in
connection and simultaneously with the grant of an Option, (b) with respect to a previously granted
Option, or (c) independent of an Option. A Stock Appreciation Right shall be subject to such terms
and conditions not inconsistent with the Plan as the Committee shall impose and shall be evidenced
by an Award Agreement. Any Stock Appreciation Right that is intended to avoid taxation under Code
§409A as a “nonqualified deferred compensation plan” must be granted with an exercise price per
share equivalent to or greater than the Fair Market Value of a share of Common Stock of the Company
determined as of the date of such grant, consistent with Treas. Reg. §1.409-1(b)(5)(iv), and any
other applicable guidance or regulations issued by the Internal Revenue Service.

     10.2 Coupled Stock Appreciation Rights.

     (a) A Coupled Stock Appreciation Right (“CSAR”) shall be related to a particular Option
and shall be exercisable only when and to the extent the related Option is exercisable.

     (b) A CSAR may be granted to the Holder for no more than the number of shares subject
to the simultaneously or previously granted Option to which it is coupled.

     (c) A CSAR shall entitle the Holder (or other person entitled to exercise the Option
pursuant to the Plan) to surrender to the Company unexercised a portion of the Option to
which the CSAR relates (to the extent then exercisable pursuant to its terms) and to receive
from the Company in exchange therefor an amount determined by multiplying the difference
obtained by subtracting the Option exercise price from the Fair Market Value of a share of
Common Stock on the date of exercise of the CSAR by the number of shares of Common Stock
with respect to which the CSAR shall have been exercised, subject to any limitations the
Committee may impose.

     10.3 Independent Stock Appreciation Rights.

     (a) An Independent Stock Appreciation Right (“ISAR”) shall be unrelated to any Option
and shall have a term set by the Committee. An ISAR shall be exercisable at such times and
in such installments, and shall cover such number of shares of Common Stock, as the
Committee may determine in its complete and absolute discretion. The exercise price per
share of Common Stock subject to each ISAR shall be set by the Committee.

     (b) An ISAR shall entitle the Holder (or other person entitled to exercise the ISAR
pursuant to the Plan) to exercise all or a specified portion of the ISAR (to the extent then
exercisable pursuant to its terms) and to receive from the Company an amount determined by
multiplying the difference obtained by subtracting the exercise price per share of the ISAR
from the Fair Market Value of a share of Common Stock on the date of exercise of the ISAR by
the number of shares of Common Stock with respect to which the ISAR shall have been
exercised, subject to any limitations the Committee may impose.

     10.4 Payment and Limitations on Exercise.

     (a) Payment of the amounts determined under Section 10.2(c) and 10.3(b) above shall be
in cash, in Common Stock (based on its Fair Market Value as of the date the Stock
Appreciation Right is exercised) or a combination of both, as determined by the Committee.
To the extent such payment is

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effected in Common Stock it shall be made subject to satisfaction of all provisions of
Section 7.4 above pertaining to Options.

     (b) Holders of Stock Appreciation Rights may be required to comply with any timing or
other restrictions with respect to the settlement or exercise of a Stock Appreciation Right,
including a window-period limitation, as may be imposed in the discretion of the Committee.

11 Administration

     11.1 Compensation Committee. The Compensation Committee (or another committee or a
subcommittee of the Board assuming the functions of the Committee under the Plan) shall consist
solely of two or more Independent Directors appointed by and holding office at the pleasure of the
Board, each of whom is both a “non-employee director” as defined by Rule 16b-3 and an “outside
director” for purposes of Code §162(m). Appointment of Committee members shall be effective upon
acceptance of appointment. Committee members may resign at any time by delivering written notice
to the Board. Vacancies in the Committee may be filled by the Board.

     11.2 Duties and Powers of Committee. It shall be the duty of the Committee to conduct the
general administration of the Plan in accordance with its provisions. The Committee shall have the
power to interpret the Plan and the Award Agreements, and to adopt such rules for the
administration, interpretation and application of the Plan as are consistent therewith, to
interpret, amend or revoke any such rules and to amend any Award Agreement provided that the rights
or obligations of the Holder of the Award that is the subject of any such Award Agreement are not
affected adversely. Any such grant or award under the Plan need not be the same with respect to
each Holder. Any such interpretations and rules with respect to ISO’s shall be consistent with the
provisions of Code §422. In its absolute discretion, the Board may at any time and from time to
time exercise any and all rights and duties of the Committee under the Plan except with respect to
matters which under Rule 16b-3 or Code §162(m), or any regulations or rules issued thereunder, are
required to be determined in the sole discretion of the Committee. Notwithstanding the foregoing,
the full Board, acting by a majority of its members in office, shall conduct the general
administration of the Plan with respect to Options, Dividend Equivalents and Restricted Stock
granted to Independent Directors. Furthermore, notwithstanding any provision of this Plan to the
contrary, the Board may assume the powers and responsibilities granted to the Committee or other
delegate at any time, in whole or in part.

     11.3 Majority Rule; Unanimous Written Consent. The Committee shall act by a majority of its
members in attendance at a meeting at which a quorum is present or by a memorandum or other written
instrument signed by all members of the Committee.

     11.4 Compensation; Professional Assistance; Good Faith Actions. Members of the Committee
shall receive such compensation, if any, for their services as members as may be determined by the
Board. All expenses and liabilities which members of the Committee incur in connection with the
administration of the Plan shall be borne by the Company. The Committee may, with the approval of
the Board, employ attorneys, consultants, accountants, appraisers, brokers or other persons. The
Committee, the Company and the Company’s Officers and Directors shall be entitled to rely upon the
advice, opinions or valuations of any such persons. All actions taken and all interpretations and
determinations made by the Committee or the Board in good faith shall be final and binding upon all
Holders, the Company and all other interested persons. No members of the Committee or Board shall
be personally liable for any action, determination or interpretation made in good faith with
respect to the Plan or Awards, and all members of the Committee and the Board shall be fully
protected by the Company in respect of any such action, determination or interpretation.

     11.5 Delegation of Authority to Grant Awards. The Committee may, but need not, delegate from
time to time some or all of its authority to grant Awards under the Plan to a committee consisting
of one or more members of the Committee or of one or more Officers of the Company; provided,
however, that the Committee may not delegate its authority to grant Awards to individuals (a) who
are subject on the date of the grant to the reporting rules under Section 16(a) of the Exchange
Act, (b) who are Code §162(m) Participants, or (c) who are Officers of the Company who are
delegated authority by the Committee hereunder. Any delegation hereunder shall be subject to the
restrictions and limits that the Committee specifies at the time of such delegation of authority
and may be rescinded at any time by the Committee. At all times, any committee appointed under
this Section 11.5 shall serve in such capacity at the pleasure of the Committee.

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12 Miscellaneous Provisions

     12.1 Not Transferable.

     (a) Except as otherwise provided in Section 12.1(b):

     (1) No Award under the Plan may be sold, pledged, assigned or transferred in any
manner other than by will or the laws of descent and distribution or, subject to the
consent of the Administrator, pursuant to a DRO, unless and until such Award has been
exercised, or the shares underlying such Award have been issued, and all restrictions
applicable to such shares have lapsed.

     (2) No Award or interest or right therein shall be liable for the debts,
contracts or engagements of the Holder or his or her successors in interest or shall
be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or involuntary or
by operation of law by judgment, levy, attachment, garnishment or any other legal or
equitable proceedings (including bankruptcy), and any attempted disposition thereof
shall be null and void and of no effect, except to the extent that such disposition
is permitted by the preceding sentence.

     (3) During the lifetime of the Holder, only he or she may exercise an Option or
other Award (or any portion thereof) granted to him or her under the Plan, unless it
has been disposed of with the consent of the Administrator pursuant to a DRO. After
the death of the Holder, any exercisable portion of an Option or other Award may,
prior to the time when such portion becomes unexercisable under the Plan or the
applicable Award Agreement, be exercised by his or her personal representative or by
any person empowered to do so under the deceased Holder’s will or under the then
applicable laws of descent and distribution.

     (b) Notwithstanding Section 12.1(a), in the case of Options granted to Independent
Directors, an Optionee who is an Independent Director may transfer an Option to a Permitted
Transferee (as defined below) subject to the following terms and conditions: (i) an Option
transferred to a Permitted Transferee shall not be assignable or transferable by the
Permitted Transferee other than by will or the laws of descent and distribution or, subject
to the consent of the Administrator, pursuant to a DRO; (ii) any Option which is transferred
to a Permitted Transferee shall continue to be subject to all the terms and conditions of
the Option as applicable to the original Holder (other than the ability to further transfer
the Option); and (iii) the Holder and the Permitted Transferee shall execute any and all
documents requested by the Administrator, including, without limitation documents to (A)
confirm the status of the transferee as a Permitted Transferee, (B) satisfy any requirements
for an exemption for the transfer under applicable federal and state securities laws and (C)
evidence the transfer. Shares of Common Stock acquired by a Permitted Transferee through
the exercise of an Option have not been registered under the Securities Act or any state
securities act and may not be transferred, nor will any assignee or transferee thereof be
recognized as an owner of such shares of Common Stock for any purpose, unless a registration
statement under the Securities Act and any applicable state securities act with respect to
such shares shall then be in effect or unless the availability of an exemption from
registration with respect to any proposed transfer or disposition of such shares shall be
established to the satisfaction of counsel for the Company. For purposes of this Section
12.1(b), “Permitted Transferee” shall mean, with respect to a Holder, any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
including adoptive relationships, any person sharing the Holder’s household (other than a
tenant or Employee), a trust in which these persons (or the Holder) control the management
of assets, and any other entity in which these persons (or the Holder) own more than fifty
percent of the voting interests, or any other transferee specifically approved by the
Administrator after taking into account any state or federal tax or securities laws
applicable to transferable Options.

     12.2 Amendment, Suspension or Termination of the Plan. Except as otherwise provided in this
Section 12.2, the Plan may be wholly or partially amended or otherwise modified, suspended or
terminated at any time or from time to time by the Administrator; provided, however, shareholder
approval of an amendment to the Plan may be necessary (1) in order for the Plan to continue to be
able to issue ISO’s under Code §422 pursuant to Treas. Reg. §1.422-2(b)(2)(iii), (2) in order for
the Plan to continue to be able to issue Awards which

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meet the performance-based exception pursuant to Treas. Reg. §1.162-27(e)(2)(vi), and (3) in
order for the Plan to comply with rules promulgated by an established stock exchange or national
market system, and, in all cases, the Board shall determine whether approval by the shareholders
shall be requested and/or required in its complete and absolute discretion after due consideration
of such matters. Further, without approval of the Company’s shareholders given within 12 months
before or after the action by the Administrator, no action of the Administrator may, except as
provided in Section 12.4, increase the limits imposed in Section 3.1 on the maximum number of
shares which may be issued under the Plan. No amendment, suspension or termination of the Plan
shall, without the consent of the Holder, alter or impair any rights or obligations under any Award
theretofore granted or awarded, unless the Award itself otherwise expressly so provides. No Awards
may be granted or awarded during any period of suspension or after termination of the Plan, and in
no event may any Award be granted under the Plan after the first to occur of the following events:

     (a) The expiration of 10 years from the date the Plan is adopted by the Board; or

     (b) The expiration of 10 years from the date the Plan is approved by the Company’s
shareholders under Section 12.5.

     12.3 Amendment of Cancellation of Awards. The Committee shall have the right to modify, amend
or cancel any Award after it has been granted if (a) the modification, amendment or cancellation
does not diminish the rights or benefits of the Holder under the Award (provided, however, that a
modification, amendment or cancellation that results solely in a change in the tax consequences
with respect to an Award shall not be deemed as a diminishment of rights or benefits of such
Award), (b) the Holder consents in writing to such modification, amendment or cancellation, (c)
there is a dissolution or liquidation of the Company, (d) this Plan and/or the Award Agreement
expressly provides for such modification, amendment or cancellation, or (e) the Company would
otherwise have the right to make such modification, amendment or cancellation by applicable law.

     12.4 Changes in Common Stock or Assets of the Company, Acquisition or Liquidation of the
Company and Other Corporate Events.

     (a) Subject to Section 12.4(e), in the event that the Administrator determines that any
dividend or other distribution (whether in the form of cash, Common Stock, other securities
or other property), recapitalization, reclassification, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination, repurchase,
liquidation, dissolution, or sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company, or exchange of Common Stock or other
securities of the Company, issuance of warrants or other rights to purchase Common Stock or
other securities of the Company, or other similar corporate transaction or event, in the
Administrator’s sole discretion, affects the Common Stock such that an adjustment is
determined by the Administrator to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available under the
Plan or with respect to an Award, then the Administrator shall, in such manner as it may
deem equitable, adjust any or all of:

     (1) The number and kind of shares of Common Stock (or other securities or
property) with respect to which Awards may be granted or awarded (including, but not
limited to, adjustments of the limitations in Section 3.1 on the maximum number and
kind of shares which may be issued and adjustments of the limitations contained in
Sections 3.1, 3.1(c), and 9.2);

     (2) The number and kind of shares of Common Stock (or other securities or
property) subject to outstanding Awards; and

     (3) The grant or exercise price with respect to any Award.

     (b) Subject to Sections 12.4(c) and (e), in the event of any transaction or event
described in Section 12.4(a) or any unusual or nonrecurring transactions or events affecting
the Company, any affiliate of the Company, or the financial statements of the Company or any
affiliate, or of changes in applicable laws, regulations or accounting principles, the
Administrator, in its sole and absolute discretion, and on such terms and conditions as it
deems appropriate, either by the terms of the Award or by action taken prior to the
occurrence of such transaction or event and either automatically or upon the Holder’s
request, is hereby authorized to take any one or more of the following actions whenever the
Administrator determines that such action is appropriate in order to prevent dilution or
enlargement

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of the benefits or potential benefits intended to be made available under the Plan or
with respect to any Award under the Plan, to facilitate such transactions or events or to
give effect to such changes in laws, regulations or principles:

     (1) To provide for either the purchase of any such Award for an amount of cash
equal to the amount that could have been attained upon the exercise of such Award or
realization of the Holder’s rights had such Award been currently exercisable or
payable or fully vested or the replacement of such Award with other rights or
property selected by the Administrator in its sole discretion;

     (2) To provide that the Award cannot vest, be exercised or become payable after
such event;

     (3) To provide that such Award shall be exercisable as to all shares covered
thereby, notwithstanding anything to the contrary in Section 6.3 or the provisions of
such Award;

     (4) To provide that such Award be assumed by the successor or survivor
corporation, or a parent or subsidiary thereof, or shall be substituted for by
similar options, rights or awards covering the stock of the successor or survivor
corporation, or a parent or subsidiary thereof, with appropriate adjustments as to
the number and kind of shares and prices; and

     (5) To make adjustments in the number and type of shares of Common Stock (or
other securities or property) subject to outstanding Awards, and in the number and
kind of outstanding Restricted Stock or Deferred Stock and/or in the terms and
conditions of (including the grant or exercise price), and the criteria included in,
outstanding options, rights and awards and options, rights and awards which may be
granted in the future.

     (6) To provide that, for a specified period of time prior to such event, the
restrictions imposed under an Award Agreement upon some or all shares of Restricted
Stock or Deferred Stock may be terminated, and, in the case of Restricted Stock, some
or all shares of such Restricted Stock may cease to be subject to forfeiture under
Section 8.4 after such event.

     (c) Subject to Sections 12.4(e), 4.2 and 4.3, the Administrator may, in its discretion,
include such further provisions and limitations in any Award, agreement or certificate, as
it may deem equitable and in the best interests of the Company.

     (d) With respect to Awards which are granted to Code §162(m) Participants and are
intended to qualify as performance-based compensation under Code §162(m)(4)(C), no
adjustment or action described in this Section 12.4 or in any other provision of the Plan
shall be authorized to the extent that such adjustment or action would cause such Award to
fail to so qualify under Code §162(m)(4)(C), or any successor provisions thereto. No
adjustment or action described in this Section 12.4 or in any other provision of the Plan
shall be authorized to the extent that such adjustment or action would cause the Plan to
violate Code §422(b)(1). Furthermore, no such adjustment or action shall be authorized to
the extent such adjustment or action would result in short-swing profits liability under
Section 16 or violate the exemptive conditions of Rule 16b-3 unless the Administrator
determines that the Award is not to comply with such exemptive conditions. The number of
shares of Common Stock subject to any Award shall always be rounded to the next whole
number.

     (e) The existence of the Plan, the Award Agreement and the Awards granted hereunder
shall not affect or restrict in any way the right or power of the Company or the
shareholders of the Company to make or authorize any adjustment, recapitalization,
reorganization or other change in the Company’s capital structure or its business, any
merger or consolidation of the Company, any issue of stock or of options, warrants or rights
to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights
are superior to or affect the Common Stock or the rights thereof or which are convertible
into or exchangeable for Common Stock, or the dissolution or liquidation of the company, or
any sale or transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.

     12.5 Approval of Plan by Shareholders. The Plan will be submitted for the approval of the
Company’s shareholders within twelve (12) months after the date on which this Plan is adopted by
the Board,

Grubb & Ellis Healthcare REIT II, Inc. 2009 Incentive Plan

Page 15

 

disregarding any contingencies or delayed effective date relative to such adoption. In the
event that shareholder approval of this Plan is not obtained, or in the event that this Plan is not
subjected to the approval of the shareholders, then any Awards granted under this Plan shall
nonetheless be deemed granted pursuant to the authority of the Board; provided, however, any such
Option granted which was intended to be an ISO shall instead be a NQSO. Should this Plan be
rejected by the shareholders after being submitted to the shareholders for their approval, the Plan
shall immediately terminate at that time, and no further grants shall be made under this Plan
thereafter. Notwithstanding the foregoing, no ISO shall be exercisable prior to the date that
shareholder approval of this Plan is obtained unless the Holder receiving such ISO agrees that the
ISO shall instead be treated as a NQSO for all purposes, and any exercise of an ISO by a Holder
prior to the date that shareholder approval of this Plan is obtained shall automatically be deemed
to be such an agreement by the exercising Holder. In addition, in the event that shareholder
approval of this Plan is not obtained, any Awards intended to meet the performance-based
compensation exception of Code §162(m)(4)(C) may not meet such exception.

     12.6 Tax Withholding. The Company shall be entitled to require payment in cash or deduction
from other compensation payable to each Holder of any sums required by federal, state or local tax
law to be withheld with respect to the issuance, vesting, exercise or payment of any Award. The
Administrator may in its discretion and in satisfaction of the foregoing requirement allow such
Holder to elect to have the Company withhold shares of Common Stock otherwise issuable under such
Award (or allow the return of shares of Common Stock) having a Fair Market Value equal to the sums
required to be withheld. Notwithstanding any other provision of the Plan, the number of shares of
Common Stock which may be withheld with respect to the issuance, vesting, exercise or payment of
any Award (or which may be repurchased from the Holder of such Award within six months after such
shares of Common Stock were acquired by the Holder from the Company) in order to satisfy the
Holder’s federal and state income and payroll tax liabilities with respect to the issuance,
vesting, exercise or payment of the Award shall be limited to the number of shares which have a
Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of such
liabilities based on the minimum statutory withholding rates for federal and state tax income and
payroll tax purposes that are applicable to such supplemental taxable income. To the extent that a
Holder is an Insider, satisfaction of withholding requirements by having the Company withhold
Shares may only be made to the extent that such withholding of Shares (1) has met the requirements
of an exemption under Rule 16b-3 promulgated under the Exchange Act, or (2) is a subsequent
transaction the terms of which were provided for in a transaction initially meeting the
requirements of an exemption under Rule 16b-3 promulgated under the Exchange Act. Unless the Award
Agreement provides otherwise, the withholding of shares to satisfy federal, state and local
withholding tax requirements shall be a subsequent transaction approved by the original grant of a
Stock Incentive.

     12.7 Restrictions on Awards. This Plan shall be interpreted and construed in a manner
consistent with the Company’s status as a real estate investment trust (“REIT”), within the meaning
of Code §§856 through 860. No Award shall be granted or awarded, and with respect to an Award
already granted under the Plan, such Award shall not vest, or be exercisable, distributable or
payable if, in the discretion of the Administrator, such Award could impair the Company’s status as
a REIT or would violate the Company’s Charter or Bylaws.

     12.8 Loans. To the extent permitted under applicable law, the Committee may, in its
discretion, extend one or more loans to Eligible Recipients in connection with the exercise or
receipt of an Award granted or awarded under the Plan, or the issuance of Restricted Stock or
Deferred Stock awarded under the Plan; provided, however, that no such loan shall be an extension
or maintenance of credit, an arrangement for the extension of credit, or a renewal of an extension
of credit in the form of a personal loan to or for any Director or executive Officer of the Company
that is prohibited by Section 13(k) of the Exchange Act or other applicable law. The terms and
conditions of any such loan shall be set by the Committee.

     12.9 Forfeiture Provisions. Pursuant to its general authority to determine the terms and
conditions applicable to Awards under the Plan, the Administrator shall have the right to provide,
in the terms of Awards made under the Plan, or to require a Holder to agree by separate written
instrument, that (a)(i) any proceeds, gains or other economic benefit actually or constructively
received by the Holder upon any receipt or exercise of the Award, or upon the receipt or resale of
any Common Stock underlying the Award, must be paid to the Company, and (ii) the Award shall
terminate and any unexercised portion of the Award (whether or not vested) shall be forfeited, if
(b)(i) the Holder ceases to perform services for the Company or a Subsidiary prior to a specified
date, or within a specified time period following receipt or exercise of the Award, or (ii) the
Holder at any time, or during a specified time period, engages in any activity in competition with
the Company, or which is

Grubb & Ellis Healthcare REIT II, Inc. 2009 Incentive Plan

Page 16

 

inimical, contrary or harmful to the interests of the Company, as further defined by the
Administrator or (iii) the Holder ceases to perform services for the Company or a Subsidiary for
cause.

     12.10 Cessation of Service. For all purposes under this Plan, the Committee shall have
complete and absolute discretion to determine when a Holder has ceased to perform services for the
Company or a Subsidiary, including situations involving cessation of services simultaneously with
beginning the performance of other services, cessation of services in temporary situations or
situations involving leave, and situations involving the cessation of services in one form with the
simultaneous beginning of services in another form (such as, for example, cessation of services as
an employee and the beginning of services as a contractor, or vice versa).

     12.11 Effect of Plan upon Options and Compensation Plans. The adoption of the Plan shall not
affect any other compensation or incentive plans in effect for the Company or any Subsidiary.
Nothing in the Plan shall be construed to limit the right of the Company (a) to establish any other
forms of incentives or compensation for Eligible Recipients, or (b) to grant or assume options or
other rights or awards otherwise than under the Plan in connection with any proper corporate
purpose including but not by way of limitation, the grant or assumption of options in connection
with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock
or assets of any corporation, partnership, limited liability company, firm or association.

     12.12 Compliance with Laws. The Plan, the granting and vesting of Awards under the Plan and
the issuance and delivery of shares of Common Stock and the payment of money under the Plan or
under Awards granted or awarded hereunder are subject to compliance with all applicable federal and
state laws, rules and regulations (including but not limited to state and federal securities law
and federal margin requirements) and to such approvals by any listing, regulatory or governmental
authority as may, in the opinion of counsel for the Company, be necessary or advisable in
connection therewith. Any securities delivered under the Plan shall be subject to such
restrictions, and the person acquiring such securities shall, if requested by the Company, provide
such assurances and representations to the Company as the Company may deem necessary or desirable
to assure compliance with all applicable legal requirements. To the extent permitted by applicable
law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent
necessary to conform to such laws, rules and regulations.

     12.13 Titles. Titles are provided herein for convenience only and are not to serve as a basis
for interpretation or construction of the Plan.

     12.14 Governing Law. The Plan and any agreements hereunder shall be administered, interpreted
and enforced under the internal laws of the State of Maryland without regard to conflicts of laws
thereof.

Grubb & Ellis Healthcare REIT II, Inc. 2009 Incentive Plan

Page 17exv4w6

Exhibit 4.6

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT FOR AND PURSUANT TO
THE PROVISIONS OF ARTICLE 5 BELOW, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR, IN
THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES,
SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION.

WARRANT TO PURCHASE STOCK

Company: Somaxon Pharmaceuticals, Inc., a Delaware corporation

Number of Shares: 200,000, subject to adjustment

Class of Stock: Common Stock, $0.0001 par value per share

Warrant Price: As set forth below

Issue Date: March 11, 2009

Expiration Date: March 11, 2019

			
	Credit Facility:	 	This Warrant is issued in connection with the repayment
of that certain Loan and Security Agreement dated May 21,
2008 among Silicon Valley Bank, Oxford Finance
Corporation and the Company, as amended (the “Loan
Agreement”).

     THIS WARRANT CERTIFIES THAT, for good and valuable consideration, OXFORD FINANCE CORPORATION
(together with any successor or permitted assignee or transferee of this Warrant or of any shares
issued upon exercise hereof, “Holder”) is entitled to purchase the number of fully paid and
non-assessable shares (the “Shares”) of the above-stated Class of Stock (the “Class”) of the
above-named company (the “Company”) at the above-stated Warrant Price, all as set forth above and
as adjusted pursuant to Article 2 of this Warrant, subject to the provisions and upon the terms and
conditions set forth in this Warrant.

     A. (1) Warrant Issued in Lieu of Prepayment Fee. This Warrant is issued to Holder in
connection with the Company’s prepayment in full of its obligations to Holder pursuant to, and in
accordance with, Section 2.1.1(e) of the Loan Agreement, and in lieu of payment by the Company of
the Prepayment Fee (as defined in the Loan Agreement), pursuant to the Payoff Letter among the
Company, Silicon Valley Bank and Holder dated the date hereof, which Holder, by its acceptance
hereof, and effective on Holder’s receipt of this executed Warrant and of payment in full of all
such obligations in accordance with Section 2.1.1(e) of the Loan Agreement, hereby waives.

          (2) Warrant Price. The purchase price per Share hereunder (the “Warrant Price”) shall
be equal to the closing price of a share of the Class as reported on the NASDAQ Global Market for
March 11, 2009, subject to adjustment from time to time in accordance with the provisions of this
Warrant.

 

 

ARTICLE 1. EXERCISE.

          1.1 Method of Exercise. Holder may exercise this Warrant by delivering the original
of this Warrant together with a duly executed Notice of Exercise in substantially the form attached
as Appendix 1 to the principal office of the Company. Unless Holder is exercising the conversion
right set forth in Article 1.2, Holder shall also deliver to the Company a check, wire transfer (to
an account designated by the Company), or other form of payment acceptable to the Company for the
aggregate Warrant Price for the Shares being purchased.

          1.2 Conversion Right. In lieu of exercising this Warrant as specified in Article 1.1,
Holder may from time to time convert this Warrant, in whole or in part, into a number of Shares
determined by dividing (a) the aggregate fair market value of the Shares or other securities
otherwise issuable upon exercise of this Warrant minus the aggregate Warrant Price of such Shares
by (b) the fair market value of one Share. The fair market value of the Shares shall be determined
pursuant to Article 1.3.

          1.3 Fair Market Value. If the Class is traded in a public market, the fair market
value of a Share shall be the closing price of a share of common stock reported for the business
day immediately before Holder delivers this Warrant together with its Notice of Exercise to the
Company. If the Class is not traded in a public market, the Board of Directors of the Company
shall determine fair market value in its reasonable good faith judgment.

          1.4 Delivery of Certificate and New Warrant. Promptly after Holder exercises or
converts this Warrant and, if applicable, the Company receives payment of the aggregate Warrant
Price, the Company shall deliver to Holder certificates for the Shares acquired and, if this
Warrant has not been fully exercised or converted and has not expired, a new Warrant representing
the Shares not so acquired.

          1.5 Replacement of Warrants. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss,
theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and
amount to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor.

          1.6 Treatment of Warrant Upon Acquisition of Company.

               1.6.1 “Acquisition”. For the purpose of this Warrant, “Acquisition” means any sale,
exclusive license, or other disposition of all or substantially all of the assets of the Company,
or any reorganization, consolidation, merger or sale of outstanding capital stock of the Company
where the holders of the Company’s outstanding voting securities before the transaction
beneficially own less than a majority of the outstanding voting securities of the surviving entity
or, if applicable, its parent entity, after the transaction.

               1.6.2 Treatment of Warrant at
Acquisition.

A) Upon the written request of the Company, Holder agrees that, in the event of an Acquisition that
is not a True Asset Sale (as defined below) in which the sole

2

 

consideration is cash, either (a) Holder shall exercise its conversion or purchase right under this
Warrant and such exercise will be deemed effective immediately prior to the consummation of such
Acquisition or (b) if Holder elects not to exercise the Warrant, this Warrant will expire upon the
consummation of such Acquisition. The Company shall provide the Holder with written notice of its
request relating to the foregoing (together with such reasonable information as the Holder may
request in connection with such contemplated Acquisition giving rise to such notice), which is to
be delivered to Holder not less than ten (10) days prior to the closing of the proposed
Acquisition.

B) Upon the written request of the Company, Holder agrees that, in the event of an Acquisition that
is an “arms length” sale of all or substantially all of the Company’s assets (and only its assets)
to a third party that is not an Affiliate (as defined below) of the Company (a “True Asset Sale”),
either (a) Holder shall exercise its conversion or purchase right under this Warrant and such
exercise will be deemed effective immediately prior to the consummation of such Acquisition or (b)
if Holder elects not to exercise the Warrant, this Warrant will continue until the Expiration Date
if the Company continues as a going concern following the closing of any such True Asset Sale. The
Company shall provide the Holder with written notice of its request relating to the foregoing
(together with such reasonable information as the Holder may request in connection with such
contemplated Acquisition giving rise to such notice), which is to be delivered to Holder not less
than ten (10) days prior to the closing of the proposed Acquisition.

C) Upon the closing of any Acquisition other than those particularly described in subsections (A)
and (B) above, the successor entity shall assume the obligations of this Warrant, and this Warrant
shall be exercisable for the same securities, cash, and property as would be payable for the Shares
issuable upon exercise of the unexercised portion of this Warrant as if such Shares were
outstanding on the record date for the Acquisition and subsequent closing. The Warrant Price and/or
number of Shares shall be adjusted accordingly.

D) Notwithstanding the foregoing provisions of this Section 1.6.2., in the event that the acquiror
in an Acquisition does not agree to assume this Warrant at and as of the closing thereof, this
Warrant, to the extent not exercised or converted on or prior to such closing, shall terminate and
be of no further force or effect as of immediately following such closing if all of the following
conditions are met: (i) the acquiror is subject to the reporting requirements of Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, as amended, (ii) the class of stock or other
security of the acquiror that would be received by Holder in connection with such Acquisition were
Holder to exercise or convert this Warrant on or prior to the closing thereof is listed for trading
on a national securities exchange or approved for quotation on an automated inter-dealer quotation
system, and (iii) the value (determined as of the closing of such Acquisition in accordance with
the definitive agreements therefor) of the acquiror stock and/or other securities that would be
received by Holder in respect of each Share were Holder to exercise or convert this Warrant on or
prior to the closing of such Acquisition is equal to or greater than three (3) times the
then-effective Warrant Price.

As used in this Section 1.6, “Affiliate” shall mean any person or entity that owns or
controls directly or indirectly ten percent (10%) or more of the stock of Company, any person or
entity that controls or is controlled by or is under common control with such

3

 

persons or entities, and each of such person’s or entity’s officers, directors, joint venturers or
partners, as applicable.

ARTICLE 2. ADJUSTMENTS TO THE SHARES.

          2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a dividend on the
outstanding shares of the Class payable in common stock or other securities, then upon exercise of
this Warrant, for each Share acquired, Holder shall receive, without cost to Holder, the total
number and kind of securities to which Holder would have been entitled had Holder owned the Shares
of record as of the date the dividend occurred. If the Company subdivides the outstanding shares
of the Class by reclassification or otherwise into a greater number of shares, the number of Shares
purchasable hereunder shall be proportionately increased and the Warrant Price shall be
proportionately decreased. If the outstanding shares of the Class are combined or consolidated, by
reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be
proportionately increased and the number of Shares shall be proportionately decreased.

          2.2 Reclassification, Exchange, Combinations or Substitution. Upon any
reclassification, exchange, substitution, or other event that results in a change of the number
and/or class of the securities issuable upon exercise or conversion of this Warrant, Holder shall
be entitled to receive, upon exercise or conversion of this Warrant, the number and kind of
securities and property that Holder would have received for the Shares if this Warrant had been
exercised immediately before such reclassification, exchange, substitution, or other event, and the
Warrant Price shall be adjusted proportionately. The Company or its successor shall promptly issue
to Holder an amendment to this Warrant setting forth the number and kind of such new securities or
other property issuable upon exercise or conversion of this Warrant as a result of such
reclassification, exchange, substitution or other event that results in a change of the number
and/or class of securities issuable upon exercise or conversion of this Warrant. The amendment to
this Warrant shall provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article 2 including, without limitation,
adjustments to the Warrant Price and to the number of securities or property issuable upon exercise
of the new Warrant. The provisions of this Article 2.2 shall similarly apply to successive
reclassifications, exchanges, substitutions, or other events.

          2.3 [Intentionally Omitted].

          2.4 No Impairment. The Company shall not, by amendment of its Certificate of
Incorporation or through a reorganization, transfer of assets, consolidation, merger, dissolution,
issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed under this Warrant by the Company,
but shall at all times in good faith assist in carrying out of all the provisions of this Article 2
and in taking all such action as may be necessary or appropriate to protect Holder’s rights under
this Article against impairment; provided, however, that notwithstanding the foregoing, nothing in
this Section 2.4 shall restrict or impair the Company’s right to effect changes to the rights,
preferences, and privileges associated with the Shares with the requisite consent of the
stockholders as may be required to amend the Certificate of Incorporation from time to time so long
as such amendment affects the rights, preferences, and privileges granted

4

 

to Holder associated with the Shares in the same manner as the other holders of outstanding shares
of the Class.

          2.5 Fractional Shares. No fractional Shares shall be issuable upon exercise or
conversion of the Warrant and the number of Shares to be issued shall be rounded down to the
nearest whole Share. If a fractional share interest arises upon any exercise or conversion of the
Warrant, the Company shall eliminate such fractional share interest by paying Holder the amount
computed by multiplying the fractional interest by the fair market value of a full Share.

          2.6 Certificate as to Adjustments. Upon each adjustment of the Warrant Price, Class
and/or number of Shares, the Company shall promptly notify Holder in writing, and, at the Company’s
expense, promptly compute such adjustment, and furnish Holder with a certificate of its Chief
Financial Officer setting forth such adjustment and the facts upon which such adjustment is based.
The Company shall, upon written request, furnish Holder a certificate setting forth the Warrant
Price, Class and number of Shares in effect upon the date thereof and the series of adjustments
leading to such Warrant Price, Class and number of Shares.

ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.

          3.1 Representations and Warranties. The Company represents and warrants to, and
agrees with, the Holder as follows:

               (a) All Shares which may be issued upon the exercise of the purchase right represented by this
Warrant shall, upon issuance, be duly authorized, validly issued, fully paid and non-assessable,
and free of any liens and encumbrances except for restrictions on transfer provided for herein or
under applicable federal and state securities laws.

          3.2 Notice of Certain Events. If the Company proposes at any time (a) to declare any
dividend or distribution upon the outstanding shares of the same class and series as the Shares,
whether in cash, property, stock, or other securities and whether or not a regular cash dividend;
(b) to offer for subscription or sale pro rata to the holders of the outstanding shares of the same
class and series as the Shares any additional shares of any class or series of the Company’s stock;
(c) to effect any reclassification, reorganization or recapitalization of the outstanding shares of
the Class; (d) to effect an Acquisition or to liquidate, dissolve or wind up; or (e) offer holders
of registration rights the opportunity to participate in an underwritten public offering of the
Company’s securities for cash, then, in connection with each such event, the Company shall give
Holder notice thereof at the same time and in the same manner as the Company notifies the holders
of the outstanding shares of the Class thereof.

          3.3 No Shareholder Rights. Except as provided in this Warrant, Holder will not have
any rights as a shareholder of the Company until the exercise of this Warrant.

ARTICLE 4. REPRESENTATIONS, WARRANTIES OF THE HOLDER. The Holder represents and warrants
to the Company as follows:

5

 

          4.1 Purchase for Own Account. This Warrant and the securities to be acquired upon
exercise of this Warrant by Holder will be acquired for investment for Holder’s account, not as a
nominee or agent, and not with a view to the public resale or distribution within the meaning of
the Act. Holder also represents that it has not been formed for the specific purpose of acquiring
this Warrant or the Shares.

          4.2 Disclosure of Information. Holder has received or has had full access to all the
information it considers necessary or appropriate to make an informed investment decision with
respect to the acquisition of this Warrant and its underlying securities. Holder further has had
an opportunity to ask questions and receive answers from the Company regarding the terms and
conditions of the offering of this Warrant and its underlying securities and to obtain additional
information (to the extent the Company possessed such information or could acquire it without
unreasonable effort or expense) necessary to verify any information furnished to Holder or to which
Holder has access.

          4.3 Investment Experience. Holder understands that the purchase of this Warrant and
its underlying securities involves substantial risk. Holder has experience as an investor in
securities of companies in the development stage and acknowledges that Holder can bear the economic
risk of such Holder’s investment in this Warrant and its underlying securities and has such
knowledge and experience in financial or business matters that Holder is capable of evaluating the
merits and risks of its investment in this Warrant and its underlying securities and/or has a
preexisting personal or business relationship with the Company and certain of its officers,
directors or controlling persons of a nature and duration that enables Holder to be aware of the
character, business acumen and financial circumstances of such persons.

          4.4 Accredited Investor Status. Holder is an “accredited investor” within the meaning
of Regulation D promulgated under the Act.

          4.5 The Act. Holder understands that this Warrant and the Shares issuable upon
exercise or conversion hereof have not been registered under the Act in reliance upon a specific
exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the
Holder’s investment intent as expressed herein. Holder understands that this Warrant and the
Shares issued upon any exercise or conversion hereof must be held indefinitely unless subsequently
registered under the Act and qualified under applicable state securities laws, or unless exemption
from such registration and qualification are otherwise available.

ARTICLE 5. MISCELLANEOUS.

          5.1 Term: This Warrant is exercisable in whole or in part at any time and from time
to time on or before the Expiration Date. 

          5.2 Legends. This Warrant and the Shares shall be imprinted with a legend in
substantially the following form:

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED
UNDER THE ACT, OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT FOR AND
PURSUANT TO THE PROVISIONS OF ARTICLE 5 OF THAT

6

 

CERTAIN WARRANT TO PURCHASE STOCK ISSUED BY THE COMPANY TO OXFORD FINANCE
CORPORATION DATED AS OF MARCH ___, 2009 MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED
UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR, IN THE OPINION OF
LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS
EXEMPT FROM REGISTRATION.

          5.3 Compliance with Securities Laws on Transfer. This Warrant and the Shares issuable
upon exercise of this Warrant may not be transferred or assigned in whole or in part without
compliance with applicable federal and state securities laws by the transferor and the transferee
(including, without limitation, the delivery of investment representation letters and legal
opinions reasonably satisfactory to the Company, as reasonably requested by the Company). The
Company shall not require Holder to provide an opinion of counsel if the transfer is to any
Affiliate of Holder, provided that any such transferee is an “accredited investor” as defined in
Regulation D promulgated under the Act.

          5.4 Transfer Procedure. Subject to the provisions of Article 5.3 and upon providing
the Company with written notice, Holder may transfer all or part of this Warrant or the Shares
issuable upon exercise of this Warrant to any transferee, provided, however, in connection with any
such transfer, Holder will give the Company notice of the portion of the Warrant being transferred
with the name, address and taxpayer identification number of the transferee and Holder will
surrender this Warrant to the Company for reissuance to the transferee(s) (and Holder if
applicable).

          5.5 Notices. All notices and other communications from the Company to the Holder, or
vice versa, shall be deemed delivered and effective (a) upon the earlier of actual receipt and
three (3) Business Days after deposit in the U.S. mail, first class, registered or certified mail
return receipt requested, with proper postage prepaid; (b) upon transmission, when sent by
electronic mail (if an email address is specified herein) or facsimile transmission; (c) one (1)
Business Day after deposit with a reputable overnight courier with all charges prepaid; or (d) when
delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address, facsimile number, or email address indicated below. Either
Holder or the Company may change its mailing or email address or facsimile number by giving the
other party written notice thereof in accordance with the terms of this Section 5.5.

     To the Holder:

Oxford Finance Corporation

Attn: Mr. John Henderson

133 North Fairfax Street

Alexandria, VA 22314

Facsimile: 703-519-5225

     To the Company:

7

 

Somaxon Pharmaceuticals, Inc.

Attn: Meg M. McGilley, Chief Financial Officer

3721 Valley Centre Drive, Suite 500

San Diego, CA 92130

Telephone: (858) 480-0402

Facsimile: (858) 509-1761

Email: mmcgilley@somaxon.com

     with copies to:

Somaxon Pharmaceuticals, Inc.

Attn: Matthew W. Onaitis, General Counsel

3721 Valley Centre Drive, Suite 500

San Diego, California 92130

Fax: (858) 509-1761

Email: monaitis@somaxon.com, and

Latham & Watkins LLP

Attn: Cheston J. Larson, Esq.

12636 High Bluff Drive, Suite 400

San Diego, California 92130

Fax: (858) 523-5450

Email: cheston.larson@lw.com

          5.6 Waiver. This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought.

          5.7 Attorney’s Fees. In the event of any dispute between the parties concerning the
terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to
collect from the other party all costs incurred in such dispute, including reasonable attorneys’
fees.

          5.8 Automatic Conversion upon Expiration. In the event that, upon the Expiration
Date, the fair market value of one Share (or other security issuable upon the exercise hereof) as
determined in accordance with Section 1.3 above is greater than the Warrant Price in effect on such
date, then this Warrant shall automatically be deemed on and as of such date to be converted
pursuant to Section 1.2 above as to all Shares (or such other securities) for which it shall not
previously have been exercised or converted, and the Company shall promptly deliver a certificate
representing the Shares (or such other securities) issued upon such conversion to Holder.

          5.9 Counterparts. This Warrant may be executed in counterparts, all of which together
shall constitute one and the same agreement.

[Remainder of page left blank intentionally]

8

 

          5.10 Governing Law. This Warrant shall be governed by and construed in accordance
with the laws of the State of California, without giving effect to its principles regarding
conflicts of law.

	 
	“COMPANY”

	 

	SOMAXON PHARMACEUTICALS, INC.

	 

	By: /s/ Meg McGilley

	 

	Name: Meg McGilley

	          (Print)

	Title: CFO

	 

	“HOLDER”

	 

	OXFORD FINANCE CORPORATION

	 

	By: /s/ John G. Henderson

	 

	Name: John G. Henderson

	          (Print)

	Title: VP and General Counsel

9

 

APPENDIX 1

NOTICE OF EXERCISE

     1. Holder elects to purchase                      shares of the Common/Series ___ Preferred [strike
one] Stock of                                          pursuant to the terms of the attached Warrant, and tenders payment
of the purchase price of the shares in full.

          [or]

     1. Holder elects to convert the attached Warrant into Shares/cash [strike one] in the manner
specified in the Warrant. This conversion is exercised for                                          of the Shares
covered by the Warrant.

     [Strike paragraph that does not apply.]

     2. Please issue a certificate or certificates representing the Shares in the name specified
below:

	 	 	 	 	 
	 

	 	 

               Holders Name
	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

               (Address)
	 	 

     3. By its execution below and for the benefit of the Company, Holder hereby restates each of
the representations and warranties in Article 4 of the Warrant as of the date hereof.

	 	 	 	 	 
	 	 	HOLDER:
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	(Date):	 	 
	 

	 	 	 	 

10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00158-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00158-of-00352.parquet"}]]