EXHIBIT 10.1

AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

KILROY REALTY, L.P.

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                                   ARTICLE 1
                                 DEFINED TERMS

Section 1.1      Definitions............................................................     1

                                   ARTICLE 2
                             ORGANIZATIONAL MATTERS

Section 2.1      Organization...........................................................    15
Section 2.2      Name...................................................................    15
Section 2.3      Resident Agent; Principal Office.......................................    15
Section 2.4      Power of Attorney......................................................    15
Section 2.5      Term...................................................................    17
Section 2.6      Number of Partners.....................................................    17

                                   ARTICLE 3
                                    PURPOSE

Section 3.1      Purpose and Business...................................................    17
Section 3.2      Powers.................................................................    17
Section 3.3      Partnership Only for Purposes Specified................................    18
Section 3.4      Representations and Warranties by the Parties..........................    18

                                   ARTICLE 4
                             CAPITAL CONTRIBUTIONS

Section 4.1      Capital Contributions of the Partners..................................    20
Section 4.2      Loans by Third Parties.................................................    20
Section 4.3      Additional Funding and Capital Contributions...........................    21
Section 4.4      Stock Incentive Plan...................................................    23
Section 4.5      Other Contribution Provisions..........................................    23

                                   ARTICLE 5
                                 DISTRIBUTIONS

Section 5.1      Requirement and Characterization of Distributions......................    23
Section 5.2      Distributions in Kind..................................................    24
Section 5.3      Distributions Upon Liquidation.........................................    24
Section 5.4      Distributions to Reflect Issuance of Additional Partnership Interests..    24

                                   ARTICLE 6
                                  ALLOCATIONS

Section 6.1      Timing and Amount of Allocations of Net Income and Net Loss............    24
Section 6.2      General Allocations....................................................    24
Section 6.3      Additional Allocation Provisions.......................................    25

Section 6.4      Tax Allocations........................................................    27

                                   ARTICLE 7
                     MANAGEMENT AND OPERATIONS OF BUSINESS

Section 7.1      Management.............................................................    28
Section 7.2      Certificate of Limited Partnership.....................................    31
Section 7.3      Restrictions on General Partner's Authority............................    32
Section 7.4      Reimbursement of the General Partner...................................    34
Section 7.5      Outside Activities of the General Partner..............................    35
Section 7.6      Contracts with Affiliates..............................................    36
Section 7.7      Indemnification........................................................    36
Section 7.8      Liability of the General Partner.......................................    38
Section 7.9      Other Matters Concerning the General Partner...........................    39
Section 7.10     Title to Partnership Assets............................................    40
Section 7.11     Reliance by Third Parties..............................................    40

                                  ARTICLE 8
                  RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

Section 8.1      Limitation of Liability................................................    41
Section 8.2      Management of Business.................................................    41
Section 8.3      Outside Activities of Limited Partners.................................    41
Section 8.4      Return of Capital......................................................    41
Section 8.5      Rights of Limited Partners Relating to the Partnership.................    42
Section 8.6      Redemption Rights......................................................    43

                                   ARTICLE 9
                    BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 9.1      Records and Accounting.................................................    45
Section 9.2      Fiscal Year............................................................    45
Section 9.3      Reports................................................................    45

                                  ARTICLE 10
                                  TAX MATTERS

Section 10.1     Preparation of Tax Returns.............................................    46
Section 10.2     Tax Elections..........................................................    46
Section 10.3     Tax Matters Partner....................................................    46
Section 10.4     Organizational Expenses................................................    48
Section 10.5     Withholding............................................................    48

                                   ARTICLE 11
                           TRANSFERS AND WITHDRAWALS

Section 11.1     Transfer...............................................................    49
Section 11.2     Transfer of General Partner's Partnership Interest.....................    49
Section 11.3     Limited Partners' Rights to Transfer...................................    51

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Section 11.4     Substituted Limited Partners...........................................    52
Section 11.5     Assignees..............................................................    53
Section 11.6     General Provisions.....................................................    53
Section 11.7     Transfer of Pledged Partnership Units..................................    55

                                   ARTICLE 12
                             ADMISSION OF PARTNERS

Section 12.1     Admission of Successor General Partner.................................    56
Section 12.2     Admission of Additional Limited Partners...............................    56
Section 12.3     Amendment of Agreement and Certificate of Limited Partnership..........    57

                                   ARTICLE 13
                          DISSOLUTION AND LIQUIDATION

Section 13.1     Dissolution............................................................    57
Section 13.2     Winding Up.............................................................    58
Section 13.3     Compliance with Timing Requirements of Regulations.....................    59
Section 13.4     Deemed Distribution and Recontribution.................................    59
Section 13.5     Rights of Limited Partners.............................................    60
Section 13.6     Notice of Dissolution..................................................    60
Section 13.7     Cancellation of Certificate of Limited Partnership.....................    60
Section 13.8     Reasonable Time for Winding-Up.........................................    60
Section 13.9     Waiver of Partition....................................................    60

                                   ARTICLE 14
                  AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS

Section 14.1     Amendments.............................................................    60
Section 14.2     Action by the Partners.................................................    61

                                   ARTICLE 15
                               GENERAL PROVISIONS

Section 15.1     Addresses and Notice...................................................    62
Section 15.2     Titles and Captions....................................................    62
Section 15.3     Pronouns and Plurals...................................................    62
Section 15.4     Further Action.........................................................    62
Section 15.5     Binding Effect.........................................................    62
Section 15.6     Creditors..............................................................    63
Section 15.7     Waiver.................................................................    63
Section 15.8     Counterparts...........................................................    63
Section 15.9     Applicable Law.........................................................    63
Section 15.10    Invalidity of Provisions...............................................    63
Section 15.11    Limitation to Preserve REIT Status.....................................    63
Section 15.12    Entire Agreement.......................................................    64
Section 15.13    No Rights as Stockholders..............................................    64

AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
KILROY REALTY, L.P.

THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as of _________, 1997, is entered into by and among Kilroy Realty Corporation, a Maryland corporation (the "Company"), as the General Partner and the Persons whose names are set forth on Exhibit A attached hereto, as the Limited Partners, together with any other Persons who become Partners in the Partnership as provided herein.

ARTICLE 1
DEFINED TERMS

WHEREAS, the limited partnership was formed on October 2, 1996 and an original agreement of limited partnership was entered into between the Company, as general partner and John B. Kilroy, Jr. as limited partner;

WHEREAS, the Company proposes to effect a public offering of its common stock, to acquire and cause the Partnership to acquire direct and indirect interests in 26 office and industrial properties and other assets, to cause the Partnership to enter into certain mortgage financing transactions, and to contribute the remaining net proceeds from the public offering to the Partnership;

WHEREAS, the Partnership will issue Partnership Interests to the Company and other persons in accordance with the foregoing transactions;

WHEREAS, upon the completion of the foregoing transactions, the Partnership shall return the original capital contributions made by the Company and Mr. Kilroy and any ongoing interest in the Partnership of the Company and Mr. Kilroy shall be based on their respective contributions as contemplated below;

WHEREAS, by virtue of their respective execution of this Agreement the Company and Mr. Kilroy hereby consent to the amendment and restatement of the original agreement of limited partnership;

NOW, THEREFORE, BE IT RESOLVED, that for good and adequate consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:

The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement.

(i) decrease such deficit by any amounts which such Partner is obligated to restore pursuant to this Agreement or is deemed to be obligated to restore pursuant to Regulations Section 1.704- 1(b)(2)(ii)(c) or the penultimate sentence of each of Regulations Sections 1.704-2(i)(5) and 1.704-2(g); and

(ii) increase such deficit by the items described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Regulations Section 1.704- 1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

upon such distribution or to which such property is subject at the time of the distribution as determined under Section 752 of the Code and the Regulations thereunder.

a. the Partnership's Net Income or Net Loss (as the case may be) for such period,

b. Depreciation and all other noncash charges deducted in determining Net Income or Net Loss for such period,

c. the amount of any reduction in reserves of the Partnership referred to in clause (ii)(f) below (including, without limitation, reductions resulting because the General Partner determines such amounts are no longer necessary),

d. the excess of the net proceeds from the sale, exchange, disposition, or refinancing of Partnership property for such period over the gain (or loss, as the case may be) recognized from any such sale, exchange, disposition, or refinancing during such period (excluding Terminating Capital Transactions), and

e. all other cash received by the Partnership for such period that was not included in determining Net Income or Net Loss for such period;

(ii) less the sum of:

a. all principal debt payments made during such period by the Partnership,

b. capital expenditures made by the Partnership during such period,

c. investments in any entity (including loans made thereto) to the extent that such investments are not otherwise described in clauses (ii)(a) or (b),

d. all other expenditures and payments not deducted in determining Net Income or Net Loss for such period,

e. any amount included in determining Net Income or Net Loss for such period that was not received by the Partnership during such period,

f. the amount of any increase in reserves established during such period which the General Partner determines are necessary or appropriate in its sole and absolute discretion, and

g. the amount of any working capital accounts and other cash or similar balances which the General Partner determines to be necessary or appropriate in its sole and absolute discretion.

Notwithstanding the foregoing, Available Cash shall not include any cash received or reductions in reserves, or take into account any disbursements made or reserves established, after commencement of the dissolution and liquidation of the Partnership.

(a) To each Partner's Capital Account there shall be added such Partner's Capital Contributions, such Partner's share of Net Income and any items in the nature of income or gain which are specially allocated pursuant to
Section 6.3, and the amount of any Partnership liabilities assumed by such Partner or which are secured by any property distributed to such Partner.

(b) From each Partner's Capital Account there shall be subtracted the amount of cash and the Gross Asset Value of any property distributed to such Partner pursuant to any provision of this Agreement, such Partner's distributive share of Net Losses and any items in the nature of expenses or losses which are specially allocated pursuant to Section 6.3 hereof, and the amount of any liabilities of such Partner assumed by the Partnership or which are secured by any property contributed by such Partner to the Partnership.

(c) In the event any interest in the Partnership is transferred in accordance with the terms of this Agreement (which does not result in a termination of the Partnership for federal income tax purposes), the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the transferred interest.

(d) In determining the amount of any liability for purposes of subsections (a) and (b) hereof, there shall be taken into account Code section 752(c) and any other applicable provisions of the Code and Regulations.

(i) the acquisition of an additional interest in the Partnership by a new or existing Partner in exchange for more than a de minimis Capital Contribution, if the General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership;

(ii) the distribution by the Partnership to a Partner of more than a de minimis amount of Partnership property as consideration for an interest in the Partnership if the General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership;

(iii) the liquidation of the Partnership within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); and

(iv) at such other times as the General Partner shall reasonably determine necessary or advisable in order to comply with Regulations Sections 1.704-1(b) and 1.704-2.

(c) The Gross Asset Value of any Partnership asset distributed to a Partner shall be the gross fair market value of such asset on the date of distribution as determined by the distributee and the General Partner, or if the distributee and the General Partner cannot agree on such a determination, by Appraisal.

(e) If the Gross Asset Value of a Partnership asset has been determined or adjusted pursuant to subparagraph (a), (b) or (d), such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Net Income and Net Losses.

of the Partner's properties, (f) any proceeding seeking liquidation, reorganization or other relief under any bankruptcy, insolvency or other similar law now or hereafter in effect has not been dismissed within 120 days after the commencement thereof, (g) the appointment without the Partner's consent or acquiescence of a trustee, receiver or liquidator has not been vacated or stayed within 90 days of such appointment, or (h) an appointment referred to in clause
(g) is not vacated within 90 days after the expiration of any such stay.

deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:

(a) Any income of the Partnership that is exempt from federal income tax and not otherwise taken into account in computing Net Income or Net Loss pursuant to this definition of Net Income or Net Loss shall be added to such taxable income or loss;

(b) Any expenditures of the Partnership described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Income or Net Loss pursuant to this definition of Net Income or Net Loss shall be subtracted from such taxable income or loss;

(c) In the event the Gross Asset Value of any Partnership asset is adjusted pursuant to subparagraph (b) or subparagraph (c) of the definition of Gross Asset Value, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Net Income or Net Loss;

(d) Gain or loss resulting from any disposition of property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;

(e) In lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such fiscal year;

(f) To the extent an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Partner's interest in the Partnership, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for purposes of computing Net Income or Net Loss; and

(g) Notwithstanding any other provision of this definition of Net Income or Net Loss, any items which are specially allocated pursuant to Section 6.3 hereof shall not be taken into account in computing Net Income or Net Loss. The amounts of the items of Partnership income, gain, loss, or deduction available to be specially allocated pursuant to Section 6.3 hereof shall be determined by applying rules analogous to those set forth in this definition of Net Income or Net Loss.

or (ii) any Debt issued by the General Partner that provides any of the rights described in clause (i).

ARTICLE 2
ORGANIZATIONAL MATTERS

The Partnership is a limited partnership formed pursuant to the provisions of the Act and upon the terms and conditions set forth in this Agreement. Except as expressly provided herein, the rights and obligations of the Partners and the administration and termination of the Partnership shall be governed by the Act. The Partnership Interest of each Partner shall be personal property for all purposes.

The name of the Partnership is Kilroy Realty, L.P. The Partnership's business may be conducted under any other name or names deemed advisable by the General Partner, including the name of the General Partner or any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or similar words or letters shall be included in the Partnership's name where necessary for the purposes of complying with the laws of any jurisdiction that so requires. The General Partner in its sole and absolute discretion may change the name of the Partnership at any time and from time to time and shall notify the Limited Partners of such change in the next regular communication to the Limited Partners.

The name and address of the resident agent of the Partnership in the State of Delaware is Prentice-Hall Corporation Systems, Inc., 1013 Centre Road, Wilmington, DE

19805. The address of the principal office of the Partnership in the State of Delaware is c/o Prentice-Hall Corporation Systems, Inc., 1013 Centre Road, Wilmington, DE 19805 at such address. The principal office of the Partnership is located at 2250 East Imperial Highway, El Segundo, California 90245, or such other place as the General Partner may from time to time designate by notice to the Limited Partners. The Partnership may maintain offices at such other place or places within or outside the State of Delaware as the General Partner deems advisable.

A. Each Limited Partner and each Assignee constitutes and appoints the General Partner, any Liquidator, and authorized officers and attorneys-in- fact of each, and each of those acting singly, in each case with full power of substitution, as its true and lawful agent and attorney-in-fact, with full power and authority in its name, place and stead to:

(1) execute, swear to, acknowledge, deliver, file and record in the appropriate public offices (a) all certificates, documents and other instruments (including, without limitation, this Agreement and the Certificate and all amendments or restatements thereof) that the General Partner or the Liquidator deems appropriate or necessary to form, qualify or continue the existence or qualification of the Partnership as a limited partnership (or a partnership in which the Limited Partners have limited liability) in the State of Delaware and in all other jurisdictions in which the Partnership may conduct business or own property; (b) all instruments that the General Partner or any Liquidator deems appropriate or necessary to reflect any amendment, change, modification or restatement of this Agreement in accordance with its terms; (c) all conveyances and other instruments or documents that the General Partner or any Liquidator deems appropriate or necessary to reflect the dissolution and liquidation of the Partnership pursuant to the terms of this Agreement, including, without limitation, a certificate of cancellation; (d) all instruments relating to the admission, withdrawal, removal or substitution of any Partner pursuant to, or other events described in, Articles 11, 12 and 13 hereof or the Capital Contribution of any Partner; and (e) all certificates, documents and other instruments relating to the determination of the rights, preferences and privileges of Partnership Interests; and

(2) execute, swear to, acknowledge and file all ballots, consents, approvals, waivers, certificates and other instruments appropriate or necessary, in the sole and absolute discretion of the General Partner or any Liquidator, to make, evidence, give, confirm or ratify any vote, consent, approval, agreement or other action which is made or given by the Partners hereunder or is consistent with the terms of this Agreement or appropriate or necessary, in the sole discretion of the General Partner or any Liquidator, to effectuate the terms or intent of this Agreement.

Nothing contained herein shall be construed as authorizing the General Partner or any Liquidator to amend this Agreement except in accordance with Article 14 hereof or as may be otherwise expressly provided for in this Agreement.

B. The foregoing power of attorney is hereby declared to be irrevocable and a power coupled with an interest, in recognition of the fact that each of the Partners will be relying upon the power of the General Partner and any Liquidator to act as contemplated by this Agreement in any filing or other action by it on behalf of the Partnership, and it shall survive and not be affected by the subsequent Incapacity of any Limited Partner or Assignee and the transfer of all or any portion of such Limited Partner's or Assignee's Partnership Units and shall extend to such Limited Partner's or Assignee's heirs, successors, assigns and personal representatives. Each such Limited Partner or Assignee hereby agrees to be bound by any representation made by the General Partner or any Liquidator, acting in good faith pursuant to such power of attorney; and each such Limited Partner or Assignee hereby waives any and all defenses which may be available to contest, negate or disaffirm the action of the General Partner or any Liquidator, taken in good faith under such power of attorney. Each Limited Partner or Assignee shall execute and deliver to the General Partner or any Liquidator, within 15 days after receipt of the General Partner's or Liquidator's request therefor, such further designation, powers of attorney and other instruments as the General Partner or the Liquidator, as the case may be, deems necessary to effectuate this Agreement and the purposes of the Partnership.

The term of the Partnership commenced on October 2, 1996 and shall continue until December 31, 2095 unless it is dissolved sooner pursuant to the provisions of Article 13 or as otherwise provided by law.

The Partnership shall not at any time have more than 100 partners (including as partners those persons indirectly owning an interest in the Partnership through a partnership, limited liability company, S corporation or grantor trust (such entity, a "flow through entity"), but only if substantially all of the value of such person's interest in the flow through entity is attributable to the flow through entity's interest (direct or indirect) in the Partnership).

ARTICLE 3
PURPOSE

income tax purposes, unless the General Partner ceases to qualify as a REIT for reasons other than the conduct of the business of the Partnership, (ii) to enter into any partnership, joint venture or other similar arrangement to engage in any of the foregoing or to own interests in any entity engaged, directly or indirectly, in any of the foregoing and (iii) to do anything necessary or incidental to the foregoing. In connection with the foregoing, and without limiting the General Partner's right in its sole discretion to cease qualifying as a REIT, the Partners acknowledge that the General Partner's current status as a REIT inures to the benefit of all the Partners and not solely the General Partner.

The Partnership shall be a partnership only for the purposes specified in Section 3.1 hereof, and this Agreement shall not be deemed to create a partnership among the Partners with respect to any activities whatsoever other than the activities within the purposes of the Partnership as specified in
Section 3.1 hereof. Except as otherwise provided in this Agreement, no Partner shall have any authority to act for, bind, commit or assume any obligation or responsibility on behalf of the Partnership, its properties or any other Partner. No Partner, in its capacity as a Partner under this Agreement, shall be responsible or liable for any indebtedness or obligation of another Partner, nor shall the Partnership be responsible or liable for any indebtedness or obligation of any Partner, incurred either before or after the execution and delivery of this Agreement by such Partner, except as to those responsibilities, liabilities, indebtedness or obligations incurred pursuant to and as limited by the terms of this Agreement and the Act.

A. Each Partner that is an individual represents and warrants to each other Partner that (i) such Partner has in the case of any Person other than an individual, the power

and authority, and in the case of an individual, the legal capacity, to enter into this Agreement and perform such Partner's obligations hereunder, (ii) the consummation of the transactions contemplated by this Agreement to be performed by such Partner will not result in a breach or violation of, or a default under, any agreement by which such Partner or any of such Partner's property is or are bound, or any statute, regulation, order or other law to which such Partner is subject, (iii) such Partner is neither a "foreign person" within the meaning of
Section 1445(f) of the Code nor a "foreign partner" within the meaning of
Section 1446(e) of the Code, and (iv) this Agreement has been duly executed and delivered by such Partner and is binding upon, and enforceable against, such Partner in accordance with its terms.

B. Each Partner that is not an individual represents and warrants to each other Partner that (i) its execution and delivery of this Agreement and all transactions contemplated by this Agreement to be performed by it have been duly authorized by all necessary action, including without limitation, that of its general partner(s), committee(s), trustee(s), beneficiaries, directors and/or stockholder(s), as the case may be, as required, (ii) the consummation of such transactions shall not result in a breach or violation of, or a default under, its certificate of limited partnership, partnership agreement, trust agreement, limited liability company operating agreement, charter or by-laws, as the case may be, any agreement by which such Partner or any of such Partner's properties or any of its partners, beneficiaries, trustees or stockholders, as the case may be, is or are bound, or any statute, regulation, order or other law to which such Partner or any of its partners, trustees, beneficiaries or stockholders, as the case may be, is or are subject, (iii) such Partner is neither a "foreign person" within the meaning of Section 1445(f) of the Code nor a "foreign partner" within the meaning of Section 1446(e) of the Code, and (iv) this Agreement has been duly executed and delivered by such Partner and is binding upon, and enforceable against, such Partner in accordance with its terms.

C. Each Partner represents, warrants and agrees that it has acquired and continues to hold its interest in the Partnership for its own account for investment only and not for the purpose of, or with a view toward, the resale or distribution of all or any part thereof, nor with a view toward selling or otherwise distributing such interest or any part thereof at any particular time or under any predetermined circumstances. Each Partner further represents and warrants that it is a sophisticated investor, able and accustomed to handling sophisticated financial matters for itself, particularly real estate investments, and that it has a sufficiently high net worth that it does not anticipate a need for the funds it has invested in the Partnership in what it understands to be a highly speculative and illiquid investment.

D. Each Partner further represents, warrants and agrees as follows:

number of shares of all classes of stock of such Tenant and (y) with respect to any Tenant that is not a corporation, interests in such Tenant representing up to, but not more than, one-half of one percent (0.5%) of the assets and one-half of one percent (0.5%) of the net profits of such Tenant, so long as such actual or Constructive Ownership otherwise permitted under clause (x) or (y) would not cause the General Partner to receive amounts described in Section 856 (d)(2)(B) of the Code.

(ii) Except as provided in Exhibit F, it does not, and agrees that it will not without the prior written consent of the General Partner, actually own or Constructively Own, any stock in the General Partner, other than any REIT Shares or other shares of capital stock of the General Partner such Partner may acquire (a) as a result of an exchange of Tendered Units pursuant to
Section 8.6 or (b) upon the exercise of options granted or delivery of REIT Shares pursuant to any Stock Incentive Plan, in each case subject to the ownership limitations set forth in the General Partner's Charter.

(iii) Upon request of the General Partner, it will disclose to the General Partner the amount of REIT Shares or other shares of capital stock of the General Partner that it actually owns or Constructively Owns.

(iv) It understands that if, for any reason, (a) the representations, warranties or agreements set forth in Subparagraph D(i) or (ii) of this Section 3.4 are violated, or (b) the Partnership's actual or Constructive Ownership of the REIT Shares or other shares of capital stock of the General Partner violates the limitations set forth in the Charter, then (1) some or all of the Redemption rights of the Partners may become non-exercisable, and (2) some or all of the REIT Shares owned by the Partners may be automatically transferred to a trust for the benefit of a charitable beneficiary, as provided in the Charter.

E. The representations and warranties contained in Sections 3.4.A, 3.4.B, 3.4.C and 3.4.D hereof shall survive the execution and delivery of this Agreement by each Partner and the dissolution and winding up of the Partnership.

F. Each Partner hereby acknowledges that no representations as to potential profit, cash flows, funds from operations or yield, if any, in respect of the Partnership or the General Partner have been made by any Partner or any employee or representative or Affiliate of any Partner, and that projections and any other information, including, without limitation, financial and descriptive information and documentation, which may have been in any manner submitted to such Partner shall not constitute any representation or warranty of any kind or nature, express or implied.

ARTICLE 4
CAPITAL CONTRIBUTIONS

At the time of their respective execution of this Agreement, the Partners shall make Capital Contributions as set forth in Exhibit A to this Agreement. The Partners shall own Partnership Units of the class and in the amounts set forth in Exhibit A and shall have a Percentage Interest in the Partnership as set forth in Exhibit A, which Percentage Interest shall be adjusted in Exhibit A from time to time by the General Partner to the extent necessary to accurately reflect exchanges, redemptions, Capital Contributions, the issuance of additional Partnership Units or similar events having an effect on a Partner's Percentage Interest. Except as required by law or as otherwise provided in Sections 4.3, 4.4 and 10.5, no Partner shall be required or permitted to make any additional Capital Contributions or loans to the Partnership. Unless otherwise specified by the General Partner at the time of the creation of any class of Partnership Interests, the corresponding class of capital stock for any Partnership Units issued shall be REIT Shares.

If at any time or from time to time the General Partner sells or issues REIT Shares pursuant to any Stock Incentive Plan, the General Partner shall contribute any proceeds therefrom to the Partnership as an additional Capital Contribution and shall receive an amount of additional Partnership Units equal to the number of REIT Shares so sold or issued. The General Partner's Capital Account shall be increased by the amount of cash so contributed.

In the event that any Partner is admitted to the Partnership and is given a Capital Account in exchange for services rendered to the Partnership, such transaction shall be treated by the Partnership and the affected Partner as if the Partnership had compensated such Partner in cash, and the Partner had contributed such cash to the capital of the Partnership. In addition, with the consent of the General Partner, one or more Limited Partners may enter into contribution agreements with the Partnership which have the effect of providing a guarantee of certain obligations of the Partnership.

ARTICLE 5
DISTRIBUTIONS

The General Partner shall cause the Partnership to distribute quarterly all, or such portion as the General Partner may in its discretion determine, of Available Cash generated by the Partnership during such quarter to the Partners who are Partners on the Partnership Record Date with respect to such quarter, (1) first, with respect to any Partnership Interests that are entitled to any preference in distribution, in accordance with the rights of such class of Partnership Interests (and within such class, pro rata in proportion to the respective Percentage Interests on such Partnership Record Date), and, (2) second, with respect to Partnership Interests that are not entitled to any preference in distribution, pro rata to each such class in accordance with the terms of such class (and within each such class, pro rata in proportion with the respective Percentage Interests on such Partnership Record Date). Unless otherwise expressly provided for herein or in an agreement at the time a new class of Partnership Interests is created in accordance with Article 4 hereof, no Partnership Interest shall be entitled to a distribution in preference to any other Partnership Interest. The General Partner shall take such reasonable efforts, as determined by it in its sole and absolute discretion and consistent with its qualification as a REIT, to cause the Partnership to distribute sufficient amounts to enable the General Partner to pay stockholder dividends that will (a) satisfy the requirements for qualifying as a REIT under the Code and Regulations ("REIT Requirements"), and (b) avoid any federal income or excise tax liability of the General Partner.

No right is given to any Partner to demand and receive property other than cash. The General Partner may determine, in its sole and absolute discretion, to make a distribution in kind to the Partners of Partnership assets, and such assets shall be distributed in such a fashion as to ensure that the fair market value is distributed and allocated in accordance with Articles 5, 6 and 10.

Proceeds from a Terminating Capital Transaction shall be distributed to the Partners in accordance with Section 13.2.

ARTICLE 6
ALLOCATIONS

Net Income and Net Loss of the Partnership shall be determined and allocated with respect to each fiscal year of the Partnership as of the end of each such year. Subject to the other provisions of this Article 6, an allocation to a Partner of a share of Net Income or Net Loss shall be treated as an allocation of the same share of each item of income, gain, loss or deduction that is taken into account in computing Net Income or Net Loss.

Notwithstanding the foregoing provisions of this Article 6:

of the Agreement, or any other provision of this Article 6 (except
Section 6.3.A(i)), if there is a net decrease in Partner Minimum Gain attributable to a Partner Nonrecourse Debt during any fiscal year, each Partner who has a share of the Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(5), shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Partner's share of the net decrease in Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each General Partner and Limited Partner pursuant thereto. The items to be so allocated shall be determined in accordance with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This
Section 6.3.A(ii) is intended to qualify as a "chargeback of partner nonrecourse debt minimum gain" within the meaning of Regulation Section 1.704-2(i) which shall be controlling in the event of a conflict between such Regulation and this Section 6.3.A(ii).

would have a deficit Capital Account in excess of such sum after all other allocations provided in this Article 6 have been tentatively made as if this Section 6.3.A(v) and Section 6.3.A(iv) were not in the Agreement.

B. For purposes of determining a Partner's proportional share of the "excess nonrecourse liabilities" of the Partnership within the meaning of Regulations Section 1.752-3(a)(3), each Partner's interest in Partnership profits shall be such Partner's Percentage Interest.

Partnership by a Partner shall be shared among the Partners for income tax purposes pursuant to Regulations promulgated under Section 704(c) of the Code, so as to take into account the variation, if any, between the basis of the property to the Partnership and its initial Gross Asset Value. With respect to Partnership property that is initially contributed to the Partnership upon its formation pursuant to Section 4.1, such variation between basis and initial Gross Asset Value shall be taken into account under the "traditional method" as described in Regulations Section 1.704-3(b). With respect to properties subsequently contributed to the Partnership, the Partnership shall account for such variation under any method approved under Section 704(c) of the Code and the applicable regulations as chosen by the General Partner. In the event the Gross Asset Value of any Partnership asset is adjusted pursuant to subparagraph
(b) of the definition of Gross Asset Value (provided in Article 1 of this Agreement), subsequent allocations of Tax Items with respect to such asset shall take account of the variation, if any, between the adjusted basis of such asset and its Gross Asset Value in the same manner as under Section 704(c) of the Code and the applicable regulations consistent with the requirements of Regulations
Section 1.704-1(b)(2)(iv)(g) using any method approved under 704(c) of the Code and the applicable regulations as chosen by the General Partner.

ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS

A. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are exclusively vested in the General Partner, and no Limited Partner shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Limited Partners with or without cause, except with the consent of the General Partner. In addition to the powers now or hereafter granted a general partner of a limited partnership under the Act and other applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to the other provisions hereof including Section 7.3, shall have full power and authority to do all things deemed necessary or desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 3.2 hereof and to effectuate the purposes set forth in Section 3.1 hereof, including, without limitation:

(1) the making of any expenditures, the lending or borrowing of money (including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will permit the General Partner (so long as the General Partner has determined to qualify as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Section 4981 of the Code) and to make distributions to its stockholders sufficient to permit the General Partner to maintain REIT status), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of

indebtedness (including the securing of same by mortgage, deed of trust or other lien or encumbrance on all or any of the Partnership's assets) and the incurring of any obligations it deems necessary for the conduct of the activities of the Partnership;

(2) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership;

(3) subject to the provisions of Section 7.3.D hereof, the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any assets of the Partnership or the merger or other combination of the Partnership with or into another entity;

(4) the mortgage, pledge, encumbrance or hypothecation of all or any assets of the Partnership, and the use of the assets of the Partnership (including, without limitation, cash on hand) for any purpose consistent with the terms of this Agreement and on any terms it sees fit, including, without limitation, the financing of the conduct or the operations of the General Partner or the Partnership, the lending of funds to other Persons (including, without limitation, the General Partner (if necessary to permit the financing or capitalization of a subsidiary of the General Partner or the Partnership) and any Subsidiaries of the Partnership) and the repayment of obligations of the Partnership, any of its Subsidiaries and any other Person in which it has an equity investment;

(5) the negotiation, execution, and performance of any contracts, leases, conveyances or other instruments that the General Partner considers useful or necessary to the conduct of the Partnership's operations or the implementation of the General Partner's powers under this Agreement;

(6) the distribution of Partnership cash or other Partnership assets in accordance with this Agreement;

(7) the selection and dismissal of employees of the Partnership (including, without limitation, employees having titles such as "president," "vice president," "secretary" and "treasurer"), and agents, outside attorneys, accountants, consultants and contractors of the Partnership, the determination of their compensation and other terms of employment or hiring, including waivers of conflicts of interest and the payment of their expenses and compensation out of the Partnership's assets;

(8) the maintenance of such insurance for the benefit of the Partnership and the Partners as it deems necessary or appropriate;

(10) the control of any matters affecting the rights and obligations of the Partnership, including the conduct of litigation and the incurring of legal expense and the settlement of claims and litigation, and the indemnification of any Person against liabilities and contingencies to the extent permitted by law;

(11) the undertaking of any action in connection with the Partnership's direct or indirect investment in any Person (including, without limitation, contributing or loaning Partnership funds to, incurring indebtedness on behalf of, or guarantying the obligations of any such Persons);

(13) the management, operation, leasing, landscaping, repair, alteration, demolition or improvement of any real property or improvements owned by the Partnership or any Subsidiary of the Partnership or any Person in which the Partnership has made a direct or indirect equity investment;

(14) holding, managing, investing and reinvesting cash and other assets of the Partnership;

(15) the collection and receipt of revenues and income of the Partnership;

(16) the exercise, directly or indirectly through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership;

(17) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person;

(18) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership does not have an interest, pursuant to contractual or other arrangements with such Person; and

(19) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or other agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement.

B. Each of the Limited Partners agrees that the General Partner is authorized to execute, deliver and perform the above-mentioned agreements and transactions on behalf of the Partnership without any further act, approval or vote of the partners, notwithstanding any other provisions of this Agreement (except as provided in Section 7.3), the Act or any applicable law, rule or regulation. The execution, delivery or performance by the General Partner or the Partnership of any agreement authorized or permitted under this Agreement shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement or of any duty stated or implied by law or equity.

C. At all times from and after the date hereof, the General Partner may cause the Partnership to obtain and maintain (i) casualty, liability and other insurance (including, without limitation, earthquake insurance) on the properties of the Partnership and (ii) liability insurance for the Indemnities hereunder.

D. At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain working capital and other reserves in such amounts as the General Partner, in it sole and absolute discretion, deems appropriate and reasonable from time to time.

E. In exercising its authority under this Agreement, the General Partner may, but, other than as set forth in the following sentence and to
Section 11.2.D, shall be under no obligation to, take into account the tax consequences to any Partner (including the General Partner) of any action taken by the General Partner. The General Partner, on behalf of the Partnership, shall use commercially reasonable efforts to cooperate with the Limited Partners to minimize any taxes payable in connection with any repayment, refinancing, replacement or restructuring of Debt, or any sale, exchange or any other disposition of assets, of the Partnership. The General Partner and the Partnership shall not have liability to a Limited Partner under any circumstances as a result of an income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner pursuant to its authority under this Agreement.

F. Except as otherwise provided herein, to the extent the duties of the General Partner require expenditures of funds to be paid to third parties, the General Partner shall not have any obligations hereunder except to the extent that Partnership funds are reasonably available to it for the performance of such duties, and nothing herein contained shall be deemed to authorize or require the General Partner, in its capacity as such, to expend its individual funds for payment to third parties or to undertake any individual liability or obligation on behalf of the Partnership.

To the extent that such action is determined by the General Partner to be reasonable and necessary or appropriate, the General Partner shall file amendments to and restatements of the Certificate and do all the things to maintain the Partnership as a limited partnership (or a partnership in which the limited partners have limited liability) under the laws of the State of Delaware and to maintain the Partnership's qualification to do business as a foreign limited partnership in each other state, the District of Columbia or other jurisdiction, in which the Partnership may elect to do business or own property. Subject to the terms of Section 8.5.A(4) hereof, the General Partner shall not be required, before or after filing, to deliver or mail a copy of the Certificate or any amendment thereto to any Limited Partner. The General Partner shall use all reasonable efforts to cause to be filed such other certificates or documents as may be reasonable and necessary or appropriate for the formation, continuation, qualification and operation of a limited partnership (or a partnership in which the limited partners have limited liability) in the State of Delaware, and any other state, or the District of Columbia or other jurisdiction, in which the Partnership may elect to do business or own property.

A. The General Partner may not take any action in contravention of this Agreement, including, without limitation:

(1) take any action that would make it impossible to carry on the ordinary business of the Partnership, except as otherwise provided in this Agreement;

(2) possess Partnership property, or assign any rights in specific Partnership property, for other than a Partnership purpose except as otherwise provided in this Agreement;

(3) admit a Person as a Partner, except as otherwise provided in this Agreement;

(4) perform any act that would subject a Limited Partner to liability as a general partner in any jurisdiction or any other liability except as provided herein or under the Act; or

(5) enter into any contract, mortgage, loan or other agreement that prohibits or restricts, or has the effect of prohibiting or restricting, the ability of a Limited Partner to exercise its rights to a Redemption in full, except with the written consent of such Limited Partner.

B. The General Partner shall not, without the prior Consent of the Partners, undertake, on behalf of the Partnership, any of the following actions or enter into any transaction which would have the effect of such transactions:

(1) except as provided in Section 7.3.E, amend, modify or terminate this Agreement other than to reflect the admission, substitution, termination or withdrawal of partners pursuant to Article 12 hereof;

(2) make a general assignment for the benefit of creditors or appoint or acquiesce in the appointment of a custodian, receiver or trustee for all or any part of the assets of the Partnership;

(3) institute any proceeding for bankruptcy on behalf of the Partnership; or

(4) confess a judgment against the Partnership;

C. The General Partner shall not, without the prior Consent of the Super Majority Limited Partners, undertake, on behalf of the Partnership, any of the following actions or enter into any transaction which would have the effect of such transactions:

(1) approve or acquiesce to the transfer of the Partnership Interest of the General Partner to any Person other than the Partnership; or

(2) admit into the Partnership any Additional or Substitute General Partners.

D. If the aggregate Limited Partnership Interests of all Limited Partners represents 5.0% or more of the aggregate Partnership Interests, the General Partner shall not, without the prior Consent of the Limited Partners, undertake, on behalf of the Partnership, any of the following actions or enter into any transaction which would have the effect of such transactions:

(1) dissolve the Partnership, or

(2) prior to the seventh anniversary of the date of this Agreement, sell any of the property listed on Exhibit G,

in each case other than incident to a transaction pursuant to Section 11.2.B or
Section 11.2.C.

E. Notwithstanding Sections 7.3.B, 7.3.C and 7.3.D hereof, but subject to Section 7.3.F hereof, the General Partner shall have the power, without the Consent of the

Limited Partners, to amend this Agreement as may be required to facilitate or implement any of the following purposes:

(1) to add to the obligations of the General Partner or surrender any right or power granted to the General Partner or any Affiliate of the General Partner for the benefit of the Limited Partners;

(2) to reflect the issuance of additional Partnership Interests pursuant to Sections 4.3.C and 4.4 or the admission, substitution, termination, or withdrawal of Partners in accordance with this Agreement;

(3) to reflect a change that is of an inconsequential nature and does not adversely affect the Limited Partners in any material respect, or to cure any ambiguity in, correct or supplement any provision in, or make other changes with respect to matters arising under, this Agreement that will not be inconsistent with law or with the provisions of this Agreement;

(4) to satisfy any requirements, conditions, or guidelines contained in any order, directive, opinion, ruling or regulation of a federal or state agency or contained in federal or state law;

(5) to reflect such changes as are reasonably necessary for the General Partner to maintain its status as a REIT, including changes which may be necessitated due to a change in applicable law (or an authoritative interpretation thereof) or a ruling of the IRS; and

(6) to modify, as set forth in the definition of "Capital Account," the manner in which Capital Accounts are computed.

The General Partner will provide notice to the Limited Partners when any action under this Section 7.3.E is taken.

F. Notwithstanding Sections 7.3.B, 7.3.C, 7.3.D and 7.3.E hereof, this Agreement shall not be amended, and no action may be taken by the General Partner, without the Consent of each Partner adversely affected if such amendment or action would (i) convert a Limited Partner's interest in the Partnership into a general partner's interest (except as the result of the General Partner acquiring such interest), (ii) modify the limited liability of a Limited Partner, (iii) alter rights of the Partner to receive distributions pursuant to Article 5 or Section 13.2.A(4), or the allocations specified in Article 6 (except as permitted pursuant to Section 4.3 and Section 7.3.E(2) hereof), (iv) alter or modify the rights to a Redemption or the REIT Shares Amount as set forth in Section 8.6, and related definitions hereof or (v) amend this Section 7.3.F. Further, no amendment may alter the restrictions on the General Partner's authority set forth elsewhere in this Section 7.3 without the Consent specified in such section. In addition, notwithstanding Sections 7.3.B, 7.3.C, 7.3.D and 7.3.E hereof, Section 11.2 of this Agreement shall not be amended, and no action in contravention of Section 11.2 hereof shall be taken, without the Consent of the Limited Partners.

A. Except as provided in this Section 7.4 and elsewhere in this Agreement (including the provisions of Articles 5 and 6 regarding distributions, payments and allocations to which it may be entitled), the General Partner shall not be compensated for its services as general partner of the Partnership.

C. If and to the extent any reimbursements to the General Partner pursuant to this Section 7.4 constitute gross income of the General Partner (as opposed to the repayment of advances made by the General Partner on behalf of the Partnership), such amounts shall constitute guaranteed payments within the meaning of Section 707(c) of the Code, shall be treated consistently therewith by the Partnership and all Partners, and shall not be treated as distributions for purposes of computing the Partners' Capital Accounts.

A. Except in connection with a transaction authorized in Section 11.2 hereof, without the Consent of the Limited Partners, the General Partner shall not, directly or indirectly, enter into or conduct any business, other than in connection with the ownership, acquisition and disposition of Partnership Interests as a General Partner and the management of the business of the Partnership, its operation as a public reporting company with a class (or classes) of securities registered under the Securities Exchange Act, its operation as a REIT and such activities as are incidental to the same. Without the Consent of the Limited Partners, the General Partner shall not, directly or indirectly, participate in or otherwise acquire any interest in any real or personal property, except its General Partner Interest, its minority interest in any Subsidiary Partnership(s) (held directly or indirectly through a Qualified REIT Subsidiary) that the General Partner holds in order to maintain such Subsidiary Partnership's status as a partnership, and such bank accounts, similar instruments or other short-term investments as it deems necessary to carry out its responsibilities contemplated under this Agreement and the Charter. Any Limited Partner Interests acquired by the General Partner, whether pursuant to exercise by a Limited Partner of its right of Redemption, or otherwise, shall be automatically converted into a General Partner Interest comprised of an identical number of Partnership Units of the same class. If, at any

time, the General Partner acquires material assets (other than on behalf of the Partnership) the definition of "REIT Shares Amount" shall be adjusted, as reasonably agreed to by the General Partner and the other Limited Partners, to reflect the relative Fair Market Value of a share of capital stock of the General Partner relative to the Deemed Partnership Interest Value of the related Partnership Unit. The General Partner's General Partner Interest in the Partnership, its minority interest in any Subsidiary Partnership(s) (held directly or indirectly through a Qualified REIT Subsidiary) that the General Partner holds in order to maintain such Subsidiary Partnership's status as a partnership, and interests in such short-term liquid investments, bank accounts or similar instruments as the General Partner deems necessary to carry out its responsibilities contemplated under this Agreement and the Charter are interests which the General Partner is permitted to acquire and hold for purposes of this
Section 7.5.A.

B. In the event the General Partner exercises its rights under the Charter to purchase REIT Shares, then the General Partner shall cause the Partnership to purchase from it a number of Partnership Units of the appropriate class as determined based on the REIT Shares Amount equal to the number of REIT Shares so purchased on the same terms that the General Partner purchased such REIT Shares.

A. The Partnership may lend or contribute to Persons in which it has an equity investment, and such Persons may borrow funds from the Partnership, on terms and conditions established in the sole and absolute discretion of the General Partner. The foregoing authority shall not create any right or benefit in favor of any Person.

B. Except as provided in Section 7.5.A, the Partnership may transfer assets to joint ventures, other partnerships, corporations or other business entities in which it is or thereby becomes a participant upon such terms and subject to such conditions consistent with this Agreement and applicable law.

C. The General Partner, in its sole and absolute discretion and without the approval of the Limited Partners, may propose and adopt on behalf of the Partnership employee benefit plans funded by the Partnership for the benefit of employees of the General Partner, the Partnership, Subsidiaries of the Partnership or any Affiliate of any of them in respect of services performed, directly or indirectly, for the benefit of the Partnership, the General Partner, or any of the Partnership's Subsidiaries. The General Partner also is expressly authorized to cause the Partnership to issue to it Partnership Units corresponding to REIT Shares issued by the General Partner pursuant to its Stock Incentive Plan or any similar or successor plan and to repurchase such Partnership Units from the General Partner to the extent necessary to permit the General Partner to repurchase such REIT Shares in accordance with such plan.

D. The General Partner is expressly authorized to enter into, in the name and on behalf of the Partnership, a right of first opportunity arrangement and other conflict avoidance agreements with various Affiliates of the Partnership and the General Partner, on such terms as the General Partner, in its sole and absolute discretion, believes are advisable.

A. The Partnership shall indemnify an Indemnitee from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including legal fees and expenses), judgments, fines, settlements, and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, that relate to the operations of the Partnership as set forth in this Agreement in which any Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, unless it is established that: (i) the act or omission of the Indemnitee was material to the matter giving rise to the proceeding and either was committed in bad faith or was the result of active and deliberate dishonesty; (ii) the Indemnitee actually received an improper personal benefit in money, property or services; or (iii) in the case of any criminal proceeding, the Indemnitee had reasonable cause to believe that the act or omission was unlawful. Without limitation, the foregoing indemnity shall extend to any liability of any Indemnitee, pursuant to a loan guaranty or otherwise, for any indebtedness of the Partnership or any Subsidiary of the Partnership (including, without limitation, any indebtedness which the Partnership or any Subsidiary of the Partnership has assumed or taken subject to), and the General Partner is hereby authorized and empowered, on behalf of the Partnership, to enter into one or more indemnity agreements consistent with the provisions of this Section 7.7 in favor of any Indemnitee having or potentially having liability for any such indebtedness. The termination of any proceeding by judgment, order or settlement does not create a presumption that the Indemnitee did not meet the requisite standard of conduct set forth in this Section 7.7.A. The termination of any proceeding by conviction or upon a plea of nolo contendere or its equivalent, or any entry of an order of probation prior to judgment, creates a rebuttable presumption that the Indemnitee acted in a manner contrary to that specified in this Section 7.7.A. Any indemnification pursuant to this Section 7.7 shall be made only out of the assets of the Partnership.

B. Reasonable expenses incurred by an Indemnitee who is a party to a proceeding may be paid or reimbursed by the Partnership in advance of the final disposition of the proceeding upon receipt by the Partnership of (i) a written affirmation by the Indemnitee of the Indemnitee's good faith belief that the standard of conduct necessary for indemnification by the Partnership as authorized in Subparagraph A of this Section 7.7 has been met, and (ii) a written undertaking by or on behalf of the Indemnitee to repay the amount if it shall ultimately be determined that the standard of conduct has not been met.

C. The indemnification provided by this Section 7.7 shall be in addition to any other rights to which an Indemnitee or any other Person may be entitled under any agreement, pursuant to any vote of the Partners, as a matter of law or otherwise, and shall continue as to an Indemnitee who has ceased to serve in such capacity.

D. The Partnership may purchase and maintain insurance, on behalf of the Indemnitees and such other Persons as the General Partner shall determine, against any liability that may be asserted against or expenses that may be incurred by any such Person in connection with the Partnership's activities, regardless of whether the Partnership would have the power to indemnify such Person against such liability under the provisions of this Agreement.

E. For purposes of this Section 7.7, the Partnership shall be deemed to have requested an Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by it of its duties to the Partnership also imposes duties on, or otherwise involves services by, it to the plan or participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect to an employee benefit plan pursuant to applicable law shall constitute fines within the meaning of Section 7.7; and actions taken or omitted by the Indemnitee with respect to an employee benefit plan in the performance of its duties for a purpose reasonably believed by it to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not opposed to the best interests of the Partnership.

F. In no event may an Indemnitee subject the Limited Partners to personal liability by reason of the indemnification provisions set forth in this Agreement.

G. An Indemnitee shall not be denied indemnification in whole or in part under this Section 7.7 because the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.

H. The provisions of this Section 7.7 are for the benefit of the Indemnitees, their heirs, successors, assigns and administrators and shall not be deemed to create any rights for the benefit of any other Persons. Any amendment, modification or repeal of this Section 7.7 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the Partnership's liability to any Indemnitee under this Section 7.7 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

I. If and to the extent any reimbursements to the General Partner pursuant to this Section 7.7 constitute gross income of the General Partner (as opposed to the repayment of advances made by the General Partner on behalf of the Partnership) such amounts shall constitute guaranteed payments within the meaning of Section 707(c) of the Code, shall be treated consistently therewith by the Partnership and all Partners, and shall not be treated as distributions for purposes of computing the Partners' Capital Accounts.

J. Any indemnification hereunder is subject to, and limited by, the provisions of Section 17-108 of the Act.

K. In the event the Partnership is made a party to any litigation or otherwise incurs any loss or expense as a result of or in connection with any Partner's personal obligations or liabilities unrelated to Partnership business, such Partner shall indemnify and reimburse the Partnership for all such loss and expense incurred, including legal fees, and the Partnership Interest of such Partner may be charged therefor. The liability of a Partner under this Section 7.7.K shall not be limited to such Partner's Partnership Interest, but shall be enforceable against such Partner personally.

A. Notwithstanding anything to the contrary set forth in this Agreement, none of the General Partner and any of its officers, directors, agents and employees shall be liable or accountable in damages or otherwise to the Partnership, any Partners or any Assignees, or their successors or assigns, for losses sustained, liabilities incurred or benefits not derived as a result of errors in judgment or mistakes of fact or law or any act or omission if the General Partner acted in good faith.

C. Subject to its obligations and duties as General Partner set forth in Section 7.1.A hereof, the General Partner may exercise any of the powers granted to it by this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through its agents. The General Partner shall not be responsible for any misconduct or negligence on the part of any such agent appointed by it in good faith.

D. Any amendment, modification or repeal of this Section 7.8 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the liability of the General Partner and any of its officers, directors, agents and employees to the Partnership and the Limited Partners under this Section 7.8 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

A. The General Partner may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties.

B. The General Partner may consult with legal counsel, accountants, appraisers, management consultants, investment bankers and other consultants and advisers selected by it, and any act taken or omitted to be taken in reliance upon the opinion of such Persons as to matters which such General Partner reasonably believes to be within such Person's professional or expert competence shall be conclusively presumed to have been done or omitted in good faith and in accordance with such opinion.

C. The General Partner shall have the right, in respect of any of its powers or obligations hereunder, to act through any of its duly authorized officers and a duly appointed attorney or attorneys-in-fact. Each such attorney shall, to the extent provided by the General Partner in the power of attorney, have full power and authority to do and perform all and every act and duty which is permitted or required to be done by the General Partner hereunder.

D. Notwithstanding any other provisions of this Agreement or any non-mandatory provision of the Act, any action of the General Partner on behalf of the Partnership or any decision of the General Partner to refrain from acting on behalf of the Partnership, undertaken in the good faith belief that such action or omission is necessary or advisable in order (i) to protect the ability of the General Partner to continue to qualify as a REIT or (ii) to avoid the General Partner incurring any taxes under Section 857 or Section 4981 of the Code, is expressly authorized under this Agreement and is deemed approved by all of the Limited Partners.

Notwithstanding anything to the contrary in this Agreement, any Person dealing with the Partnership shall be entitled to assume that the General Partner has full power and authority to encumber, sell or otherwise use in any manner any and all assets of the Partnership and to enter into any contracts on behalf of the Partnership, and such Person shall be entitled to deal with the General Partner as if it were the Partnership's sole party in interest, both legally and beneficially. Each Limited Partner hereby waives any and all defenses or other remedies which may be available against such Person to contest, negate or disaffirm any action of the General Partner in connection with any such dealing. In no event shall any Person dealing with the General Partner or its representatives be obligated to ascertain that the terms of this Agreement have been complied with or to inquire into the necessity or expedience of any act or action of the General Partner or its representatives. Each and every certificate, document or other instrument executed on behalf of the Partnership by the General Partner or its

representatives shall be conclusive evidence in favor of any and every Person relying thereon or claiming thereunder that (i) at the time of the execution and delivery of such certificate, document or instrument, this Agreement was in full force and effect, (ii) the Person executing and delivering such certificate, document or instrument was duly authorized and empowered to do so for and on behalf of the Partnership and (iii) such certificate, document or instrument was duly executed and delivered in accordance with the terms and provisions of this Agreement and is binding upon the Partnership.

ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

The Limited Partners shall have no liability under this Agreement except as expressly provided in this Agreement or under the Act.

No Limited Partner or Assignee (other than the General Partner, any of its Affiliates or any officer, director, employee, general partner, agent or trustee of the General Partner, the Partnership or any of their Affiliates, in their capacity as such) shall take part in the operations, management or control (within the meaning of the Act) of the Partnership's business, transact any business in the Partnership's name or have the power to sign documents for or otherwise bind the Partnership. The transaction of any such business by the General Partner, any of its Affiliates or any officer, director, employee, general partner, agent or trustee of the General Partner, the Partnership or any of their Affiliates, in their capacity as such, shall not affect, impair or eliminate the limitations on the liability of the Limited Partners or Assignees under this Agreement.

Subject to any agreements entered into by a Limited Partner or its Affiliates with the General Partner, Partnership or a Subsidiary, any Limited Partner and any officer, director, employee, agent, trustee, Affiliate or stockholder of any Limited Partner shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Partnership, including business interests and activities in direct competition with the Partnership or that are enhanced by the activities of the Partnership. Neither the Partnership nor any Partners shall have any rights by virtue of this Agreement in any business ventures of any Limited Partner or Assignee. Subject to such agreements, none of the Limited Partners nor any other Person shall have any rights by virtue of this Agreement or the partnership relationship established hereby in any business ventures of any other Person, other than the Limited Partners benefitting from the business conducted by the General Partner, and such other Person shall have no obligation pursuant to this Agreement to offer any interest in any such business ventures to the Partnership, any Limited Partner or any such other Person, even if such opportunity is of

a character which, if presented to the Partnership, any Limited Partner or such other Person, could be taken by such other Person.

Except pursuant to the rights of Redemption set forth in Section 8.6, no Limited Partner shall be entitled to the withdrawal or return of his or her Capital Contribution, except to the extent of distributions made pursuant to this Agreement or upon termination of the Partnership as provided herein. No Limited Partner or Assignee shall have priority over any other Limited Partner or Assignee either as to the return of Capital Contributions, or as otherwise expressly provided in this Agreement, as to profits, losses, distributions or credits.

A. In addition to other rights provided by this Agreement or by the Act, and except as limited by Section 8.5.C hereof, each Limited Partner shall have the right, for a purpose reasonably related to such Limited Partner's interest as a limited partner in the Partnership, upon written demand with a statement of the purpose of such demand and at the Partnership's expense:

(1) to obtain a copy of the most recent annual and quarterly reports filed with the Securities and Exchange Commission by the General Partner pursuant to the Securities Exchange Act, and each communication sent to the stockholders of the General Partner;

(2) to obtain a copy of the Partnership's federal, state and local income tax returns for each Partnership Year;

(3) to obtain a current list of the name and last known business, residence or mailing address of each Partner;

(4) to obtain a copy of this Agreement and the Certificate and all amendments thereto, together with executed copies of all powers of attorney pursuant to which this Agreement, the Certificate and all amendments thereto have been executed; and

(5) to obtain true and full information regarding the amount of cash and a description and statement of any other property or services contributed by each Partner and which each Partner has agreed to contribute in the future, and the date on which each became a Partner.

B. The Partnership shall notify each Limited Partner in writing of any adjustment made in the calculation of the REIT Shares Amount within 10 Business Days of the date such change becomes effective.

C. Notwithstanding any other provision of this Section 8.5, the General Partner may keep confidential from the Limited Partners, for such period of time as the General Partner determines in its sole and absolute discretion to be reasonable, any information that (i) the General Partner believes to be in the nature of trade secrets or other information the disclosure of which the General Partner in good faith believes is not in the best interests of the Partnership or (ii) the Partnership or the General Partner is required by law or by agreements with unaffiliated third parties to keep confidential.

B. Notwithstanding Section 8.6.A above, if a Limited Partner has delivered to the General Partner a Notice of Redemption then the General Partner may, in its sole and absolute discretion, (subject to the limitations on ownership and transfer of REIT Shares set forth in Article IV.E of the Charter) elect to acquire some or all of the Tendered Units from the Tendering Partner in exchange for the REIT Shares Amount (as of the Specified Redemption Date) and, if the General Partner so elects, the Tendering Partner shall sell the Tendered Units to the General Partner in exchange for the REIT Shares Amount. In such event, the Tendering Partner shall have no right to cause the Partnership to redeem such Tendered Units. The General Partner shall promptly give such Tendering Partner written notice of its election, and the Tendering Partner may elect to withdraw its redemption request at any time prior to the acceptance of the Cash Amount or REIT Shares Amount by such Tendering Partner. Notwithstanding the foregoing, the General Partner, at the request of a Limited Partner that is a corporation or limited liability company, shall be required to issue, and the General Partner agrees to issue, the REIT Shares Amount in exchange for such Limited Partner's Tendered Units, subject to the ownership restrictions applicable to such shares set forth in the Charter. In addition, the General Partner agrees to maintain an amount of authorized but unissued REIT Shares equal to the number of REIT Shares issuable upon the exchange of Partnership Units owned from time to time by Limited Partners that are corporations.

C. The REIT Shares Amount, if applicable, shall be delivered as duly authorized, validly issued, fully paid and nonassessable REIT Shares and, if applicable, free of any pledge, lien, encumbrance or restriction, other than those provided in the Charter, the Bylaws of the General Partner, the Securities Act, relevant state securities or blue sky laws and any applicable registration rights agreement with respect to such REIT Shares entered into by the Tendering Partner. The REIT Shares Amount shall be registered in the name and otherwise delivered as set forth in the Notice of Redemption. Notwithstanding any delay in such delivery (but subject to Section 8.6.E), the Tendering Partner shall be deemed the owner of such REIT Shares for all purposes, including without limitation, rights to vote or consent, and receive dividends, as of the Specified Redemption Date.

D. Each Limited Partner covenants and agrees with the General Partner that all Tendered Units shall be delivered to the General Partner free and clear of all liens, claims and encumbrances whatsoever and should any such liens, claims and/or encumbrances exist or arise with respect to such Tendered Units, the General Partner shall be under no obligation to acquire the same. Each Limited Partner further agrees that, in the event any state or local property transfer tax is payable as a result of the transfer of its Tendered Units to the General Partner (or its designee), such Limited Partner shall assume and pay such transfer tax.

E. Notwithstanding the provisions of Section 8.6.A, 8.6.B, 8.6.C or any other provision of this Agreement, a Limited Partner (i) shall not be entitled to effect a Redemption for cash or an exchange for REIT Shares to the extent the ownership or right to acquire REIT Shares pursuant to such exchange by such Partner on the Specified Redemption Date would cause such Partner or any other Person, or, in the opinion of counsel selected by the General Partner, may cause such Partner or any other Person, to violate the restrictions on ownership and transfer of REIT Shares set forth in Article IV.E of the Charter and (ii) shall have no rights under this Agreement to acquire REIT Shares which would otherwise be prohibited under the Charter. To the extent any attempted Redemption or exchange for REIT Shares would be in violation of this Section 8.6.E, it shall be null and void ab initio and such Limited Partner shall not acquire any rights or economic interest in the cash otherwise payable upon such redemption or the REIT Shares otherwise issuable upon such exchange.

F. Notwithstanding anything herein to the contrary (but subject to
Section 8.6.E), with respect to any Redemption or exchange for REIT Shares pursuant to this Section 8.6:

(1) All Partnership Units acquired by the General Partner pursuant thereto shall automatically, and without further action required, be converted into and deemed to be General Partner Interests comprised of the same number and class of Partnership Units.

(2) Without the consent of the General Partner, each Limited Partner may not effect a Redemption for less than 500 Partnership Units or, if the Limited Partner holds less than 500 Partnership Units, all of the Partnership Units held by such Limited Partner.

(3) Without the consent of the General Partner, each Limited Partner may not effect a Redemption during the period after the Partnership Record Date with respect to a distribution and before the record date established by the General Partner for a distribution to its stockholders of some or all of its portion of such distribution.

(4) The consummation of any Redemption or exchange for REIT Shares shall be subject to the expiration or termination of the applicable waiting period, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

(5) Each Tendering Partner shall continue to own all Partnership Units subject to any Redemption or exchange for REIT Shares, and be treated as a Limited Partner with respect to such Partnership Units for all purposes of this Agreement, until such Partnership Units are transferred to the General Partner and paid for or exchanged on the Specified Redemption Date. Until a Specified Redemption Date, the Tendering Partner shall have no rights as a stockholder of the General Partner with respect to such Tendering Partner's Partnership Units.

G. In the event that the Partnership issues additional Partnership Interests to any Additional Limited Partner pursuant to Section 4.3.C hereof, the General Partner shall make such revisions to this Section 8.6 as it determines are necessary to reflect the issuance of such additional Partnership Interests.

ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS

The fiscal year of the Partnership shall be the calendar year.

A. As soon as practicable, but in no event later than 105 days after the close of each Partnership Year, or such earlier date as they are filed with the Securities and Exchange Commission, the General Partner shall cause to be mailed to each Limited Partner as of the close of the Partnership Year, an annual report containing financial statements of the Partnership, or of the General Partner if such statements are prepared solely on a consolidated basis with the General Partner, for such Partnership Year, presented in accordance with generally accepted accounting principles, such statements to be audited by a nationally recognized firm of independent public accountants selected by the General Partner.

B. As soon as practicable, but in no event later than 45 days after the close of each calendar quarter (except the last calendar quarter of each year), or such earlier date as they are filed with the Securities and Exchange Commission, the General Partner shall cause to be mailed to each Limited Partner as of the last day of the calendar quarter, a report containing unaudited financial statements of the Partnership, or of the General Partner, if such statements are prepared solely on a consolidated basis with the General Partner, presented in accordance with the applicable law or regulation, or as the General Partner determines to be appropriate.

ARTICLE 10
TAX MATTERS

The General Partner shall arrange for the preparation and timely filing of all returns of Partnership income, gains, deductions, losses and other items required of the Partnership for federal and state income tax purposes and shall use all reasonable efforts to furnish, within 90 days of the close of each taxable year, the tax information reasonably required by Limited Partners for federal and state income tax reporting purposes.

Except as otherwise provided herein, the General Partner shall, in its sole and absolute discretion, determine whether to make any available election pursuant to the Code, including the election under Section 754 of the Code. The General Partner shall have the right to seek to revoke any such election (including without limitation, any election under Section 754 of the Code) upon the General Partner's determination in its sole and absolute discretion that such revocation is the best interests of the Partners.

A. The General Partner shall be the "tax matters partner" of the Partnership for federal income tax purposes. Pursuant to Section 6223(c) of the Code, upon receipt of notice from the IRS of the beginning of an administrative proceeding with respect to the Partnership, the tax matters partner shall furnish the IRS with the name, address and profit interest of each

B. The tax matters partner is authorized, but not required:

(1) to enter into any settlement with the IRS with respect to any administrative or judicial proceedings for the adjustment of Partnership items required to be taken into account by a Partner for income tax purposes (such administrative proceedings being referred to as a "tax audit" and such judicial proceedings being referred to as "judicial review"), and in the settlement agreement the tax matters partner may expressly state that such agreement shall bind all Partners, except that such settlement agreement shall not bind any Partner (i) who (within the time prescribed pursuant to the Code and Regulations) files a statement with the IRS providing that the tax matters partner shall not have the authority to enter into a settlement agreement on behalf of such Partner or (ii) who is a "notice partner" (as defined in Section 6231 of the Code) or a member of a "notice group" (as defined in Section 6223(b)(2) of the Code);

(2) in the event that a notice of a final administrative adjustment at the Partnership level of any item required to be taken into account by a Partner for tax purposes (a "final adjustment") is mailed to the tax matters partner, to seek judicial review of such final adjustment, including the filing of a petition for readjustment with the Tax Court or the United States Claims Court, or the filing of a complaint for refund with the District Court of the United States for the district in which the Partnership's principal place of business is located;

(3) to intervene in any action brought by any other Partner for judicial review of a final adjustment;

(4) to file a request for an administrative adjustment with the IRS at any time and, if any part of such request is not allowed by the IRS, to file an appropriate pleading (petition or complaint) for judicial review with respect to such request;

(5) to enter into an agreement with the IRS to extend the period for assessing any tax which is attributable to any item required to be taken into account by a Partner for tax purposes, or an item affected by such item; and

(6) to take any other action on behalf of the Partners of the Partnership in connection with any tax audit or judicial review proceeding to the extent permitted by applicable law or regulations.

The taking of any action and the incurring of any expense by the tax matters partner in connection with any such proceeding, except to the extent required by law, is a matter

in the sole and absolute discretion of the tax matters partner and the provisions relating to indemnification of the General Partner set forth in
Section 7.7 of this Agreement shall be fully applicable to the tax matters partner in its capacity as such.

C. The tax matters partner shall receive no compensation for its services. All third party costs and expenses incurred by the tax matters partner in performing its duties as such (including legal and accounting fees) shall be borne by the Partnership. Nothing herein shall be construed to restrict the Partnership from engaging an accounting firm to assist the tax matters partner in discharging its duties hereunder, so long as the compensation paid by the Partnership for such services is reasonable.

The Partnership shall elect to deduct expenses, if any, incurred by it in organizing the Partnership ratably over a 60-month period as provided in
Section 709 of the Code.

take such actions as the Partnership or the General Partner shall request in order to perfect or enforce the security interest created hereunder.

ARTICLE 11
TRANSFERS AND WITHDRAWALS

A. The term "transfer," when used in this Article 11 with respect to a Partnership Interest, shall be deemed to refer to a transaction by which the General Partner purports to assign its General Partner Interest to another Person or by which a Limited Partner purports to assign its Limited Partnership Interest to another Person, and includes a sale, assignment, gift (outright or in trust), pledge, encumbrance, hypothecation, mortgage, exchange or any other disposition by law or otherwise. The term "transfer" when used in this Article 11 does not include any Redemption or exchange for REIT Shares pursuant to
Section 8.6. No part of the interest of a Limited Partner shall be subject to the claims of any creditor, any spouse for alimony or support, or to legal process, and may not be voluntarily or involuntarily alienated or encumbered, except as may be specifically provided for in this Agreement.

B. No Partnership Interest shall be transferred, in whole or in part, except in accordance with the terms and conditions set forth in this Article 11. Any transfer or purported transfer of a Partnership Interest not made in accordance with this Article 11 shall be null and void.

A. The General Partner shall not withdraw from the Partnership and shall not transfer all or any portion of its interest in the Partnership
(whether by sale, statutory merger or consolidation, liquidation or otherwise) without the Consent of the Partners, which may be given or withheld by each Partner in its sole and absolute discretion, and only upon the admission of a successor General Partner pursuant to Section 12.1. Upon any transfer of a Partnership Interest in accordance with the provisions of this Section 11.2, the transferee shall become a substitute General Partner for all purposes herein, and shall be vested with the powers and rights of the transferor General Partner, and shall be liable for all obligations and responsible for all duties of the General Partner, once such transferee has executed such instruments as may be necessary to effectuate such admission and to confirm the agreement of such transferee to be bound by all the terms and provisions of this Agreement with respect to the Partnership Interest so acquired. It is a condition to any transfer otherwise permitted hereunder that the transferee assumes, by operation of law or express agreement, all of the obligations of the transferor General Partner under this Agreement with respect to such transferred Partnership Interest, and no such transfer (other than pursuant to a statutory merger or consolidation wherein all obligations and liabilities of the transferor General Partner are assumed by a successor corporation by operation of law) shall relieve the transferor General Partner of its obligations under this Agreement without the Consent of the Partners, in their reasonable discretion. In the event the General Partner withdraws from the Partnership, in

violation of this Agreement or otherwise, or otherwise dissolves or terminates, or upon the Incapacity of the General Partner, all of the remaining Partners may elect to continue the Partnership business by selecting a substitute General Partner in accordance with the Act.

C. The General Partner may merge, or otherwise combine its assets, with another entity without satisfying the requirements of Section 11.2.B(ii) hereof if: (i) immediately after such merger or other combination, substantially all of the assets directly or indirectly owned by the surviving entity, other than Partnership Units held by such General Partner, are owned directly or indirectly by the Partnership or another limited partnership or limited liability company which is the survivor of a merger, consolidation or combination of assets with the Partnership (in each case, the "Surviving Partnership"); (ii) the Limited Partners own a percentage interest of the Surviving Partnership based on the relative fair market value of the net assets of the Partnership (as determined pursuant to Section 11.2.E) and the other net assets of the Surviving Partnership (as determined pursuant to Section 11.2.E) immediately prior to the consummation of such transaction; (iii) the rights preferences and privileges of the Limited Partners in the Surviving Partnership are at least as favorable as those in effect immediately prior to the consummation of such transaction and as those applicable to any other limited partners or non-managing members of the Surviving Partnership; and (iv) such rights of the Limited Partners include the right to exchange their interests in the Surviving Partnership for at least one of: (a) the consideration available to such Limited Partners pursuant to Section 11.2.B or (b) if the ultimate controlling person of the Surviving Partnership has publicly traded common equity securities, such common equity securities, with an exchange ratio based on the relative fair market value of such securities (as determined pursuant to
Section 11.2.E) and the REIT Shares.

D. In connection with any transaction permitted by Section 11.2.B or
Section 11.2.C hereof, the General Partner shall use its commercially reasonable efforts to structure such Termination Transaction to avoid causing the Limited Partners to recognize gain for federal

income tax purposes by virtue of the occurrence of or their participation in such Termination Transaction.

E. In connection with any transaction permitted by Section 11.2.B or 11.2.C, the relative fair market values shall be reasonably determined by the General Partner as of the time of such transaction and, to the extent applicable, shall be no less favorable to the Limited Partners than the relative values reflected in the terms of such transaction.

It is a condition to any transfer otherwise permitted hereunder that the transferee assumes by operation of law or express agreement all of the obligations of the transferor Limited Partner under this Agreement with respect to such transferred Partnership Interest and no such transfer (other than pursuant to a statutory merger or consolidation wherein all obligations and liabilities of the transferor Partner are assumed by a successor corporation by operation of law) shall relieve the transferor Partner of its obligations under this Agreement without the approval of the General Partner, in its reasonable discretion. Notwithstanding the foregoing, any transferee of any transferred Partnership Interest shall be subject to any and all ownership limitations contained in the Charter and the representations in Section 3.4.D. Any transferee, whether or not admitted as a Substituted Limited Partner, shall take subject to the obligations of the transferor hereunder. Unless admitted as a Substitute Limited Partner, no transferee, whether by a voluntary transfer, by operation of law or otherwise, shall have rights hereunder, other than the rights of an Assignee as provided in Section 11.5.

B. If a Limited Partner is subject to Incapacity, the executor, administrator, trustee, committee, guardian, conservator, or receiver of such Limited Partner's estate shall have all the rights of a Limited Partner, but not more rights than those enjoyed by other Limited Partners, for the purpose of settling or managing the estate, and such power as the Incapacitated Limited Partner possessed to transfer all or any part of his or its interest in the Partnership. The Incapacity of a Limited Partner, in and of itself, shall not dissolve or terminate the Partnership.

C. The General Partner may prohibit any transfer otherwise permitted under Section 11.3 by a Limited Partner of his or her Partnership Units if, in the opinion of legal counsel to the Partnership, such transfer would require the filing of a registration statement under the Securities Act by the Partnership or would otherwise violate any federal or state securities laws or regulations applicable to the Partnership or the Partnership Unit.

D. No transfer by a Limited Partner of his or her Partnership Units
(including any Redemption or exchange for REIT Shares pursuant to Section 8.6) may be made to any person if (i) in the opinion of legal counsel for the Partnership, it would result in the Partnership being treated as an association taxable as a corporation, or (ii) such transfer is effectuated through an "established securities market" or a "secondary market (or the substantial equivalent thereof)" within the meaning of Section 7704 of the Code.

A. No Limited Partner shall have the right to substitute a transferee as a Limited Partner in his or her place (including any transferee permitted by Section 11.3). The General Partner shall, however, have the right to consent to the admission of a permitted transferee of the interest of a Limited Partner, other than a transferee in a transfer permitted by Section 11.3 hereof, as a Substituted Limited Partner, pursuant to this Section 11.4, which consent may be given or withheld by the General Partner in its sole and absolute discretion. The General Partner's failure or refusal to permit a transferee of any such interests to become a Substituted Limited Partner shall not give rise to any cause of action against the Partnership or any Partner.

B. A transferee who has been admitted as a Substituted Limited Partner in accordance with this Article 11 shall have all the rights and powers and be subject to all the restrictions and liabilities of a Limited Partner under this Agreement. The admission of any transferee as a Substituted Limited Partner shall be subject to the transferee executing and delivering to the Partnership an acceptance of all of the terms and conditions of this Agreement (including without limitation, the provisions of Section 2.4 and such other documents or instruments as may be required to effect the admission, each in form and substance satisfactory to the General Partner) and the acknowledgement by such transferee that each of the representations and warranties set forth in
Section 3.4 hereof are true and correct with respect to such transferee as of the date of the transfer of the Partnership Interest to such transferee.

C. Upon the admission of a Substituted Limited Partner, the General Partner shall amend Exhibit A to reflect the name, address, number of Partnership Units, and Percentage Interest of such Substituted Limited Partner and to eliminate or adjust, if necessary, the name, address and interest of the predecessor of such Substituted Limited Partner.

If the General Partner, in its sole and absolute discretion, does not consent to the admission of any permitted transferee under Section 11.3 as a Substituted Limited Partner, as described in Section 11.4, such transferee shall be considered an Assignee for purposes of this Agreement. An Assignee shall be entitled to all the rights of an assignee of a limited partnership interest under the Act, including the right to receive distributions from the Partnership and the share of Net Income, Net Losses, gain and loss attributable to the Partnership Units assigned to such transferee, the rights to transfer the Partnership Units provided in this Article 11, and the right of Redemption provided in Section 8.6, but shall not be deemed to be a holder of Partnership Units for any other purpose under this Agreement, and shall not be entitled to effect a Consent with respect to such Partnership Units on any matter presented to the Limited Partners for approval (such Consent remaining with the transferor Limited Partner). In the event any such transferee desires to make a further assignment of any such Partnership Units, such transferee shall be subject to all the provisions of this Article 11 to the same extent and in the same manner as any Limited Partner desiring to make an assignment of Partnership Units.

A. No Limited Partner may withdraw from the Partnership other than as a result of (i) a permitted transfer of all of such Limited Partner's Partnership Units in accordance with this Article 11 and the transferee(s) of such Units being admitted to the Partnership as a Substituted Limited Partner(s) or (ii) pursuant to the exercise of its right of Redemption of all of such Limited Partner's Partnership Units under Section 8.6.

B. Any Limited Partner who shall transfer all of such Limited Partner's Partnership Units in a transfer permitted pursuant to this Article 11 where such transferee was admitted as a Substituted Limited Partner or pursuant to the exercise of its rights of Redemption of all of such Limited Partner's Partnership Units under Section 8.6 shall cease to be a Limited Partner.

C. Transfers pursuant to this Article 11 may only be made on the first day of a fiscal quarter of the Partnership, unless the General Partner otherwise agrees.

D. If any Partnership Interest is transferred, assigned or redeemed during any quarterly segment of the Partnership's fiscal year in compliance with the provisions of this Article 11 or transferred or redeemed pursuant to Section 8.6, on any day other than the first day of a Partnership Year, then Net Income, Net Losses, each item thereof and all other items attributable to such Partnership Interest for such fiscal year shall be divided and allocated between the transferor Partner and the transferee Partner by taking into account their varying interests during the fiscal year in accordance with Section 706(d) of the Code, using the interim closing of the books method. Except as otherwise required by Section 706(d) of the Code, solely for purposes of making such allocations, each of such items for the calendar month in which the transfer, assignment or redemption occurs shall be allocated to the Person who is a Partner as of midnight on the last day of said month and none of such items for the calendar month in which a redemption occurs will be allocated to the redeeming Partner. All distributions of Available Cash with respect to which the Partnership Record Date is before the date of such transfer, assignment or redemption shall be made to the transferor Partner, and all distributions of Available Cash thereafter, in the case of a transfer or assignment other than a redemption, shall be made to the transferee Partner.

E. In addition to any other restrictions on transfer herein contained, including without limitation the provisions of this Article 11 and
Section 2.6, in no event may any transfer or assignment of a Partnership Interest by any Partner (including by way of a Redemption) be made (i) to any person or entity who lacks the legal right, power or capacity to own a Partnership Interest; (ii) in violation of applicable law; (iii) of any component portion of a Partnership Interest, such as the Capital Account, or rights to distributions, separate and apart from all other components of a Partnership Interest; (iv) if in the opinion of legal counsel to the Partnership such transfer would cause a termination of the Partnership for federal or state income tax purposes (except as a result of the Redemption or exchange for REIT Shares of all Partnership Units held by all Limited Partners or pursuant to a Termination Transaction expressly permitted under Section 11.2); (v) if in the opinion of counsel to the Partnership such transfer would cause the Partnership to cease to be classified as a partnership for federal or state

income tax purposes (except as a result of the Redemption or exchange for REIT Shares of all Partnership Units held by all Limited Partners); (vi) if such transfer would cause the Partnership to become, with respect to any employee benefit plan subject to Title I of ERISA, a "party-in-interest" (as defined in
Section 3(14) of ERISA) or a "disqualified person" (as defined in Section 4975(c) of the Code); (vii) if such transfer would, in the opinion of counsel to the Partnership, cause any portion of the assets of the Partnership to constitute assets of any employee benefit plan pursuant to Department of Labor Regulations Section 2510.2-101; (viii) if such transfer requires the registration of such Partnership Interest pursuant to any applicable federal or state securities laws; (ix) if such transfer is effectuated through an "established securities market" or a "secondary market" (or the substantial equivalent thereof) within the meaning of Section 7704 of the Code or such transfer causes the Partnership to become a "Publicly Traded Partnership," as such term is defined in Sections 469(k)(2) or 7704(b) of the Code; (x) if such transfer subjects the Partnership to be regulated under the Investment Company Act of 1940, the Investment Advisors Act of 1940 or the Employee Retirement Income Security Act of 1974, each as amended; (xi) if the transferee or assignee of such Partnership Interest is unable to make the representations set forth in
Section 3.4.D or such transfer could otherwise adversely affect the ability of the General Partner to remain qualified as a REIT; or (xii) if in the opinion of legal counsel for the Partnership such transfer would adversely affect the ability of the General Partner to continue to qualify as a REIT or subject the General Partner to any additional taxes under Section 857 or Section 4981 of the Code.

F. The General Partner shall monitor the transfers of interests in the Partnership to determine (i) if such interests are being traded on an "established securities market" or a "secondary market (or the substantial equivalent thereof)" within the meaning of Section 7704 of the Code, and (ii) whether additional transfers of interests would result in the Partnership being unable to qualify for at least one of the "safe harbors" set forth in Regulations Section 1.7704-1 (or such other guidance subsequently published by the IRS setting forth safe harbors under which interests will not be treated as "readily tradable on a secondary market (or the substantial equivalent thereof)" within the meaning of Section 7704 of the Code) (the "Safe Harbors"). The General Partner shall take all steps reasonably necessary or appropriate to prevent any trading of interests or any recognition by the Partnership of transfers made on such markets and, except as otherwise provided herein, to insure that at least one of the Safe Harbors is met.

A. Notwithstanding anything to the contrary in this Agreement but subject to Section 11.6 hereof, any or all of the Limited Partnership Interests pledged to the Company, as agent on behalf of the pledgees, pursuant to the Pledge Agreement may be transferred, without the consent of any other Partner, to any Person designated by the Company in its sole and absolute discretion in connection with the exercise by the Company of its rights and remedies under the Pledge Agreement. Any such transferee shall be admitted as a Substituted Limited Partner, subject to the provisions of Section 11.4 hereof.

B. Each of the Pledgors hereby constitutes and appoints the Company and authorized officers and attorneys-in-fact of the Company, and each of those acting singly, in

each case with full power of substitution, as its true and lawful agent and attorney-in-fact, with full power and authority in its name, place and stead to effect any transfer of Partnership Interests pledged pursuant to the Pledge Agreement referred to in Subparagraph A of this Section 11.7. The foregoing power of attorney is hereby declared to be irrevocable and a power coupled with an interest, and it shall survive and not be affected by the subsequent Incapacity of any Pledgor and shall extend to such Pledgor's heirs, successors, assigns and personal representatives. Each such Pledgor hereby waives any and all defenses which may be available to contest, negate or disaffirm the action of the Company taken in good faith under such power of attorney.

ARTICLE 12
ADMISSION OF PARTNERS

A successor to all of the General Partner's General Partner Interest pursuant to Section 11.2 hereof who is proposed to be admitted as a successor General Partner shall be admitted to the Partnership as the General Partner, effective upon such transfer. Any such transferee shall carry on the business of the Partnership without dissolution. In each case, the admission shall be subject to the successor General Partner executing and delivering to the Partnership an acceptance of all of the terms and conditions of this Agreement and such other documents or instruments as may be required to effect the admission. In the case of such admission on any day other than the first day of a Partnership Year, all items attributable to the General Partner Interest for such Partnership Year shall be allocated between the transferring General Partner and such successor as provided in Article 11 hereof.

A. After the admission to the Partnership of the initial Limited Partners on the date hereof, a Person who makes a Capital Contribution to the Partnership in accordance with this Agreement shall be admitted to the Partnership as an Additional Limited Partner only upon furnishing to the General Partner (i) evidence of acceptance in form satisfactory to the General Partner of all of the terms and conditions of this Agreement, including, without limitation, the power of attorney granted in Section 2.4 hereof and (ii) such other documents or instruments as may be required in the discretion of the General Partner in order to effect such Person's admission as an Additional Limited Partner.

B. Notwithstanding anything to the contrary in this Section 12.2, no Person shall be admitted as an Additional Limited Partner without the consent of the General Partner, which consent may be given or withheld in the General Partner's sole and absolute discretion. The admission of any Person as an Additional Limited Partner shall become effective on the date upon which the name of such Person is recorded on the books and records of the Partnership, following the receipt of the Capital Contribution in respect of such Limited Partner, the documents set forth in Paragraph A of this Section 12.2 hereof and the consent of the General Partner to such admission. If any Additional Limited Partner is admitted to the Partnership on

any day other than the first day of a Partnership Year, then Net Income, Net Losses, each item thereof and all other items allocable among Partners and Assignees for such Partnership Year shall be allocated among such Limited Partner and all other Partners and Assignees by taking into account their varying interests during the Partnership Year in accordance with Section 706(d) of the Code, using the interim closing books method. Solely for purposes of making such allocations, each of such items for the calendar month in which an admission of an Additional Limited Partner occurs shall be allocated among all the Partners and Assignees including such Additional Limited Partner. All distributions of Available Cash with respect to which the Partnership Record Date is before the date of such admission shall be made solely to Partners and Assignees other than the Additional Limited Partner (other than in its capacity as an Assignee) and except as otherwise agreed to by the Additional Limited Partners and the General Partner, and all distributions of Available Cash thereafter shall be made to all Partners and Assignees including such Additional Limited Partner.

For the admission to the Partnership of any Partner, the General Partner shall take all steps necessary and appropriate under the Act to amend the records of the Partnership and, if necessary, to prepare as soon as practical an amendment of this Agreement (including an amendment of Exhibit A) and, if required by law, shall prepare and file an amendment to the Certificate and may for this purpose exercise the power of attorney granted pursuant to
Section 2.4 hereof.

ARTICLE 13
DISSOLUTION AND LIQUIDATION

The Partnership shall not be dissolved by the admission of Substituted Limited Partners or Additional Limited Partners or by the admission of a successor General Partner in accordance with the terms of this Agreement. Upon the withdrawal of the General Partner, any successor General Partner (selected as described in Section 13.1.B below) shall continue the business of the Partnership. The Partnership shall dissolve, and its affairs shall be wound up, upon the first to occur of any of the following ("Liquidating Events"):

A. the expiration of its term as provided in Section 2.5 hereof;

B. an event of withdrawal of the General Partner, as defined in the Act, unless, within 90 days after the withdrawal, all of the remaining Partners agree in writing, in their sole and absolute discretion, to continue the business of the Partnership and to the appointment, effective as of the date of withdrawal, of a substitute General Partner;

C. subject to the provisions of Section 7.3.D(1) hereof, an election to dissolve the Partnership made by the General Partner;

D. entry of a decree of judicial dissolution of the Partnership pursuant to the provisions of the Act;

E. the sale of all or substantially all of the assets and properties of the Partnership;

F. the Incapacity of the General Partner, unless all of the remaining Partners in their sole and absolute discretion agree in writing to continue the business of the Partnership and to the appointment, effective as of a date prior to the date of such Incapacity, of a substitute General Partner; or

G. the Redemption or exchange for REIT Shares of all Partnership Units (other than those of the General Partner).

A. Upon the occurrence of a Liquidating Event, the Partnership shall continue solely for the purposes of winding up its affairs in an orderly manner, liquidating its assets, and satisfying the claims of its creditors and Partners. No Partner shall take any action that is inconsistent with, or not necessary to or appropriate for, the winding up of the Partnership's business and affairs. The General Partner (or, in the event there is no remaining General Partner, any Person elected by a Majority in Interest of the Limited Partners (the "Liquidator")) shall be responsible for overseeing the winding up and dissolution of the Partnership and shall take full account of the Partnership's liabilities and assets and the Partnership property shall be liquidated as promptly as is consistent with obtaining the fair value thereof, and the proceeds therefrom (which may, to the extent determined by the General Partner, include shares of stock of the General Partner) shall be applied and distributed in the following order:

(1) First, to the payment and discharge of all of the Partnership's debts and liabilities to creditors other than the Partners;

(2) Second, to the payment and discharge of all of the Partnership's debts and liabilities to the General Partner;

(3) Third, to the payment and discharge of all of the Partnership's debts and liabilities to the other Partners; and

(4) The balance, if any, to the General Partner and Limited Partners in accordance with their positive Capital Account balances, determined after taking into account all Capital Account adjustments for the Partnership taxable year during which the liquidation occurs (other than those made as a result of the liquidating distribution set forth in this Section 13.2.A(4)).

The General Partner shall not receive any additional compensation for any services performed pursuant to this Article 13 other than reimbursement of its expenses as provided in Section 7.4.

B. Notwithstanding the provisions of Section 13.2.A hereof which require liquidation of the assets of the Partnership, but subject to the order of priorities set forth therein, if prior to or upon dissolution of the Partnership the Liquidator determines that an immediate sale of part or all of the Partnership's assets would be impractical or would cause undue loss to the Partners, the Liquidator may, in its sole and absolute discretion, defer for a reasonable time the liquidation of any assets except those necessary to satisfy liabilities of the Partnership (including to those Partners as creditors) and/or distribute to the Partners, in lieu of cash, as tenants in common and in accordance with the provisions of Section 13.2.A hereof, undivided interests in such Partnership assets as the Liquidator deems not suitable for liquidation. Any such distributions in kind shall be made only if, in the good faith judgment of the Liquidator, such distributions in kind are in the best interest of the Partners, and shall be subject to such conditions relating to the disposition and management of such properties as the Liquidator deems reasonable and equitable and to any agreements governing the operation of such properties at such time. The Liquidator shall determine the fair market value of any property distributed in kind using such reasonable method of valuation as it may adopt.

In the event the Partnership is "liquidated" within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant to this Article 13 to the General Partner and Limited Partners who have positive Capital Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2). If any Partner has a deficit balance in his or her Capital Account (after giving effect to all contributions, distributions and allocations for the taxable years, including the year during which such liquidation occurs), such Partner shall have no obligation to make any contribution to the capital of the Partnership with respect to such deficit, and such deficit shall not be considered a debt owed to the Partnership or to any other Person for any purpose whatsoever. In the discretion of the Liquidator or the General Partner, a pro rata portion of the distributions that would otherwise be made to the General Partner and Limited Partners pursuant to this Article 13 may be:

A. distributed to a trust established for the benefit of the General Partner and Limited Partners for the purposes of liquidating Partnership assets, collecting amounts owed to the Partnership, and paying any contingent or unforeseen liabilities or obligations of the Partnership or of the General Partner arising out of or in connection with the Partnership. The assets of any such trust shall be distributed to the General Partner and Limited Partners from time to time, in the reasonable discretion of the Liquidator or the General Partner, in the same proportions and the amount distributed to such trust by the Partnership would otherwise have been distributed to the General Partner and Limited Partners pursuant to this Agreement; or

Notwithstanding any other provision of this Article 13, in the event the Partnership is liquidated within the meaning of Regulations Section 1.704- 1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership's property shall not be liquidated, the Partnership's liabilities shall not be paid or discharged, and the Partnership's affairs shall not be wound up. Instead, the Partnership shall be deemed to have distributed the Partnership property in kind to the General Partner and Limited Partners, who shall be deemed to have assumed and taken such property subject to all Partnership liabilities, all in accordance with their respective Capital Accounts. Immediately thereafter, the General Partner and Limited Partners shall be deemed to have recontributed the Partnership property in kind to the Partnership, which shall be deemed to have assumed and taken such property subject to all such liabilities.

Except as otherwise provided in this Agreement, each Limited Partner shall look solely to the assets of the Partnership for the return of his Capital Contribution and shall have no right or power to demand or receive property from the General Partner. No Limited Partner shall have priority over any other Limited Partner as to the return of his Capital Contributions, distributions or allocations.

In the event a Liquidating Event occurs or an event occurs that would, but for provisions of Section 13.1, result in a dissolution of the Partnership, the General Partner shall, within 30 days thereafter, provide written notice thereof to each of the Partners and to all other parties with whom the Partnership regularly conducts business (as determined in the discretion of the General Partner) and shall publish notice thereof in a newspaper of general circulation in each place in which the Partnership regularly conducts business (as determined in the discretion of the General Partner).

Upon the completion of the liquidation of the Partnership cash and property as provided in Section 13.2 hereof, the Partnership shall be terminated and the Certificate and all qualifications of the Partnership as a foreign limited partnership in jurisdictions other than the State of Delaware shall be cancelled and such other actions as may be necessary to terminate the Partnership shall be taken.

A reasonable time shall be allowed for the orderly winding-up of the business and affairs of the Partnership and the liquidation of its assets pursuant to Section 13.2 hereof, in order to minimize any losses otherwise attendant upon such winding-up, and the provisions of this Agreement shall remain in effect between the Partners during the period of liquidation.

Each Partner hereby waives any right to partition of the Partnership property.

ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS

A. The actions requiring consent or approval of the Partners or of the Limited Partners pursuant to this Agreement, including Section 7.3, or otherwise pursuant to applicable law, are subject to the procedures in this Article 14.

A. Meetings of the Partners may be called by the General Partner and shall be called upon the receipt by the General Partner of a written request by Limited Partners holding 25 percent or more of the Partnership Interests held by Limited Partners. The call shall state the nature of the business to be transacted. Notice of any such meeting shall be given to all Partners not less than seven days nor more than 30 days prior to the date of such meeting. Partners may vote in person or by proxy at such meeting. Whenever the vote of the Percentage Interests of the Partners, or the Consent of the Partners or Consent of the Limited Partners is permitted or required under this Agreement, such vote or Consent may be given at a meeting of Partners or may be given in accordance with the procedure prescribed in Section 14.1 hereof.

B. Any action required or permitted to be taken at a meeting of the Partners may be taken without a meeting if a written consent setting forth the action so taken is signed by the percentage as is expressly required by this Agreement for the action in question. Such consent may be in one instrument or in several instruments, and shall have the same force and effect as a vote of the Percentage Interests of the Partners (expressly required by this Agreement). Such consent shall be filed with the General Partner. An action so taken shall be deemed to have been taken at a meeting held on the effective date so certified.

C. Each Limited Partner may authorize any Person or Persons to act for him by proxy on all matters in which a Limited Partner is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Every proxy must be signed by the Limited Partner or his attorney-in-fact. No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the Limited Partner executing it.

D. To the extent the Company is entitled to exercise its rights and remedies under the Pledge Agreement, the Company is hereby authorized to act for each Pledgor with respect to such Pledgor's Partnership Interests pledged pursuant to the Pledge Agreement by proxy on all matters in which such Pledgor is now or hereafter entitled to participate under this Agreement by reason of such pledged Partnership Interests, including waiving notice of any meeting, or voting or participating at a meeting. Notwithstanding anything to the contrary in Subparagraph C of this Section 14.2, the foregoing proxy is irrevocable and coupled with an interest, shall survive and not be affected by the subsequent Incapacity of any Pledgor and shall extend to such Pledgor's heirs, successors, assigns and personal representatives and shall be valid until such time as all collateral subject to the Pledge Agreement, if any, is returned to the Pledgors pursuant to the terms of the Pledge Agreement.

E. Each meeting of Partners shall be conducted by the General Partner or such other Person as the General Partner may appoint pursuant to such rules for the conduct of the meeting as the General Partner or such other Person deems appropriate.

ARTICLE 15
GENERAL PROVISIONS

Any notice, demand, request or report required or permitted to be given or made to a Partner or Assignee under this Agreement shall be in writing and shall be deemed given or made when delivered in person or when sent by certified first class United States mail, nationally recognized overnight delivery service or facsimile transmission to the Partner or Assignee at the address set forth in Exhibit A or such other address as the Partners shall notify the General Partner in writing.

All article or section titles or captions in this Agreement are for convenience only. They shall not be deemed part of this Agreement and in no way define, limit, extend or describe the scope or intent of any provisions hereof. Except as specifically provided otherwise, references to "Articles" and "Sections" are to Articles and Sections of this Agreement.

Whenever the context may require, any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa.

The parties shall execute and deliver all documents, provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement.

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives and permitted assigns.

Other than as expressly set forth herein with respect to Indemnitees, none of the provisions of this Agreement shall be for the benefit of, or shall be enforceable by, any creditor of the Partnership.

No failure or delay by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon any breach thereof shall constitute waiver of any such breach or any other covenant, duty, agreement or condition.

This Agreement may be executed in counterparts, all of which together shall constitute one agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Agreement immediately upon affixing its signature hereto.

This Agreement shall be construed in accordance with and governed by the laws of the State of Delaware, without regard to the principles of conflicts of law.

If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby.

To the extent that any amount paid or credited to the General Partner or its officers, directors, employees or agents pursuant to Section 7.4 or
Section 7.7 would constitute gross income to the General Partner for purposes of Sections 856(c)(2) or 856(c)(3) of the Code (a "General Partner Payment") then, notwithstanding any other provision of this Agreement, the amount of such General Partner Payments for any fiscal year shall not exceed the lesser of:

(i) an amount equal to the excess, if any, of (a) 4.17% of the General Partner's total gross income (but not including the amount of any General Partner Payments) for the fiscal year which is described in subsections (A) through (H) of Section 856(c)(2) of the Code over (b) the amount of gross income (within the meaning of Section 856(c)(2) of the Code) derived by the General Partner from sources other than those described in subsections (A) through (H) of Section 856(c)(2) of the Code (but not including the amount of any General Partner Payments); or

(ii) an amount equal to the excess, if any, of (a) 25% of the General Partner's total gross income (but not including the amount of any General Partner Payments) for the fiscal year which is described in subsections (A) through (I) of Section 856(c)(3) of the Code over (b) the amount of gross income (within the meaning of
Section 856(c)(3) of the Code) derived by the General Partner from sources other than those described in subsections (A) through (I) of Section 856(c)(3) of the Code (but not including the amount of any General Partner Payments);

This Agreement contains the entire understanding and agreement among the Partners with respect to the subject matter hereof and supersedes any other prior written or oral understandings or agreements among them with respect thereto.

Nothing contained in this Agreement shall be construed as conferring upon the holders of Partnership Units any rights whatsoever as stockholders of the General Partner, including without limitation any right to receive dividends or other distributions made to stockholders of the General Partner or to vote or to consent or to receive notice as stockholders in respect of any meeting of stockholders for the election of directors of the General Partner or any other matter.

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

KILROY REALTY, L. P.

By: Kilroy Realty Corporation,
its General Partner

By:_______________________________________
John B. Kilroy, Jr.
President and Chief Executive Officer

LIMITED PARTNERS:

JOHN B. KILROY, SR.

JOHN B. KILROY, JR.

PATRICE BOUZAID
SUSAN HAHN
ANNE McCAHON
DANA PANTUSO

By:_______________________________________
John B. Kilroy, Sr.
Attorney-in-Fact

MARSHALL L. McDANIEL

A
PARTNERS, CONTRIBUTIONS AND PARTNERSHIP INTERESTS

EXHIBIT B
NOTICE OF REDEMPTION

The undersigned hereby [irrevocably] (i) exchanges ____________ Limited Partnership Units in Kilroy Realty, L.P. in accordance with the terms of the Limited Partnership Agreement of Kilroy Realty, L.P. dated as of __________, as amended, and the rights of Redemption referred to therein, (ii) surrenders such Limited Partnership Units and all right, title and interest therein, and (iii) directs that the cash (or, if applicable, REIT Shares) deliverable upon Redemption or exchange be delivered to the address specified below, and if applicable, that such REIT Shares be registered or placed in the name(s) and at the address(es) specified below.

Dated: ________________________

Name of Limited Partner:

Signature Guaranteed by:

Issue REIT Shares in the name of:

Please insert social security or identifying number:

Address (if different than above):

EXHIBIT C
CONSTRUCTIVE OWNERSHIP DEFINITION

The term "Constructively Owns" means ownership determined through the application of the constructive ownership rules of Section 318 of the Code, as modified by Section 856(d)(5) of the Code. Generally, these rules provide the following:

a. an individual is considered as owning the Ownership Interest that is owned, actually or constructively, by or for his spouse, his children, his grandchildren, and his parents;

b. an Ownership Interest that is owned, actually or constructively, by or for a partnership or estate is considered as owned proportionately by its partners or beneficiaries;

c. an Ownership Interest that is owned, actually or constructively, by or for a trust is considered as owned by its beneficiaries in proportion to the actuarial interest of such beneficiaries (provided, however, that in the case of a "grantor trust" the Ownership Interest will be considered as owned by the grantors);

d. if 10 percent or more in value of the stock in a corporation is owned, actually or constructively, by or for any person, such person shall be considered as owning the Ownership Interest that is owned, actually or constructively, by or for such corporation in that proportion which the value of the stock which such person so owns bears to the value of all the stock in such corporation;

e. an Ownership Interest that is owned, actually or constructively, by or for a partner of a partnership or a beneficiary of an estate or trust shall be considered as owned by the partnership, estate, or trust (or, in the case of a grantor trust, the grantors);

f. if 10 percent or more in value of the stock in a corporation is owned, actually or constructively, by or for any person, such corporation shall be considered as owning the Ownership Interest that is owned, actually or constructively, by or for such person;

g. if any person has an option to acquire an Ownership Interest (including an option to acquire an option or any one of a series of such options), such Ownership Interest shall be considered as owned by such person;

h. an Ownership Interest that is constructively owned by a person by reason of the application of the rules described in paragraphs (a) through (g) above shall, for purposes of applying paragraphs (a) through (g), be considered as actually owned by such person provided, however, that (i) an Ownership Interest constructively owned by an individual by reason of paragraph (a) shall not be considered as owned by him for purposes of again applying paragraph (a) in order to make another the constructive owner of such Ownership Interest, (ii) an Ownership Interest constructively owned by a partnership, estate, trust, or corporation by reason of the application of paragraphs (e) or (f) shall not be considered as owned by it for purposes of applying paragraphs (b), (c), or (d) in order to make another the constructive owner of such Ownership Interest,
(iii) if an Ownership Interest may be considered as owned by an individual under paragraphs (a) or (g), it shall be considered as owned by him under paragraph
(g), and (iv) for purposes of the above described rules, an S corporation shall be treated as a partnership and any stockholder of the S corporation shall be treated as a partner of such partnership except that this rule shall not apply for purposes of determining whether stock in the S corporation is constructively owned by any person.

i. For purposes of the above summary of the constructive ownership rules, the term "Ownership Interest" means the ownership of stock with respect to a corporation and, with respect to any other type of entity, the ownership of an interest in either its assets or net profits.

EXHIBIT D
FORM OF PARTNERSHIP UNIT CERTIFICATE

CERTIFICATE FOR PARTNERSHIP UNITS OF
KILROY REALTY, L.P.

No. ____________________ ______________________ UNITS

Kilroy Realty Corporation as the General Partner of Kilroy Realty, L.P., a Delaware limited partnership (the "Operating Partnership"), hereby certifies that ______________________________________________________ is a Limited Partner of the Operating Partnership whose Partnership Interests therein, as set forth in the Agreement of Limited Partnership of Kilroy Realty, L.P., dated as of ______________, 1997 (as it may be amended, modified or supplemented from time to time in accordance with its terms, (the "Partnership Agreement"), under which the Operating Partnership is existing and as filed in the office of the Delaware
[State Department of Assessments and Taxation] (copies of which are on file at the Operating Partnership's principal office at __________________________________________________, represent ______________ units of limited partnership interest in the Operating Partnership (the "Partnership Units").

THE PARTNERSHIP UNITS REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE PARTNERSHIP AGREEMENT (A COPY OF WHICH IS ON FILE WITH THE OPERATING PARTNERSHIP). EXCEPT AS OTHERWISE PROVIDED IN THE PARTNERSHIP AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE PARTNERSHIP UNITS REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR (B) IF THE OPERATING PARTNERSHIP HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER OF THE PARTNERSHIP UNITS REPRESENTED BY THIS CERTIFICATE THAT SUCH TRANSFER, SALE ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS IN EFFECT THEREUNDER.

DATED: _____________________________, 1997.

KILROY REALTY CORPORATION

General Partner of
Kilroy Realty, L.P.

ATTEST:

By: _____________________________ By: _____________________________

EXHIBIT E
SCHEDULE OF PARTNERS' OWNERSHIP
WITH RESPECT TO TENANTS

EXHIBIT F
SCHEDULE OF REIT SHARES
ACTUALLY OR CONSTRUCTIVELY OWNED BY LIMITED PARTNERS
OTHER THAN THOSE ACQUIRED PURSUANT TO AN EXCHANGE

EXHIBIT G
SCHEDULE OF CERTAIN PROPERTY OF THE PARTNERSHIP

2260 E. Imperial Highway, El Segundo, California

EXHIBIT 10.2

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT, dated as of __________, 1997, is entered into by and among Kilroy Realty Corporation, a Maryland corporation (the "Company" or the "REIT"), Kilroy Realty, L.P., a Delaware limited partnership (the "Operating Partnership"), and the unit holders whose names are set forth on the signature pages hereto (each, a "Unit Holder" and collectively, the "Unit Holders").

WHEREAS, in connection with the initial public offering of shares of the Company's common stock, par value $.01 per share (the "Common Stock"), the Company, the Operating Partnership and the Unit Holders as the parties which hold ownership interests in certain office properties and other assets (the "Properties") will engage in certain formation transactions whereby the Unit Holders will contribute to the Operating Partnership their interests in the Properties;

WHEREAS, the Unit Holders will receive units of limited partnership interests ("OP Units") in the Operating Partnership in exchange for their respective interests in the Properties and the Company will be the general partner of the Operating Partnership;

WHEREAS, pursuant to the Partnership Agreement (as defined below), OP Units owned by the Unit Holders will be redeemable for cash or exchangeable for shares of Common Stock of the Company upon the terms and subject to the conditions contained therein; and

WHEREAS, the Unit Holders are willing to contribute their respective interests in the Properties in consideration of receiving the registration rights provided for in this Agreement;

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS

"Affiliate" of any Person means any other Person directly or indirectly controlling or controlled by or under common control with such Person. For the purposes of this definition, "control" when used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person,

whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

"Agreement" means this Registration Rights Agreement, as it may be amended, supplemented or restated from time to time.

"Articles of Incorporation" means the Articles of Amendment and Restatement of the Company as filed with the Secretary of State of the State of Maryland on _____________, 1997, as the same may be amended, modified or restated from time to time.

"Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in New York, New York or Los Angeles, California are authorized by law to close.

"Code" means the Internal Revenue Code of 1986, as amended from time to time or any successor statute thereto, as interpreted by the applicable regulations thereunder.

"Commission" means the Securities and Exchange Commission.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Exchangeable OP Units" means OP Units which may be redeemable for cash or exchangeable for Common Stock pursuant to Section 8.6 of the Partnership Agreement (without regard to any limitations on the exercise of such exchange right as a result of the Ownership Limit Provisions, as defined below).

"General Partner" means the Company or its successors as general partner of the Operating Partnership.

"Holder" means any Unit Holder who is the record or beneficial owner of any Registrable Security or any assignee or transferee of such Registrable Security (including assignments or transfers of Registrable Securities to such assignees or transferees as a result of the foreclosure on any loans secured by such Registrable Securities) unless such Registrable Security is acquired in a public distribution pursuant to a registration statement under the Securities Act or pursuant to transactions exempt from registration under the Securities Act, in each such case where securities sold in such transaction may be resold without subsequent registration under the Securities Act.

"Incapacitated" shall have the meaning set forth in the Partnership Agreement.

"Initial Public Offering" means the offering of the Company's Common Stock pursuant to the Form S-11 Registration Statement (No. 333-15553) filed by the Company with the Commission under the Securities Act.

"Ownership Limit Provisions" mean the various provisions of the Articles of Incorporation set forth in Article IV thereof restricting the ownership of Common Stock by certain Persons to specified percentages of the outstanding Common Stock.

"Partnership Agreement" means the amended and restated agreement of limited partnership of the Operating Partnership dated as of _________, 1997, as the same may be amended, modified or restated from time to time.

"Person" means an individual or a corporation, partnership, limited liability company, association, trust, or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

"Piggy-Back Registration" means a Piggy-Back Registration as defined in Section 2.2 hereof.

"REIT" means a real estate investment trust under Section 856 through
Section 860 of the Code.

"Registrable Securities" means shares of Common Stock of the Company at any time owned, either of record or beneficially, by any Holder and no matter how acquired (including, without limitation, shares of Common Stock issuable upon exchange of Exchangeable OP Units) until (i) a registration statement covering such securities has been declared effective by the Commission and such shares have been sold or transferred pursuant to such effective registration statement, (ii) such shares are sold under circumstances in which all of the applicable conditions of Rule 144 under the Securities Act (or any similar provisions then in force) under the Securities Act are met or under which such shares may be sold pursuant to Rule 144(k) under the Securities Act or (iii) such shares have been otherwise transferred in a transaction that would constitute a sale thereof under the Securities Act, the Company has delivered a new certificate or other evidence of ownership for such shares not bearing the Securities Act restricted stock legend and such shares may be resold without subsequent registration under the Securities Act.

"Securities Act" means the Securities Act of 1933, as amended.

"Selling Holder" means a Holder who is selling Registrable Securities pursuant to a registration statement under the Securities Act pursuant to this Agreement.

"Underwriter" means a securities dealer who purchases any Registrable Securities as principal and not as part of such dealer's market-making activities.

Statement to be declared effective on or as soon as practicable after such second anniversary, and to keep such Shelf Registration Statement continuously effective for a period ending when all shares of Common Stock covered by the Shelf Registration Statement have been issued and resold.

(a) The Company will as expeditiously as possible prepare and file with the Commission a registration statement on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the sale of the Registrable Securities to be registered thereunder in accordance with the intended method of distribution thereof, and use its best efforts to cause such filed registration statement to become and remain effective for a period of not less than 180 days or in the case of a Shelf Registration Statement as provided in Section 2.1 hereof.

(b) The Company will, if requested, prior to filing a registration statement or prospectus or any amendment or supplement thereto, furnish to each Selling Holder

and each Underwriter, if any, of the Registrable Securities covered by such registration statement or prospectus copies of such registration statement or prospectus or any amendment or supplement thereto as proposed to be filed, and thereafter furnish to such Selling Holder and Underwriter, if any, such number of conformed copies of such registration statement, each amendment and supplement thereto (in each case including all exhibits thereto and documents incorporated by reference therein), the prospectus included in such registration statement (including each preliminary prospectus) and such other documents as such Selling Holder or Underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Selling Holder.

(c) After the filing of the registration statement, the Company will promptly notify each Selling Holder of Registrable Securities covered by such registration statement of any stop order issued or threatened by the Commission and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered.

(e) The Company will immediately notify each Selling Holder of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the occurrence of an event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances then existing, not misleading and promptly make available to each Selling Holder a reasonable number of copies of any such supplement or amendment.

(f) The Company will enter into customary agreements (including an underwriting agreement, if any, in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities.

(g) The Company will make available for inspection by any Selling Holder of such Registrable Securities, any Underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other professional retained by any such Selling Holder or Underwriter (collectively, the "Inspectors"), all financial and other

records, pertinent corporate documents and properties of the Company (collectively, the "Records") as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company's officers, directors and employees to supply all information reasonably requested by any Inspectors in connection with such registration statement. Records which the Company determines, in good faith, to be confidential and which it notifies the Inspectors are confidential shall not be disclosed by the Inspectors unless (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in such registration statement or (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction. Each Selling Holder of such Registrable Securities agrees that information obtained by it as a result of such inspections shall be deemed confidential and shall not be used by it as the basis for any market transactions in the securities of the company or its Affiliates or otherwise disclosed by it unless and until such is made generally available to the public. Each Selling Holder of such Registrable Securities further agrees that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of the Records deemed confidential.

(h) The Company will furnish to each Selling Holder and to each Underwriter, if any, a signed counterpart, addressed to such Selling Holder or Underwriter, of (i) an opinion or opinions of counsel to the Company and (ii) a comfort letter or comfort letters from the Company's independent public accountants (to the extent permitted by the standards of the American Institute of Certified Public Accountants), each in customary form and covering such matters of the type customarily covered by opinions or comfort letters, as the case may be, as the Holders of a majority of the Registrable Securities included in such offering or the managing Underwriter or Underwriters therefor reasonably requests.

(i) The Company will otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make available to its securityholders, as soon as reasonably practicable, an earnings statement covering a period of twelve (12) months, beginning within three (3) months after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 of the Commission promulgated thereunder (or any successor rule or regulation hereafter adopted by the Commission).

(j) The Company will use its best efforts to cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed.

The Company may require, as a condition precedent to the obligations of the Company under the Agreement, each Selling Holder of Registrable Securities to promptly furnish in writing to the Company such information regarding such selling Holder, the Registrable Securities held by it and the intended method of distribution of the Registrable Securities as the Company may from time to time reasonably request and such other information as may be legally required in connection with such registration.

Each Selling Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2.4(e) hereof, such Selling Holder will forthwith discontinue disposition of Registrable Securities pursuant to the registration statement and prospectus covering such Registrable Securities until such Selling Holder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 2.4(e) hereof, and, if so directed by the Company, such Selling Holder will deliver to the Company all copies, other than permanent file copies then in such Selling Holder's possession, of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice. Each Selling Holder of Registrable Securities agrees that it will immediately notify the Company at any time when a prospectus relating to the registration of such Registrable securities is required to be delivered under the Securities Act of the happening of an event as a result of which information previously furnished by such Selling Holder to the Company in writing for inclusion in such prospectus contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. In the event the Company shall give such notice, the Company shall extend the period during which such registration statement shall be maintained effective (including the period referred to in Section 2.4(a) hereof) by the number of days during the period from and including the date of the giving of notice pursuant to Section 2.4(e) hereof to the date when the Company shall make available to the Selling Holders of Registrable Securities covered by such registration statement a prospectus supplemented or amended to conform with the requirements of Section 2.4(e) hereof.

which indemnity may be sought pursuant to Sections 2.6 or 2.7 hereof, such person (an "Indemnified Party") shall promptly notify the person against whom such indemnity may be sought (an "Indemnifying Party") in writing and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Party, and shall assume the payment of all fees and expenses. In any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the Indemnified Party and the Indemnifying Party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the Indemnifying Party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for all such Indemnified Parties, and that all such fees and expenses shall be reimbursed as they are incurred. In the case of any such separate firm for the Indemnified Parties, such firm shall be designated in writing by (i) in the case of Persons indemnified pursuant to
Section 2.6 hereof, by the Selling Holders which owned a majority of the Registrable Securities sold under the applicable registration statement and (ii) in the case of Persons indemnified pursuant to Section 2.7 hereof, the Company. The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent, or if there be a final judgment for the plaintiff, the Indemnifying Party shall indemnify and hold harmless such Indemnified Parties from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Party shall have requested an Indemnifying Party to reimburse the Indemnified Party for fees and expenses of counsel as contemplated by the third sentence of this paragraph, the Indemnifying Party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than thirty (30) Business Days after receipt by such Indemnifying Party of the aforesaid request and (ii) such Indemnifying Party shall not have reimbursed the Indemnified Party in accordance with such request prior to the date of such settlement. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending or threatened proceeding in which any Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability arising out of such proceeding.

appropriate to reflect the relative benefits received by the Company and the Selling Holders on the one hand and the Underwriters on the other from the offering of the securities, or if such allocation is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits but also the relative fault of the Company and the Selling Holders on the one hand and of the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations and (ii) as between the Company on the one hand and each Selling Holder on the other, in such proportion as is appropriate to reflect the relative fault of the Company and of each Selling Holder in connection with such statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Selling Holders on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total proceeds from the offering
(net of underwriting discounts and commissions but before deducting expenses)
received by the Company and the Selling Holders bear to the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover page of the prospectus. The relative fault of the Company and the Selling Holders on the one hand and of the Underwriters on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and the Selling Holders or by the Underwriters. The relative fault of the Company on the one hand and of each Selling Holder on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or such Selling Holder, and the Company's and the Selling Holder's relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

The Company and the Selling Holders agree that it would not be just and equitable if contribution pursuant to this Section 2.9 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages or liabilities referred to in Sections 2.6 and 2.7 hereof shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 2.9, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, and no Selling Holder shall be required to contribute any amount in excess of the amount by which the total price at which the securities of such Selling Holder were offered to the public exceeds the amount of any damages which such Selling Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Selling Holder's obligations to contribute pursuant to this Section 2.9 are several in the

proportion that the proceeds of the offering received by such Selling Holder bears to the total proceeds of the offering received by all the Selling Holders and not joint.

(b) If the Company determines in its good faith judgment that the filing of the Shelf Registration Statement under Section 2.1 hereof or the use of any related prospectus would require the disclosure of non-public material information that the Company has a bona fide business purpose for preserving as confidential or the disclosure of which would impede the Company's ability to consummate a material transaction, and that the Company is not otherwise required by applicable securities laws or regulations to disclose, upon written notice of such determination by the Company, the rights of the Holders to offer, sell or distribute any Registrable Securities pursuant to the Shelf Registration Statement or to require the Company to take action with respect to the registration or sale of any Registrable Securities pursuant to the Shelf Registration Statement shall be suspended until the earlier of (i) the date upon which the Company notifies the Holders in writing that suspension of such rights for the grounds set forth

in this Section 2.11(b) is no longer necessary and (ii) 180 days. The Company agrees to give such notice as promptly as practicable following the date that such suspension of rights is no longer necessary.

(c) If all reports required to be filed by the Company pursuant to the Exchange Act have not been filed by the required date without regard to any extension, or if the consummation of any business combination by the Company has occurred or is probable for purposes of Rule 3-05 or Article 11 of Regulation S-X under the Act, upon written notice thereof by the Company to the Holders, the rights of the Holders to offer, sell or distribute any Registrable Securities pursuant to the Shelf Registration Statement or to require the Company to take action with respect to the registration or sale of any Registrable Securities pursuant to the Shelf Registration Statement shall be suspended until the date on which the Company has filed such reports or obtained and filed the financial information required by Rule 3-05 or Article 11 of Regulation S-X to be included or incorporated by reference, as applicable, in the Shelf Registration Statement, and the Company shall notify the Holders as promptly as practicable when such suspension is no longer required.

ARTICLE III
MISCELLANEOUS

(1) if to any Unit Holder, initially c/o Kilroy Realty Corporation, 2250 East Imperial Highway, El Segundo, California 90245 (Attention: President and Chief Executive Officer), or to such other address and to such other Persons as the Unit Holders may hereafter specify in writing; and

(2) if to the Company, initially at 2250 East Imperial Highway, El Segundo, California 90245 (Attention: President and Chief Executive Officer), or to such other address as the Company may hereafter specify in writing.

All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; when received if deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery.

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

KILROY REALTY CORPORATION,
a Maryland corporation

By: _____________________________________
John B. Kilroy, Jr.
President and Chief Executive Officer

KILROY REALTY, L.P., a Delaware limited
partnership

By: Kilroy Realty Corporation,
its general partner

By: _____________________________________
John B. Kilroy, Jr.
President and Chief Executive Officer

KILROY INDUSTRIES,

a California corporation

By: _____________________________________
John B. Kilroy, Jr.
President and Chief Executive Officer

PATRICE BOUZAID
SUSAN HAHN
ANNE McCAHON
DANA PANTUSO

By: _____________________________________
John B. Kilroy, Sr.
Attorney-in-Fact

MARSHALL McDANIEL

EXHIBIT 10.3

OMNIBUS OPTION AGREEMENT

BY AND AMONG

KILROY REALTY, L.P.

AND

THE GRANTORS NAMED HEREIN

Dated as of October 30, 1996

This Omnibus Option Agreement (this "Agreement") is executed as of the ___ day of October, 1996 by Kilroy Realty, L.P., a Delaware limited partnership (the "Operating Partnership" or "Optionee"), and the grantors whose names are set forth on the signature pages hereto (each, a "Grantor" and, collectively, the "Grantors"). Capitalized terms used but not defined herein shall have the meaning given to each such term in the Memorandum (as defined below).

WHEREAS, the Grantor owns a direct or indirect interest in one or more of the office and industrial properties and related real and personal property, contracts and other rights (collectively, the "Properties") affiliated with the business of Kilroy Industries, a California corporation ("KI") and set forth on Exhibit A hereto;

WHEREAS, the Grantor holds such interest (an "Interest") directly (any entity owning a Property directly is referred to herein as an "Entity"), as a beneficiary of a trust, in the form of general or limited partnership interests in one or more partnerships or in the form of membership interests in a limited liability company;

WHEREAS, Optionee desires to acquire from each Grantor, and each Grantor desires to grant to Optionee, an option (the "Option") to require Grantor's contribution, transfer, assignment and conveyance of the Interests (the "Contribution"), including the Option Property (as defined below), to Optionee in exchange (the "Exchange") for limited partnership interests ("OP Units") in the Operating Partnership on the terms and conditions set forth herein;

WHEREAS, the Contribution may be effected, with respect to certain partnerships and limited liability companies at the discretion of the general partner(s) or members thereof, as applicable, either by (i) the direct transfer of all or a portion of the Grantor's direct or indirect interests in an Entity to the Operating Partnership in exchange for OP Units, followed in certain cases by the Entity's distribution of its Properties to the Operating Partnership in redemption of such transferred interests, or (ii) the direct transfer of a Property by an Entity to the Operating Partnership in exchange for OP Units followed, in the case of certain partnerships, limited liability companies or trusts, by the Entity's distribution, either directly or through a constituent entity that owns an interest in an Entity, of such OP Units to the holders of direct or indirect interests in that Entity, as more fully described in the private placement memorandum dated as of October 29, 1996 delivered to Grantors and attached hereto as Exhibit D (the "Memorandum"), and the Representation Letter, Consent and Power of Attorney of even date herewith delivered by or on behalf of such Grantor to the Operating Partnership (each such letter is hereinafter referred to as such Grantor's "Consent Letter"); and

WHEREAS, the parties acknowledge that the Operating Partnership is considering the acquisition of each Grantor's Interests in connection with the formation of a real estate investment trust, Kilroy Realty Corporation, a Maryland corporation (the

"Company"), which will be the sole general partner of the Operating Partnership and a proposed initial public offering (the "IPO") of the Company's shares of common stock (the "REIT Shares");

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and conditions set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Optionee and each of the Grantors agree as follows:

which in the aggregate have an initial value of at least $5.0 million (each OP Unit to be deemed to have an initial value equal to the public offering price of one REIT Share in the IPO), and (iii) the approval for listing, subject to notice of issuance, of the REIT Shares on a national securities exchange or the approval for designation, subject to notice of issuance, of the REIT Shares as national market system securities on an interdealer quotation system by the National Association of Securities Dealers, Inc.

A. Such Grantor will not, and will not enter into any agreement to, transfer, sell or otherwise dispose of any of such Grantor's Interests to any other person or entity, subject to the rights of certain of the Grantors to sell the Option Property following consummation of the IPO as provided on Exhibit C.

B. Such Grantor will, or (if not an Entity) will cause any Entity in which it has a direct or indirect interest, to conduct its business in the ordinary course, and operate and maintain the Properties, in each case, consistent with past practice.

C. Such Grantor will allow, and will cause an Entity over which it has control to allow, the Operating Partnership and its agents and representatives to inspect the Properties and the records, books and accounts of the Entities at all reasonable times.

D. Such Grantor will promptly notify the Operating Partnership if any of its representations or warranties in the Consent Letter is untrue or if it becomes aware of any transaction or occurrence which would make any of such representations or warranties untrue.

E. Such Grantor will or (if not an Entity) will cause any Entity over which it has control, to maintain in effect insurance of such types, in such amounts and on such terms as are currently in effect with respect to the Properties and keep in force and renew such permits and licenses as are necessary to own and operate the Properties.

F. Such Grantor shall not modify or amend any partnership agreement, limited liability company operating agreement or trust agreement of any partnership, limited liability company or trust in which it has an Interest without the prior consent of the Operating Partnership other than as necessary to permit or facilitate the Contribution and the transactions related thereto contemplated thereby.

G. Such Grantor shall not, without the Operating Partnership's prior consent and other than in connection with the arrangement of any interim financing with respect to the Properties, permit any Entity to:

1. enter into any material transaction or contract;

2. amend, modify or terminate any material agreement to which the Entity is a party; or

3. materially alter the manner of keeping the Entity's books, accounts or records or the accounting practices therein reflected.

H. Such Grantor will, or (if not an Entity) will cause any Entity over which it has control to, maintain the Properties in at least as good condition and repair as prevails on the date hereof except for reasonable wear and tear.

J. Such Grantor shall use its good faith best efforts to obtain any approvals, waivers or other consents of governmental authorities or other third parties required to effect the transactions contemplated by this Agreement.

defined in Exhibit C)). The consummation of the Contributions made on the closing of the IPO shall be deemed to occur concurrently with the consummation of the IPO. Any Closing of the Option with respect to the Option Property exercised after the consummation of the IPO shall be held at such place and time as determined by the Operating Partnership in its sole discretion and, with respect to all other Properties, shall be held at such place and time as the closing of the IPO is held.

A. At the Closing, each Grantor shall, directly or through its attorney-in-fact, execute, acknowledge and deliver to the Operating Partnership the legal documents and other items necessary to carry out the intention of this Agreement, including, but not limited to, deeds and bills of sale and assignments of such Grantor's Interests, including bills of sale and assignments (as applicable) for such Grantor's interest in leases (including, without limitation, ground leases and space leases), contracts, licenses, permits, personalty agreements and proprietary rights related to the ownership, development, use and operation of the Properties, as well as assignments of the interests in the agreements listed on Exhibit B, in a form reasonably satisfactory to the Operating Partnership.

B. In addition to the documents mentioned above and herein, each Grantor shall deliver or cause to be delivered any other documents reasonably requested by Operating Partnership or reasonably necessary to assign, transfer and convey such Grantor's Interests and effectuate the transactions contemplated hereby.

C. At the Closing, each Grantor shall execute, acknowledge and deliver and shall cause each entity in which the Grantor has a direct or indirect interest to execute, acknowledge and deliver an affidavit from each of such Grantor or entity as appropriate, stating under penalty of perjury the United States Taxpayer Identification Number of the Grantor or entity, as appropriate, and that Grantor or entity, as appropriate, is not a foreign person pursuant to Section 1445(b)(2) of the Internal Revenue Code of 1986, as amended, and a comparable affidavit satisfying state and any other withholding requirements.

(a) Optionee may, in its sole discretion, elect not to complete the acquisition of all or any portion of the Interests of any Grantor in the event that the Grantor breaches any provision of this Agreement (any such Grantor, a "Non-Complying Grantor"). The election of Optionee to not acquire all or any portion of the Interests of a particular Non-Complying Grantor shall not affect the obligations of any other Grantor hereunder, including any other Non- Complying Grantor.

(b) If any Grantor defaults with respect to its obligations under this Agreement, Optionee shall be entitled to exercise against each such Grantor any and all remedies provided at law or in equity, including but not limited to, the right to specific performance. No default by any Grantor hereunder shall in any way limit or affect the obligations of any other Grantor hereunder.

To the Operating Partnership:

Kilroy Realty, L.P.
c/o Kilroy Industries
2250 East Imperial Highway
El Segundo, California 90245

To Grantor:

c/o Kilroy Industries, John B. Kilroy, Sr.
2250 East Imperial Highway
El Segundo, California 90245

IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement, or caused the Agreement to be duly executed on its behalf, as of the date first written above.

OPTIONEE:                              KILROY REALTY, L.P.



                                       By:  Kilroy Realty Corporation
                                       Its: General Partner



                                       By: /s/ John B. Kilroy, Jr.
                                           -------------------------------
                                           Name:  John B. Kilroy, Jr.
                                           Title: President

GRANTOR SIGNATURE PAGE

The undersigned, desiring to become one of the within named Grantors to this Omnibus Option Agreement by and among Optionee and the Grantors named therein, dated as of October __, 1996, hereby becomes a party to such Agreement. The undersigned agrees that this signature page may be attached to any counterpart of this Agreement.

              Property/Agreement                 Party
              ------------------                 -----
(Other than as indicated below, each entry
below includes real estate (but only a
ground leasehold estate with respect to
land held subject to a ground lease),
substantially all personal property owned
by a Grantor related thereto, and leases)

Kilroy Airport Center at El Segundo              Kilroy Airport Associates
2240, 2250, 2260 E. Imperial Hwy.
El Segundo, California

Kilroy Airport Center Long Beach                 Kilroy Long Beach
3750, 3760, 3780 Kilroy Airport Way              Associates*
Long Beach, California                           Kilroy Long Beach Partner
(and ground lease)                               II**


Phases III and IV                               Kilroy Long Beach
Kilroy Airport Center Long Beach                Associates
Long Beach, California
(all ground leases and development
 agreement)

185 S. Douglas Street                            Kilroy-Freehold Industrial
El Segundo, California                           Development Organization
(Bldgs 213/215)

2031 E. Mariposa Avenue                          Kilroy Industries
El Segundo, California
(Bldg 51)

3320/3332 E. La Palma Avenue                     John B. Kilroy, Sr.*
Anaheim, California                              Kilroy Building 73
(Bldg 73)                                        Partnership**

2260 E. El Segundo Blvd.                         Kilroy-Freehold Industrial
El Segundo, California                           Development Organization
(Bldg 214)

2265 E. El Segundo Blvd.                         Kilroy-Freehold Industrial
El Segundo, California                           Development Organization
(Bldg 218)

1000 E. Ball Road                                Kilroy 1979 Trust(1)/Kilroy
Anaheim, California                              Industries
(Bldg 235)

              Property/Agreement                 Party
              ------------------                 -----
(Other than as indicated below, each entry
below includes real estate (but only a
ground leasehold estate with respect to
land held subject to a ground lease),
substantially all personal property owned
by a Grantor related thereto, and leases)

1230/1240 South Lewis Street                     Kilroy 1979 Trust(1)/Kilroy
Anaheim, California                              Industries
(Bldg 236)

12681/12691 Pala Drive                           Kilroy Industries*
Garden Grove, California                         Kilroy Garden Grove
(Bldg 241)                                       Associates**

2270 E. El Segundo Blvd.                         Kilroy-Freehold Industrial
El Segundo, California                           Development Organization
(Bldg 212)

5115 North 27th Avenue                           Kilroy A-102 Trust(2)
Phoenix, Arizona

SeaTac Office Center                             Sea/Tac Properties, Ltd.
17900, 17930, 18000 Pacific Highway              Kilroy Industries***
Seattle, Washington
(and all ground and air leases)

Administrative Assets                            Kilroy Industries/Kilroy
                                                 Technologies Company,
                                                 LLC

Thousand Oaks Exclusive Negotiation              Kilroy Industries
Agreement

* holds legal title to property as agent on behalf of beneficial owner ** beneficial owner of 100% interest in property *** Party to ground and air leases only
(1) Beneficiaries are John B. Kilroy, Sr., John B. Kilroy, Jr., Patrice Bouzaid, Susan Hahn, Anne McCahon and Dana Pantuso
(2) Beneficiaries are John B. Kilroy, Jr., Patrice Bouzaid, Susan Hahn, Anne McCahon and Dana Pantuso.

Agreement                                        Party
- ---------                                        -----
Development Management Agreement                 Kilroy Technologies
 (Riverside)                                     Company, LLC

Agreement to Provide Real Estate Services        Kilroy Technologies
 (Northrop Grumman - Pico Rivera)                Company, LLC

Exclusive Broker Employment Agreement            The Kilroy
 (Northrop Grumman)                              Companies,
                                                 LLC

Lease between Kilroy Industries, as              Kilroy Industries
 landlord, and United Artists Theatre
 Circuit, Inc., as tenant

Option to Enter Into Ground Lease                Kilroy Long Beach
 between City of Long Beach and Kilroy           Associates
 Long Beach Associates, as amended

Any contract rights held by any Grantor
 with respect to properties to be acquired
 by the Operating Partnership or any
 affiliate thereof

EXHIBIT C

I. TERMS OF OPTION FOR SEATAC OFFICE CENTER

a. If the Operating Partnership exercises the SeaTac Option prior to or concurrently with the closing of the IPO, the Grantor(s) of the SeaTac Option shall be entitled to receive such number of OP Units in exchange for its Interests as described in the Memorandum.

b. In the event that the Operating Partnership exercises the SeaTac Option following the consummation of the IPO, the purchase price for such Option Property, payable in OP Units, will be equal to the greater of (i) the Net Operating Income (as defined below) for each of such office properties, capitalized at a 9.5% rate, plus capitalized expenditures and expenses, excluding carrying costs, incurred from the date the underwriting agreement is executed in connection with the IPO (the "Offering Date") through the date of exercise of the SeaTac Option (the "Exercise Date"), less the amount of outstanding debt on such

Property as of the Exercise Date or (ii) $20 million, plus capitalized expenditures and expenses, excluding carrying costs, incurred from the Offering Date through the Exercise Date, net to holder less the amount of outstanding debt on such Property as of the Exercise Date (but in no event less than zero). Upon exercise of the Option, the Operating Partnership will be responsible for all indebtedness related to the Option Property. For purposes of this paragraph, "Net Operating Income" is defined as net operating income for the 12-month period ending the Offering Date, adjusted for (A) the incremental increase in net operating income attributable to contractual rental increases for the 12- month period immediately following the Offering Date, (B) the incremental increase in net operating income attributable to rental revenue from leases commencing during the 12-month period ending the Offering Date for the 12- month period immediately following the Offering Date, (C) the elimination of rental revenue reflected in rental revenue for the 12-month period ending the Offering Date from (1) leases which expired during such 12-month period, and (2) leases which expire during the 12-month period immediately following the Offering Date for that portion of such 12-month period that such leases are no longer in effect and (D) the effect of adjusting straight-line rental income and expenses included in net operating income from an accrual basis under GAAP to a cash basis. The number of OP Units to be issued in respect of the foregoing will be in an amount determined by reference to the average trading value of the REIT Shares for the ten trading days immediately preceding the Exercise Date. In exercising the Option following the consummation of the IPO, the Operating Partnership will use reasonable efforts to cooperate with the Grantors to minimize any taxes payable in connection with such exercise or the assumption or repayment of debt relating to the SeaTac Property.

offer, provided that the economic terms may be up to 5% below those described in the Notice; provided, however, that if such sale is at a price in excess of the Option Price and at the time the Notice is given the Estoppel Certificates have not been delivered, the Operating Partnership shall have the right to acquire at the Option Price the Owner's rights and related monetary obligations under such sales agreement. In the event the Grantor(s) of the SeaTac Property (i) have not entered into a letter of intent for the sale of the SeaTac Property within 180 days following the Notice Date, or (ii) have not completed the sale of the SeaTac Property within 270 days following the Notice Date, then the Operating Partnership's SeaTac Option will be reinstated. The SeaTac Option shall be subject to any arrangements entered into by the Grantor(s) in connection with any financing, recapitalization or leasing of the SeaTac Property including, without limitation, any rights of the current lender(s) with respect to the SeaTac Property with respect to a transfer pursuant to the SeaTac Option.

EXHIBIT D

[Private Placement Memorandum]

EXHIBIT 10.4

THIS SUPPLEMENTAL REPRESENTATIONS, WARRANTIES AND INDEMNITY AGREEMENT (the "Agreement") is made and entered into as of __________ __, 1997 by Kilroy Industries, a California corporation, John B. Kilroy, Sr., and John B. Kilroy, Jr. (all of the aforementioned individuals and entity being referred to herein individually as an "Indemnitor" and collectively as the "Indemnitors"), and Kilroy Realty, L.P., a Delaware limited partnership (the "Operating Partnership"), and Kilroy Realty Corporation, a Maryland corporation (the "REIT").

WHEREAS, the Indemnitors and certain other persons own interests in one or more of the Properties (each as hereinafter defined) either directly or indirectly through a trust or in the form of general or limited partnership interests in one or more partnerships or in the form of a membership interest in a limited liability company (each such interest is referred to herein as an "Interest");

WHEREAS, the Indemnitors and certain other persons will transfer to the Operating Partnership all of their Interests in the Properties (a) upon the exercise by the Operating Partnership, on or before consummation of an initial public offering of shares of common stock of the REIT (the "IPO"), of options granted to it by such persons pursuant to the Omnibus Option Agreement dated as of November 3, 1996 (the "Omnibus Agreement") by and among the Operating Partnership and the grantors named therein and (b) upon the exercise by the Operating Partnership, following the IPO, of options granted to it by such persons pursuant to two separate Option Agreements, each dated as of ______________, 1997 (each individually, an "Option Properties Agreement", and collectively, the "Option Properties Agreements") by and among the Operating Partnership and the grantors named therein (all individuals and entities other than the Operating Partnership which executed the Omnibus Agreement or the Option Properties Agreements are referred to herein collectively as the "Grantors" and individually as a "Grantor");

WHEREAS, certain of the Grantors executed a Representation Letter, Consent and Power of Attorney (collectively, the "Consents and Power of Attorney") pursuant to which they consented to the transfer of their Interests to the Operating Partnership under the Omnibus Agreement, made certain representations and warranties and appointed John B. Kilroy, Sr., John B. Kilroy, Jr. and Jeffrey C. Hawken or any of them as their attorney-in-fact (each, an "Attorney- in-Fact") to effect such transfers; all of the foregoing transfers and actions contemplated in connection with the IPO under the Consents and Power of Attorney, the Omnibus Agreement and the Option Properties Agreements are collectively referred to herein as the "Transactions"; and

WHEREAS, to induce the REIT to consummate the IPO and to induce the Operating Partnership to exercise the options granted to it pursuant to the Omnibus Agreement and the Option Properties Agreements, each Indemnitor has agreed to make the representations and warranties contained in this Agreement for the benefit of the REIT and the Operating Partnership.

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereby agree as follows:

of such action or is (as the case may be) a party or subject or by which such Grantor or any of its properties or other assets was at the time of such action or is (as the case may be) bound, (iii) conflict with or violate any provision of any law, statute, rule or regulation or any judgment, order, writ, injunction, decree, rule or regulation of any court or federal, state or other governmental agency, authority or regulatory body to which such Grantor or any of its properties or other assets was at the time of such action or is (as the case may be) subject or (iv) result in the creation of any Lien upon the Properties or such Grantor's Interest.

(a) Liens, or deposits made to secure the release of such Liens, securing taxes, the payment of which is not delinquent or the payment of which is actively being contested in good faith by appropriate proceedings diligently pursued;

(b) Zoning laws and ordinances generally applicable to the districts in which the Real Properties are located which are not violated by the existing structures or present uses thereof;

(c) Liens imposed by laws, such as carriers', warehousemen's and mechanics' liens, and other similar liens arising in the ordinary course of business which secure payment of obligations not more than 60 days past due or which are being contested in good faith by appropriate proceedings diligently pursued;

(d) non-exclusive easements for public utilities, minor encroachments, rights of access or other non-monetary matters that do not have a material adverse effect upon, or materially interfere with the use of, the Real Properties; and

(e) any exceptions contained in the title insurance policies with respect to the Real Properties obtained in connection with the IPO and acceptable to the representatives of the underwriters involved with the IPO.

(b) Each Grantor has been and will be solvent at all times prior to and immediately following the transfer of its Interests to the Operating Partnership in connection with the Transactions.

be binding in accordance with its terms following the consummation of the Transactions and is freely assignable to the Operating Partnership.

tribunal or other federal, state or other governmental, agency, authority or regulatory body (other than generally applicable laws, rules and regulations) that would have a material adverse effect on the condition (financial or otherwise), earnings, business, affairs or business prospects of any Real Property, the Kilroy Group's Business or, following the consummation of the Transactions, the REIT or the Operating Partnership or on the Transactions. Except as disclosed in the Registration Statement, there is no pending or, to the knowledge of the Indemnitors, threatened litigation, moratorium, condemnation or eminent domain proceedings, zoning change, or other similar proceeding or action, or private purchase in lieu of such a proceeding or action, that is likely to in any manner affect the size of, use of, improvements on, construction on, access to or availability of utilities or other necessary services to, any Real Property, except such proceedings or actions that would not, singly or in the aggregate, have a material adverse effect on the condition (financial or otherwise), earnings, assets, business, affairs or business prospects of or with respect to such Real Property, the Kilroy Group's Business or, following the consummation of the Transactions, the REIT or the Operating Partnership or on the Transactions.

(b) All claims, suits or proceedings asserted or instituted by ACD2, a California corporation, or its affiliates or by Hughes Aircraft Company or Hughes Electronic Corporation's Space & Communications Company or its affiliates, in each case against any member of the Kilroy Group or its affiliates either have been settled with prejudice or dismissed pursuant to a final judgment with prejudice, the time for appeal therefrom having expired.

be filed after the Closing Date will be true, correct and complete when filed by or on behalf of such Grantor.

(b) There is no action, suit or proceeding pending against, or with respect to, any Grantor or Property in respect of any tax (other than tax abatement proceedings) nor is any claim for additional tax asserted by any taxing authority. No Grantor has given or been requested to give waivers or extensions (or is or would be subject to a waiver or extension given by any other person) of any statute of limitations relating to the payment of taxes for which such Grantor may be liable.

(d) There is no existing tax sharing agreement to which any Grantor is a party that may or will require that any payment be made by Grantors or any of their affiliates on or after the date hereof.

(e) No amounts due and owing with respect to any Real Property in connection with utilities, insurance, assessments or other charges customarily prorated in real estate transactions have been outstanding.

(f) The Transactions will not result in any tax liability to the REIT or the Operating Partnership, other than customary documentary real estate transfer taxes with respect to Real Properties located in California in an amount not to exceed [$1.10 per $1,000] in value of real property.

and as would otherwise customarily be carried by owners or operators of projects similar to the Real Properties in the markets in which such Real Properties are located. Each insurance policy with respect to a Real Property currently in place is, and each insurance policy with respect to a Real Property which will be in place upon consummation of the Transactions will be on such date, in full force and effect and all premiums due and payable thereunder have been or will be (as the case may be) fully paid when due. None of the Indemnitors has received from any insurance company notice of any material defects or deficiencies affecting the insurability of any Real Property or any notices of cancellation or intent to cancel any such insurance.

(a) no Hazardous Substances (as defined below) are present in the Environment (as defined below) at any Real Property in amounts or concentrations that would have a material adverse effect on the condition (financial or otherwise), earnings, assets, business, affairs or business prospects of any Real Property, the Kilroy Group's Business or, following the consummation of the Transactions, the REIT or the Operating Partnership or on the Transactions;

(b) no Grantor has caused or allowed any discharging or disposal of any Hazardous Substance or pollutant into the Environment at any Real Property in violation of any Environmental Law (as defined below) applicable to such Real Property in an amount or concentration that would have a material adverse effect on the condition (financial or otherwise), earnings, assets, business, affairs, or business prospects of any Real Property, the Kilroy Group's Business or, following the consummation of the Transactions, the REIT or the Operating Partnership or on the Transactions;

(c) no Grantor has received any notice of a claim under or pursuant to any Environmental Law applicable to a Real Property pertaining to Hazardous Substances on any Real Property or pertaining to other property at which Hazardous Substances generated at any Real Property have come to be located, which claim would have a material adverse effect on the condition (financial or otherwise), earnings, assets, business, affairs, or business prospects of any Real Property, the Kilroy Group's Business or, following the consummation of the Transactions, the REIT or the Operating Partnership or on the Transactions;

(d) no Grantor has received any notice from any Governmental Authority (as defined below) claiming any violation of any Environmental Law at any Real Property that is uncured or unremediated as of the date hereof, which violation would have a material adverse effect on the condition (financial or otherwise), earnings, assets, business, affairs, or business prospects of any Real Property, the Kilroy Group's Business or, following the consummation of the Transactions, the REIT or the Operating Partnership or on the Transactions;

(e) no Real Property (A) is included in the National Priorities List issued pursuant to CERCLA (as defined below) by the United States Environmental Protection Agency (the "EPA") or in the Comprehensive Environmental Response, Compensation and Liability Information System database maintained by the EPA or (B) is included in any similar list of potentially contaminated sites pursuant to any other applicable Environmental Law, and no Grantor has received any written notice from the EPA or any other Governmental Authority proposing the inclusion of any Real Property on such list;

(f) all reports of environmental surveys, audits, investigations and assessments relating to the Real Properties have been disclosed to the Operating Partnership or the REIT; and

(g) except as would not have a material adverse effect on the condition (financial or otherwise), earnings, assets, business, affairs, or business prospects of any Real Property, the Kilroy Group's Business or, following the consummation of the Transactions, the REIT or the Operating Partnership or on the Transactions, all permits and licenses required under any Environmental Law with respect to the Real Properties have been obtained and the Real Properties are in compliance with the terms and conditions of such permits and licenses.

As used in this Section 2.22, "Hazardous Substance" shall mean asbestos containing materials, polychlorinated biphenyls or any hazardous substance, hazardous material, hazardous waste, toxic substance, toxic material, toxic waste, oil, petroleum, or petroleum-derived substance or waste, listed or regulated under the Comprehensive Environmental Response, Compensation and Liability Act, as amended (42 U.S.C. (S)(S) 9601 et seq.) ("CERCLA"), the Resource Conservation and Recovery Act, as amended (42 U.S.C. (S)(S) 6901, et seq.) ("RCRA"), or any other Environmental Law affecting the Real Properties; "Environment" shall mean any ambient air, surface water, ground water, land surface, or subsurface strata located at, on, or under the Real Properties; "Environmental Law" shall mean CERCLA, RCRA, the Clean Air Act, as amended (42 U.S.C. (S)(S) 7401 et seq.), or the Clean Water Act, as amended (33 U.S.C. (S)(S) 1251 et seq.), together with all laws, rules, regulations, statutes, ordinances and orders promulgated thereunder and all other federal, state and local laws, relating to the protection of the environment or the safety and health of persons from exposure to any actual or potential release, removal, discharge or emission of Hazardous Substances; "Governmental Authority" shall mean any federal, state or local governmental office, agency or authority having the duty or authority to promulgate, implement or enforce any Environmental Law.

and, therefore, no Grantor is subject to the provisions of the Code relating to the withholding of sales proceeds to foreign persons.

(b) The Grantors have the right and authority to use the "Kilroy" name, and, to the knowledge of the Indemnitors, the right and authority to use each Proprietary Right being transferred to the REIT or the Operating Partnership in connection with the Transactions necessary, in connection with the operation of the Properties and the Kilroy Group's Business in the manner in which it is currently used. The Grantors have the right and authority to license such right and authority with respect to the "Kilroy" name to the REIT and the Operating Partnership and, to the knowledge of the Indemnitors, the Grantors have the right and authority to convey such right and authority with respect to such Proprietary Rights to the REIT and the Operating Partnership, in each case in connection with the Transactions. The current use of the "Kilroy" name, and, to the knowledge of the Indemnitors, each such Proprietary Right, does not, and such use did not, conflict with, infringe upon or violate any copyright, trade secret, trademark or registration of any other person.

(c) To the knowledge of the Indemnitors, there are no outstanding or threatened disputes or disagreements with respect to any Proprietary Right being transferred to the Operating Partnership in connection with the Transactions, the "Kilroy" name or any license, contract, agreement or other commitment, written or oral, relating to the same.

Agreements or in any other document or instrument furnished or to be furnished by or on behalf of the Grantors pursuant thereto or as contemplated thereby (i) contains or will contain any untrue statement of a material fact or (ii) omits or will omit to state a material fact necessary to make statements contained herein or therein not misleading.

counsel selected by it. The REIT shall be entitled to rely upon the advice of legal counsel, independent accountants, and other experts selected by the REIT in its sole discretion.

that Indemnitor and that Claim only and no other Claim (other than other Claims satisfying the conditions of this proviso) shall be stayed, as necessary, to preserve such Covered Party's rights against such Indemnitor under this Agreement. The amounts recovered under an insurance policy or from any Grantor with respect to any Claim shall be credited against the Indemnitors' liability with respect to such Claim.

If to any Indemnitor, to:         c/o Kilroy Industries
                                  2250 East Imperial Highway
                                  El Segundo, California  90245
                                  Attn: ___________________
                                  Fax:  (___) ___-____

With a copy to:                   ________________________
                                  ________________________
                                  ________________________
                                  ________________________

If to the REIT or the
Operating Partnership to:         2250 East Imperial Highway
                                  El Segundo, California  90245
                                  Attn: ____________________
                                  Fax:  (___) ___-____

With a copy to:                   Edward Sonnenschein, Jr., Esq.
                                  Latham & Watkins
                                  633 West Fifth Street
                                  Los Angeles, California  90071
                                  Fax:  (213) 891-8763

or to such other address in the United States of America as the addressee may indicate by written notice to the other party in conformance with this Section 7.1.

Each notice, demand, request or communication which shall be given or made in the manner described above shall be deemed sufficiently given or made for all purposes at such time as it is delivered to the addressee (with the delivery receipt, the

affidavit of messenger or (with respect to a telex) the answer back being deemed conclusive but not exclusive evidence of such delivery) or at such time as delivery is refused by the addressee upon presentation.

parties to this Agreement shall not be bound by any terms, conditions, statements, warranties or representations, oral or written, not contained or referred to herein or therein. No change or modification of this Agreement shall be valid unless the same is in writing and signed by all of the parties hereto.

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed and delivered on its behalf as of the date first above written.

KILROY REALTY, L.P.

By: Kilroy Realty Corporation,
its General Partner

By: _______________________________
Name:
Title:

KILROY REALTY CORPORATION

By: _______________________________
Name:
Title:

INDEMNITORS:

KILROY INDUSTRIES

By: _______________________________
Name:
Title:

SCHEDULE 1

1. All obligations to fund tenant improvements and leasing commissions pursuant to leases signed during the period commencing on October 1, 1996 and ending on December 20, 1996.

2. Any compensation payable to an officer or employee of the REIT or any of its subsidiaries for his or her services in connection with the IPO, including, without limitation, a $200,000 bonus payable to Richard E. Moran Jr. if the IPO is consummated on or before June 30, 1997.

3. All liabilities in connection with the termination of employees by any member of the Kilroy Group.

4. Other than as set forth in the September 30, 1996 pro forma condensed consolidated balance sheet of the REIT included in the Registration Statement, all liabilities in connection with actions taken by the Kilroy Group to effect the Transactions and the IPO.

5. All liabilities in connection with development projects of the Kilroy Group other than the Properties (including Kilroy Airport Center Long Beach Phases III and IV).

6. All liabilities in connection with the construction of a freeway on-ramp at the Kilroy Airport Center in El Segundo Property.

7. All mechanics' or materialmens' liens outstanding with respect to the Properties.

8. All taxes other than real property taxes that are not by their terms past due.

EXHIBIT A

[L&W to provide - include Kilroy name]

EXHIBIT B

[L&W to provide]

EXHIBIT C

[L&W to provide]

EXHIBIT D

[See Attached]

EXHIBIT 10.5

PLEDGE AGREEMENT, dated ___________, 1997, between Kilroy Industries, a California corporation, John B. Kilroy, Sr. and John B. Kilroy, Jr. (each of the foregoing individuals and entity is referred to herein individually as a "Pledgor" and collectively as the "Pledgors"), and Kilroy Realty Corporation, a Maryland corporation (the "REIT"), for itself and as agent for Kilroy Realty, L.P., a Delaware limited partnership (the "Operating Partnership") and each other person who becomes a Covered Party (as defined in the Representations Agreement defined below) and agrees to such agency (in both such capacities, the "Pledgee").

WHEREAS, the Pledgors are limited partners of the Operating Partnership, pursuant to the Amended and Restated Agreement of Limited Partnership of Kilroy Realty, L.P. dated the date hereof among the REIT, as sole general partner, the Pledgors, as limited partners, and the other limited partners named therein (as such agreement may be amended, modified or supplemented from time to time in accordance with its terms, the "Operating Partnership Agreement"), and such limited partnership interests are evidenced by certificates representing units of limited partnership interest in the Operating Partnership (the "Units");

WHEREAS, the Pledgors, the REIT and the Operating Partnership are parties to that certain Supplemental Representations, Warranties and Indemnity Agreement dated the date hereof (as such agreement may be amended, modified or supplemented from time to time in accordance with its terms, the "Representations Agreement"); capitalized terms used herein but not otherwise defined herein shall have the meanings assigned to such terms in the Representations Agreement;

WHEREAS, the Pledgors agreed to indemnify the REIT and the Operating Partnership for certain losses as set forth in Section 4 of the Representations Agreement (the "Secured Obligations"); and

NOW, THEREFORE, the parties agree as follows:

Pledgee, for its own benefit and for the benefit of the Operating Partnership and the other Covered Parties, and grants to the Pledgee, for its own benefit and for the benefit of the Operating Partnership and the other Covered Parties, a security interest in the following property (collectively, the "Collateral"):

(b) all rights of each Pledgor under the Operating Partnership Agreement attributable to its ownership of the Pledged Units, including, without limitation, all rights of such Pledgor in, to and under that portion of its capital account and distributions represented by, or to which such Pledgor is entitled as a result of its ownership of, the Pledged Units;

(c) any additional partnership interests in the Operating Partnership ("Partnership Interests") and/or obligations of the Operating Partnership which may at any time hereafter be acquired by any Pledgor in connection with the Pledged Units and the certificates or other instruments or documents evidencing same;

(d) any additional partnership interests, shares of stock, obligations and/or other property and the certificates or other instruments or documents evidencing the same which may at any time hereafter be delivered by the Pledgors to the Pledgee to be held pursuant to this Agreement;

(e) all distributions and moneys paid or distributed in respect of or in exchange for any or all of the foregoing;

(f) all rights of Pledgor in and to all distributions declared in respect of any or all of the foregoing;

(g) all books and records relating to the foregoing; and

(h) all proceeds and profits of any or all of the foregoing.

extent set forth therein to perform all of their duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by the Pledgee of any of its rights hereunder shall not release any Pledgor from any of its duties or obligations under the agreements (including, without limitation, the Operating Partnership Agreement) included in the Collateral, except to the extent that such duties and obligations may have been terminated by reason of a sale, transfer or other disposition of the Collateral pursuant hereto, and (c) the Pledgee shall have no obligation or liability under the agreements (including, without limitation, the Operating Partnership Agreement) included in the Collateral by reason of this Agreement, nor shall the Pledgee be obligated to perform any of the obligations or duties of any Pledgor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

With respect to each Pledgor which is an entity, the address of its chief executive office and principal place of business, and the location of its books and records relating to the Collateral, is set forth below its signature hereto. With respect to each Pledgor which is an individual, the addresses of its principal and only places of residence/business are set forth below its signature hereto. No Pledgor will change said address or location, or merge or consolidate with any person or change its name, without at least 15 days' prior written notice to the Pledgee, and with respect to any such change in address or name or merger or consolidation, each Pledgor shall execute and deliver to the Pledgee such documents and take such actions as the Pledgee reasonably deems necessary to perfect and protect the Pledgee's security interests in and to the Collateral.

(c) Such Pledgor will not create, incur, assume or permit to exist any security interest in the Collateral other than the security interest created hereby and other than, with respect to the Collateral delivered by John B. Kilroy, Jr., Robin Kilroy's interests in distributions in respect of such Collateral which are in all respects subject and subordinate to the interests of the Pledgee hereunder as provided in the Consent, or sell, transfer, assign, pledge or grant a security interest in the Collateral to any person other than the Pledgee.

(e) The Pledged Units constitute 50% of the Partnership Interests of the Operating Partnership owned by such Pledgor.

(f) The Collateral consisting of Partnership Interests are fully paid and are not subject to any options to purchase or similar rights of any kind of any person.

(g) Such Pledgor, if an entity, is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority to own its properties and to transact the business in which it is engaged.

(h) Such Pledgor has the requisite power and authority and, if an individual, full legal right and capacity, to execute and deliver, and to perform its obligations under, this Agreement, and has taken all necessary action to authorize the execution, delivery and performance of this Agreement. Such Pledgor, if an individual living in a community property state, has obtained all consents, approvals or authorizations required under applicable laws relating to the transfer of community property to execute, deliver and perform its obligations under this Agreement; a true, correct and complete copy of all such consents, approvals or authorizations is attached as a Schedule to the Representations Agreement.

(i) This Agreement constitutes the legal, valid and binding obligation of such Pledgor, enforceable in accordance with its terms.

(j) The execution, delivery and performance of this Agreement will not violate (as applicable) any law or regulation, or any order or decree of any court or governmental instrumentality, or any provision of the charter or by- laws of, or any securities issued by, such Pledgor, and will not conflict with, or result in the breach of, or constitute a default under, any indenture, mortgage, deed of trust, agreement or other instrument to which such Pledgor is a party or by which it is bound, and will not result in the creation or imposition of any lien, charge or encumbrance upon any of the property of such Pledgor pursuant to the provisions of any of the foregoing.

(k) No consent of any other person (including, without limitation, as applicable, stockholders and creditors of such Pledgor) and no consent, license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental instrumentality is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement, except for the filing of any financing statements required hereunder.

(l) The pledge of the Collateral pursuant to this Agreement creates a valid and perfected first priority security interest in such Collateral, subject to any filings or actions required pursuant to the California Uniform Commercial Code or otherwise.

(m) It will defend the Pledgee's security interest in the Collateral against the claims and demands of all persons whomsoever.

(n) It will take any and all actions necessary to maintain such Pledgor's status as a limited partner of the Operating Partnership and the limited liability represented by the Pledged Units.

(o) Such Pledgor will not enter into or assume any other agreement containing a negative pledge with respect to the Collateral.

(a) Subject to Section 6 of the Representations Agreement, on or prior to the date on which the Survival Period terminates, a Covered Party may give notice (a "Claim Notice") to one or more of the Pledgors of any Claim it may have against the Pledgor(s), or any claim against the Covered Party which it reasonably believes may result in a Claim against the Pledgor(s) under Section 4 of the Representations Agreement, specifying in reasonable detail the nature and dollar amount of any such Claim. A Pledgor shall be deemed to have accepted a Claim if it does not give a Response Notice (as hereinafter defined) with respect thereto within 30 days following receipt of the Claim Notice. In the event that any Pledgor objects to any Claim and provides a written response (a "Response Notice") to such Covered Party within 30 days following receipt of the Claim Notice, which Response Notice describes in reasonable detail such Pledgor's objection to the Claim (whether as to the facts giving rise thereto, the amount thereof, or otherwise) and, if applicable, providing a recalculation of the amount thereof, such Covered Party and such Pledgor shall meet within ten days of the Covered Party's receipt of the Response Notice to discuss and negotiate in good faith the Claim and such Pledgor's objection thereto. In the event that such meeting is not held or, if held, no resolution or compromise is reached within 30 days of such meeting, then at the election of either such Covered Party or such Pledgor the dispute regarding the Claim shall be submitted to and determined by the U.S. District Court for the Southern District of California or, if such court does not have

jurisdiction over such dispute, such dispute shall be submitted to and determined by the Circuit Court of Los Angeles County, California. A Claim is successful and is deemed to be a Secured Obligation on the earliest to occur of:
(i) the date on which the relevant Pledgor(s) accepts such Claim pursuant to the second sentence of this paragraph (a) or otherwise; (ii) on the date the relevant Pledgor(s) and Covered Party agree on the amount of such Claim; or
(iii) 30 days after a final adjudication of the relevant Pledgor's or Pledgors' liability with respect to such Claim (which shall mean that all applicable appeals of any decision have been made or the time periods for filing such appeals have lapsed) in accordance with the procedures set forth above in this paragraph (a).

(b) The value of Collateral (the "Value") shall be determined as follows: (i) with respect to Collateral consisting of the Pledged Units or other Partnership Interests, an amount equal to the fair market value of the number of shares of the REIT's common stock for which such Collateral is exchangeable; and
(ii) for all other Collateral, the fair market value of such Collateral as determined by the Independent Directors of the Pledgee. For purposes of clause
(i) of this Section 6(b), "fair market value" of a share of common stock of the REIT shall have the meaning assigned to such term in the Operating Partnership Agreement.

(a) Until Collateral may be applied to satisfy a Secured Obligation hereunder (such Collateral to consist only of Collateral delivered by a Pledgee liable for such Secured Obligation), each Pledgor shall be entitled to exercise, as it shall think fit, but in a manner in the judgment of the Pledgee not inconsistent with the terms hereof, the voting power with respect to any such Collateral, and for that purpose the Pledgee shall (if such Collateral shall be registered in the name of the Pledgee or its nominee) execute or cause to be executed from time to time, at the expense of such Pledgor, such proxies or other instruments in favor of such Pledgor or its nominee, in such form and for such purposes as shall be reasonably required by such Pledgor and, if such Pledgor is an entity, shall be specified in a written request therefor of its President or a Vice-President, to enable it to exercise such voting power with respect to such Collateral.

(b) Until the Independent Directors of the Pledgee reasonably determine that the outstanding Claims asserted by the Covered Parties in one or more Claim Notices may equal or exceed the value of the Collateral then available to satisfy such Claims, each Pledgor shall be entitled to receive and retain for its own account any and all regular cash distributions (but not distributions in the form of Partnership Interests or other securities or liquidating distributions) and interest at any time and from time to time paid upon any of such Collateral.

(c) Notwithstanding anything contained in this Agreement to the contrary, except with the prior consent of the Pledgee, until such time as this Agreement is terminated, no Pledgor shall have the right to exercise any of its redemption rights under Section 8.6 of the Operating Partnership Agreement.

(b) All payments, distributions or other property or assets which are received by any Pledgor contrary to the provisions of paragraph (a) of this
Section 9 shall be received and held in trust for the benefit of the Pledgee, shall be segregated from other funds of such Pledgor and shall be forthwith paid over to the Pledgee.

time and from time to time be applied (in whole or in part) by the Pledgee, at its option, to the payment of the Secured Obligations to which such Collateral is subject (in such order as the Pledgee shall in its sole discretion determine).

(a) At such time that a Claim becomes a Secured Obligation, the Pledgee, without obligation to resort to other security, shall have the right at any time and from time to time to cause the Operating Partnership to redeem, sell, resell, assign and deliver, in its discretion, all or any part of Collateral with a Value equal to the amount of the Secured Obligation (such Collateral to consist of Collateral delivered by a Pledgor which is liable for such Secured Obligation), in one or more parcels at the same or different times, and all right, title and interest, claim and demand therein and right of redemption thereof, at any public or private sale, for cash, upon credit or for future delivery, and in connection therewith the Pledgee may grant options. Each such purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of any Pledgor, and each Pledgor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal which such Pledgor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. If any part of the Collateral is sold by the Pledgee upon credit or for future delivery, the Pledgee shall not be liable for the failure of the purchaser to purchase or pay for the same and, in the event of any such failure, the Pledgee may resell the Collateral. In no event shall a Pledgor be credited with any part of the proceeds of sale of any Collateral until cash payment thereof has actually been received by the Pledgee.

(b) No demand, advertisement or notice, all of which are hereby expressly waived, shall be required in connection with (i) any redemption by the Operating Partnership of any Collateral in accordance with the Operating Partnership Agreement or (ii) any sale or other disposition of any part of the Collateral which threatens to decline speedily in value or which is of a type customarily sold on a recognized market. Except as set forth in the preceding sentence, the Pledgee shall give the Pledgors at least ten days' prior notice of the time and place of any public sale and of the time after which any private sale or other disposition is to be made, which notice the Pledgors agree is reasonable, all other demands, advertisements and notices being hereby waived. The Pledgee shall not be obligated to make any sale of Collateral if it shall determine not to do so, regardless of the fact that notice of sale may have been given. The Pledgee may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. Upon each private sale of Collateral of a type customarily sold in a recognized market and upon each public sale, the REIT, the Operating Partnership or any other Covered Party may purchase all or any of the Collateral being sold, free from any equity or right of redemption, which is hereby waived and released, and may make payment therefor by release or discharge of the Secured Obligations in lieu of cash payment, and may, upon compliance with the terms of sale, hold, retain and dispose of such Collateral without further accountability therefor. In the case of all sales of Collateral, public or private, the

Pledgee may deduct from the proceeds of sale all costs and expenses of every kind for sale or delivery, including brokers' and attorneys' fees, and the Pledgee shall apply any balance of the proceeds of sale to the payment of the Secured Obligations. Recourse against the Pledgors is limited to the rights of the Pledgors in the Collateral and the Pledgors shall not be liable for any deficiency in the proceeds of sale of the Collateral to the payment of the Secured Obligations. If any proceeds of sale remain after payment in full of such costs and expenses and all of the Secured Obligations, they shall be held by the Pledgee as additional Collateral hereunder, subject to any duty of the Pledgee imposed by law to the holder of any subordinate security interest in the Collateral known to the Pledgee.

(c) For purposes of this Section 11, an agreement to sell all or any part of the Collateral shall be treated as a sale thereof and the Pledgee shall be free to carry out such sale pursuant to such agreement, and no Pledgor shall be entitled to the return of any of the same subject thereto, notwithstanding that after the Pledgee shall have entered into such an agreement, all Secured Obligations may have been paid and performed in full.

(d) Each Pledgor recognizes that the Pledgee may be unable to effect a public sale of all or a part of the Collateral by reason of certain prohibitions contained in the Securities Act of 1933, as amended, as now or hereafter in effect, or in applicable Blue Sky or other state securities laws, as now or hereafter in effect, but may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such Collateral for their own account, for investment and not with a view to the distribution or resale thereof. Each Pledgor agrees that private sales so made may be at prices and other terms less favorable to the seller than if such Collateral were sold at public sales, and that the Pledgee has no obligation to delay sale of any such Collateral for the period of time necessary to permit the issuer of such Collateral, even if such issuer would agree, to register such Collateral for public sale under such applicable securities laws. Each Pledgor agrees that private sales made under the foregoing circumstances shall be deemed to have been made in a commercially reasonable manner.

(e) The remedies provided herein in favor of the Pledgee shall not be deemed exclusive, but shall be cumulative, and shall be in addition to all other remedies in favor of the Pledgee existing at law or in equity.

(f) The Pledgee shall not have any duty to exercise any of the rights, privileges, options or powers or to sell or otherwise realize upon any of the Collateral, as herein authorized, and the Pledgee shall not be responsible for any failure to do so or delay in so doing.

ascertain the occurrence and to give reasonable notice to the Pledgors of any events applicable to any Collateral which are registered and held in the name of the Pledgee or its nominee, (ii) the Pledgee gives the Pledgors reasonable notice of the occurrence of any events, of which the Pledgee has received actual knowledge, as to any securities which are in bearer form or are not registered and held in the name of the Pledgee or its nominee (the Pledgors agreeing to give the Pledgee reasonable notice of the occurrence of any events applicable to any securities in the possession of the Pledgee of which the Pledgors have received knowledge), and (iii) (a) the Pledgee endeavors to take such action with respect to any of the events as the Pledgors may reasonably and specifically request in writing in sufficient time for such action to be evaluated and taken or (b) if the Pledgee determines that the action requested might adversely affect the value of the Collateral, the collection of the Secured Obligations, or otherwise prejudice the interests of the Pledgee, the Pledgee gives reasonable notice to the Pledgors that any such requested action will not be taken and if the Pledgee makes such determination or if any Pledgor fails to make such timely request, the Pledgee takes such other action as it deems advisable in the circumstances. Except as hereinabove specifically set forth, the Pledgee shall have no further obligation to ascertain the occurrence of, or to notify the Pledgors with respect to, any events and shall not be deemed to assume any such further obligation as a result of the establishment by the Pledgee of any internal procedures with respect to any securities in its possession. Except for any claims, causes of action or demands arising out of the Pledgee's failure to perform its agreements set forth in this Section, the Pledgors release the Pledgee from any claims, causes of action and demands at any time arising out of or with respect to this Agreement, the Collateral and/or any actions taken or omitted to be taken by the Pledgee with respect thereto, and the Pledgors hereby agree to hold the Pledgee harmless from and with respect to any and all such claims, causes of action and demands.

waiver thereof or preclude any other or further exercise thereof or the exercise of any other option, power, right or remedy.

(a) Any legal action or proceeding with respect to this Agreement may be brought in the courts of the State of California or of the United States of America located in California, and, by execution and delivery of this Agreement, each Pledgor hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. Each Pledgor hereby irrevocably waives, in connection with any such action or proceeding, (i) trial by jury, (ii) any objection, including, without limitation, any objection to the laying of venue or based on the grounds of forum non conveniens, which it may now or hereafter have to the bringing of any such action or proceeding in such respective jurisdictions and (iii) the right to interpose any setoff, counterclaim or cross-claim.

(b) Each Pledgor irrevocably consents to the service of process of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by certified mail, postage prepaid, to such Pledgor at its address determined pursuant to Section 18 hereof.

(c) Nothing herein shall affect the right of the Pledgee to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Pledgor in any other jurisdiction.

IN WITNESS WHEREOF, the Pledgors have duly executed this Agreement, and the Pledgee has caused this Agreement to be duly executed by its officers duly authorized, as of the day and year first above written.

PLEDGORS:                              KILROY INDUSTRIES



                                       By:________________________________
                                          Name:
                                          Title:

                                       Address:
                                       2250 East Imperial Highway
                                       El Segundo, California  90245
                                       Attn:______________________________
                                       Tel:  (    ) ____-_______
                                       Fax:  (   ) ____-_______
                                       Telex:  (    ) ____-_______

Address (residence):

Address (business):

[Kilroy Realty Corporation]
2250 East Imperial Highway
El Segundo, California 90245
Tel: ( ) ____-_______
Fax: ( ) ____-_______
Telex: ( ) ____-_______

Address (residence):

PLEDGEE:                               KILROY REALTY CORPORATION


                                       By:________________________________
                                          Name:
                                          Title:

                                       Address:
                                       2250 East Imperial Highway
                                       El Segundo, California  90245
                                       Attn:______________________________
                                       Tel:  (    ) ____-_______
                                       Fax:  (   ) ____-_______
                                       Telex:  (    ) ____-_______

                                                                Percentage
        Name of         Certificate     Number   Percentage     of Pledgors
        Pledgor           Number       of Units  of Equity      Total Units
        -------         -----------    --------  ---------      -----------
Kilroy Industries                                                   50%
John B. Kilroy,                                                     50%
 Sr.
John B. Kilroy,                                                     50%
 Jr.

EXHIBIT 10.6

THE 1997 STOCK OPTION AND INCENTIVE PLAN

OF KILROY REALTY CORPORATION

KILROY REALTY, L.P.

AND KILROY SERVICES, INC.

TABLE OF CONTENTS

                                                                                      Page
                                                                                      ----

ARTICLE I

                                 DEFINITIONS.........................................    1
         1.1   General...............................................................    1
               -------
         1.2   Award Limit...........................................................    1
               -----------
         1.3   Beneficiary...........................................................    1
               -----------
         1.4   Board.................................................................    2
               -----
         1.5   Capital Stock.........................................................    2
               -------------
         1.6   Change in Control.....................................................    2
               -----------------
         1.7   Code..................................................................    2
               ----
         1.8   Committee.............................................................    2
               ---------
         1.9   Common Stock..........................................................    2
               ------------
         1.10  Company...............................................................    2
               -------
         1.11  Company Employee......................................................    2
               ----------------
         1.12  Company Subsidiary....................................................    3
               ------------------
         1.13  Corporate Transaction.................................................    3
               ---------------------
         1.14  Development Services Contract.........................................    3
               -----------------------------
         1.15  Director..............................................................    3
               --------
         1.16  Employee..............................................................    3
               --------
         1.17  Exchange Act..........................................................    3
               ------------
         1.18  Fair Market Value.....................................................    3
               -----------------
         1.19  General Partner Interest..............................................    4
               ------------------------
         1.20  Grantee...............................................................    4
               -------
         1.21  Incentive Stock Option................................................    4
               ----------------------
         1.22  Independent Director..................................................    4
               --------------------
         1.23  Non-Employee Director.................................................    4
               ---------------------
         1.24  Non-Qualified Stock Option............................................    4
               --------------------------
         1.25  Option................................................................    4
               ------
         1.26  Optionee..............................................................    5
               --------
         1.27  Partnership...........................................................    5
               -----------
         1.28  Partnership Agreement.................................................    5
               ---------------------
         1.29  Partnership Employee..................................................    5
               --------------------
         1.30  Partnership Optionee Purchased Shares.................................    5
               -------------------------------------
         1.31  Partnership Purchase Price............................................    5
               --------------------------
         1.32  Partnership Purchased Shares..........................................    5
               ----------------------------
         1.33  Partnership Subsidiary................................................    5
               ----------------------
         1.34  Plan..................................................................    5
               ----
         1.35  QDRO..................................................................    5
               ----
         1.36  Restricted Stock......................................................    5
               ----------------
         1.37  Restricted Stockholder................................................    5
               ----------------------
         1.38  Rule 16b-3............................................................    5
               ----------
         1.39  Services Company......................................................    6
               ----------------

                                                                                      Page
                                                                                      ----

         1.40  Services Company Board................................................    6
               ----------------------
         1.41  Services Company Employee.............................................    6
               -------------------------
         1.42  Services Company Independent Director.................................    6
               -------------------------------------
         1.43  Services Company Optionee Purchased Shares............................    6
               ------------------------------------------
         1.44  Services Company Purchase Price.......................................    6
               -------------------------------
         1.45  Services Company Purchased Shares.....................................    6
               ---------------------------------
         1.46  Services Company Subsidiary...........................................    6
               ---------------------------
         1.47  Stock Appreciation Right..............................................    6
               ------------------------
         1.48  Stock Ownership Limit.................................................    6
               ---------------------
         1.49  Subsidiary............................................................    7
               ----------
         1.50  Termination of Consultancy............................................    7
               --------------------------
         1.51  Termination of Directorship...........................................    7
               ---------------------------
         1.52  Termination of Employment.............................................    7
               -------------------------

ARTICLE II

                            SHARES SUBJECT TO PLAN...................................    8
         2.1   Shares Subject to Plan................................................    8
               ----------------------
         2.2   Add-back of Options and Other Rights..................................    8
               ------------------------------------

ARTICLE III

                             GRANTING OF OPTIONS.....................................    9
         3.1   Eligibility...........................................................    9
               -----------
         3.2   Disqualification for Stock Ownership..................................    9
               ------------------------------------
         3.3   Qualification of Incentive Stock Options..............................    9
               ----------------------------------------
         3.4   Granting of Options...................................................    9
               -------------------

ARTICLE IV

                              TERMS OF OPTIONS.......................................   11
         4.1   Option Agreement......................................................   11
               ----------------
         4.2   Option Price..........................................................   11
               ------------
         4.3   Option Term...........................................................   11
               -----------
         4.4   Option Vesting........................................................   12
               --------------
         4.5   No Right to Continue as Employee or Consultant........................   12
               ----------------------------------------------
         4.6   Exercise of Option after Termination of Employment, Consultancy or
               ------------------------------------------------------------------
               Directorship..........................................................   13
               ------------
         4.7   Consideration.........................................................   14
               -------------

ARTICLE V

                             EXERCISE OF OPTIONS.....................................   14
         5.1   Partial Exercise......................................................   14
               ----------------

                                                                                      Page
                                                                                      ----

         5.2   Manner of Exercise....................................................   14
               ------------------
         5.3   Transfer of Shares to a Company Employee, Independent Director or
               -----------------------------------------------------------------
               Other Board Member....................................................   15
               ------------------
         5.4   Transfer of Shares to a Partnership Employee..........................   16
               --------------------------------------------
         5.5   Transfer of Shares to a Services Company Employee, Services Company
               -------------------------------------------------------------------
               Independent Director or other Non-Employee Members of the Services
               ------------------------------------------------------------------
               Company Board.........................................................   16
               -------------
         5.6   Transfer of Payment to the Partnership................................   17
               --------------------------------------
         5.7   Conditions to Issuance of Stock Certificates..........................   17
               --------------------------------------------
         5.8   Rights as Stockholders................................................   18
               ----------------------
         5.9   Ownership and Transfer Restrictions...................................   18
               -----------------------------------
         5.10  Restrictions on Exercise of Option....................................   18
               ----------------------------------

ARTICLE VI

                          AWARD OF RESTRICTED STOCK..................................   19
         6.1   Award of Restricted Stock.............................................   19
               -------------------------
         6.2   Restricted Stock Agreement............................................   19
               --------------------------
         6.3   Consideration.........................................................   19
               -------------
         6.4   Rights as Stockholders................................................   20
               ----------------------
         6.5   Restriction...........................................................   20
               -----------
         6.6   Repurchase of Restricted Stock........................................   20
               ------------------------------
         6.7   Escrow................................................................   21
               ------
         6.8   Legend................................................................   21
               ------

ARTICLE VII

                          STOCK APPRECIATION RIGHTS..................................   21
         7.1   Grant of Stock Appreciation Rights....................................   21
               ----------------------------------
         7.2   Coupled Stock Appreciation Rights.....................................   22
               ---------------------------------
         7.3   Independent Stock Appreciation Rights.................................   22
               -------------------------------------
         7.4   Payment and Limitations on Exercise...................................   23
               -----------------------------------
         7.5   Consideration.........................................................   23
               -------------

ARTICLE VIII

                               ADMINISTRATION........................................   23
         8.1   Compensation Committee................................................   23
               ----------------------
         8.2   Duties and Powers of Committee........................................   24
               ------------------------------
         8.3   Majority Rule; Unanimous Written Consent..............................   24
               ----------------------------------------
         8.4   Compensation; Professional Assistance; Good Faith Actions.............   24
               ---------------------------------------------------------

ARTICLE IX

                          MISCELLANEOUS PROVISIONS...................................    25
         9.1   Not Transferable......................................................    25
               ----------------
         9.2   Amendment, Suspension or Termination of this Plan.....................    25
               -------------------------------------------------

                                                                             Page
                                                                             ----

9.3   Changes in Common Stock or Assets of the Company, Acquisition
      -------------------------------------------------------------
      or Liquidation of the Company and Other Corporate Events..............   26
      --------------------------------------------------------
9.4   Approval of Plan by Stockholders......................................   28
      --------------------------------
9.5   Tax Withholding.......................................................   29
      ---------------
9.6   Loans.................................................................   29
      -----
9.7   Forfeiture Provisions.................................................   29
      ---------------------
9.8   Limitations Applicable to Section 16 Persons and Performance-Based
      ------------------------------------------------------------------
      Compensation..........................................................   29
      ------------
9.9   Effect of Plan Upon Options and Compensation Plans....................   30
      --------------------------------------------------
9.10  Section 83(b) Election Prohibited.....................................   30
      ---------------------------------
9.11  Compliance with Laws..................................................   30
      --------------------
9.12  Titles................................................................   30
      ------
9.13  Governing Law.........................................................   31
      -------------
9.14  Conflicts with Company's Restated Articles............................   31
      ------------------------------------------

THE 1997 STOCK OPTION AND INCENTIVE PLAN
OF KILROY REALTY CORPORATION,
KILROY REALTY, L.P.
AND KILROY SERVICES, INC.

Kilroy Realty Corporation, a Maryland corporation (the "Company"), Kilroy Realty, L.P., a Delaware limited partnership (the "Partnership") and Kilroy Services, Inc., a Maryland corporation (the "Services Company"), have adopted The 1997 Stock Option and Incentive Plan of Kilroy Realty Corporation, Kilroy Realty, L.P. and Kilroy Services, Inc. (the "Plan"), effective January 31, 1997, for the benefit of their eligible employees, consultants and directors. The Plan consists of three plans, one for the benefit of the employees, consultants and directors of the Company, one for the benefit of the employees and consultants of the Partnership and one for the benefit of the employees, consultants and directors of the Services Company.

The purposes of this Plan are as follows:

(1) To provide an additional incentive for directors, key Employees and consultants 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.

(2) To enable the Company, the Partnership and the Services Company to obtain and retain the services of directors, key Employees and consultants 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.

ARTICLE I

DEFINITIONS

(a) any person or related group of persons (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities pursuant to a tender or exchange offer made directly to the Company's stockholders which the Board does not recommend such stockholders to accept; or

(b) there is a change in the composition of the Board over a period of thirty-six (36) consecutive months (or less) such that a majority of the Board members (rounded up to the nearest whole number) ceases, by reason of one or more proxy contests for the election of Board members, to be comprised of individuals who either (i) have been Board members continuously since the beginning of such period or (ii) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (i) who were still in office at the time such election or nomination was approved by the Board.

(a) a merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the State in which the Company is incorporated, form a holding company or effect a similar reorganization as to form whereupon this Plan and all Options are assumed by the successor entity;

(b) the sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company, in complete liquidation or dissolution of the Company in a transaction not covered by the exceptions to clause (a), above; or

(c) any reverse merger in which the Company is the surviving entity but in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger.

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 (ii) 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 (iii) 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 Committee (or the Board, in the case of Options granted to Independent Directors) acting in good faith. Notwithstanding anything to the contrary herein, the Fair Market Value at the time of grant of a share of Common Stock underlying an option grant or other award made under this Plan and in connection with the initial public offering of the Company shall be the initial offering price per share.

ARTICLE II

SHARES SUBJECT TO PLAN

(a) The shares of stock subject to Options, awards of Restricted Stock or Stock Appreciation Rights shall be shares of the Company's Common Stock, par value $.01 per share. 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 one million four hundred and sixty thousand (1,460,000). 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.

(b) The maximum number of shares which may be subject to options or Stock Appreciation Rights granted under the Plan to any individual in any fiscal year shall not exceed the Award Limit. To the extent required by Section 162(m) of the Code, shares subject to Options which are canceled continue to be counted against the Award Limit and if, after grant of an Option, the price of shares subject to such Option is reduced, the transaction is treated as a cancellation of the Option and a grant of a new Option and both the Option deemed to be canceled and the Option deemed to be granted are counted against the Award Limit. Furthermore, to the extent required by Section 162(m) of the Code, if, after grant of a Stock Appreciation Right, the base amount on which stock appreciation is calculated is reduced to reflect a reduction in the Fair Market Value of the Company's Common Stock, the transaction is treated as a cancellation of the Stock Appreciation Right and a grant of a new Stock Appreciation Right and both the Stock Appreciation Right deemed to be canceled and the Stock Appreciation Right deemed to be granted are counted against the Award Limit.

other right but as to which such Option or other right was not exercised prior to its expiration or cancellation may again be optioned, granted or awarded hereunder, subject to the limitations of Section 2.1. Any shares subject to Options or other awards which are adjusted pursuant to Section 9.3 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. If any share of Restricted Stock is forfeited by the Grantee or repurchased by the Company pursuant to Section 6.6 hereof, such share may again be optioned, granted or awarded hereunder, subject to the limitations of Section 2.1.

ARTICLE III

GRANTING OF OPTIONS

(a) The Committee shall from time to time, in its absolute discretion, and subject to applicable limitations of this Plan:

(i) Determine which Employees are key Employees and select from among the key Employees, consultants and Non-Employee Directors (including Employees, consultants and Non-Employee Directors who have previously received Options or other awards under this Plan) such of them as in its opinion should be granted Options;

(ii) Subject to the Award Limit and the Stock Ownership Limit, determine the number of shares to be subject to such Options granted to the selected key Employees or consultants;

(iii) Determine whether such Options are to be Incentive Stock Options or Non-Qualified Stock Options and whether such Options are to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code; and

(b) Upon the selection of a key Employee or consultant to be granted an Option, the Committee shall instruct the Secretary of the Company to issue the Option and may impose such conditions on the grant of the Option as it deems appropriate. Without limiting the generality of the preceding sentence, the Committee may, in its discretion and on such terms as it deems appropriate, require as a condition on the grant of an Option to an Employee or consultant that the Employee or consultant surrender for cancellation some or all of the unexercised Options, awards of Restricted Stock or Stock Appreciation Rights or other rights which have been previously granted to him under this Plan or otherwise. An Option, the grant of which is conditioned upon such surrender, may have an option price lower (or higher) than the exercise price of such surrendered Option or other award, may cover the same (or a lesser or greater) number of shares as such surrendered Option or other award, may contain such other terms as the Committee deems appropriate, and shall be exercisable in accordance with its terms, without regard to the number of shares, price, exercise period or any other term or condition of such surrendered Option or other award.

(c) Any Incentive Stock Option granted under this Plan may be modified by the Committee to disqualify such option from treatment as an "incentive stock option" under Section 422 of the Code.

(d) During the term of the Plan and subject to the Stock Ownership Limit, each person who is an Independent Director as of the date of the consummation of the initial public offering of Common Stock automatically shall be granted (i) an Option to purchase 10,000 shares of Common Stock (subject to adjustment as provided in Section 9.3) on the date of such initial public offering and (ii) provided that the Independent Director is still an Independent Director on the date of each such grant, an Option to purchase 1,000 shares of Common Stock (subject to adjustment as provided in Section 9.3) on the date of each anniversary of the initial election of such Independent Director to the Board. During the term of the Plan, a person who is initially elected to the Board after the consummation of the initial public offering of Common Stock and who is an Independent Director at the time of such initial election shall be granted an Option on the date of such initial election to purchase such number of shares of Common Stock as the Board (excluding such Independent Director) may determine in its sole discretion and (ii) provided that the Independent Director is still an Independent Director on the date of each such grant, an Option to purchase 1,000 shares of Common Stock (subject to adjustment as provided in
Section 9.3) on the date of each anniversary of the initial election of such Independent Director to the Board. Any directors

who are also Employees and who subsequently cease to be Employees but remain on the Board will receive an initial Option grant pursuant to clause (i) of the preceding sentence as the Committee shall determine in its sole discretion, and to the extent that they are otherwise eligible, will receive, after the time that they cease to be Employees, Options as described in clause (ii) of the preceding sentence. All the foregoing Option grants authorized by this Section 3.4(d) are subject to stockholder approval of the Plan.

ARTICLE IV

TERMS OF OPTIONS

Termination of Consultancy of the Optionee, or amend any other term or condition of such Option relating to such a termination.

(b) No portion of an Option which is unexercisable at Termination of Employment, Termination of Directorship or Termination of Consultancy, as applicable, shall thereafter become exercisable, except as may be otherwise provided by the Committee in the case of Options granted to Employees, consultants or Non-Employee Directors either in the Stock Option Agreement or by action of the Committee following the grant of the Option.

(c) To the extent that the aggregate Fair Market Value of stock with respect to which "incentive stock options" (within the meaning of Section 422 of the Code, but without regard to Section 422(d) of the Code) are exercisable for the first time by an Optionee during any calendar year (under the Plan and all other incentive stock option plans of the Company and any Company Subsidiary) exceeds $100,000, such Options shall be treated as Non-Qualified Options to the extent required by Section 422 of the Code. The rule set forth in the preceding sentence shall be applied by taking Options into account in the order in which they were granted. For purposes of this Section 4.4(c), the Fair Market Value of stock shall be determined as of the time the Option with respect to such stock is granted.

Partnership and any Partnership Subsidiary, which are hereby expressly reserved, to discharge any Optionee at any time for any reason whatsoever, with or without good cause.

(a) An Option granted to an Employee is exercisable by an Optionee only while the Optionee is an Employee. The preceding notwithstanding, the Committee may determine that an Option granted to an Employee may be exercised subsequent to an Optionee's Termination of Employment, subject to the following limitations:

(i) If the Optionee dies while an Option is exercisable under the terms of this Plan, the Optionee's Beneficiary may exercise such rights, to the extent the Optionee could have done so immediately preceding his death. Any such Option must be exercised within twelve
(12) months after the Optionee's death and the Committee may in its sole and absolute discretion extend such period to accommodate such exercise; or

(ii) If the Optionee's Termination of Employment is due to the Optionee's permanent and total disability, as defined in Section 22(e)(3) of the Code, the Optionee may exercise his Option, to the extent exercisable as of the Optionee's Termination of Employment, within twelve (12) months after termination; or

(iii) If the Optionee's employment is terminated for any reason other than those set forth in subsections (i) or (ii) above, the Optionee may exercise his Option, to the extent exercisable as of his Termination of Employment, within three (3) months after Termination of Employment, unless the Employee dies within said three-month period.

(iv) Notwithstanding (i) through (iii) above, an Option may not be exercised later than the Option's Expiration Date.

(b) No Option granted to an Independent Director or a Services Company Independent Director may be exercised to any extent by anyone after the first to occur of the following events:

(i) The expiration of twelve (12) months from the date of the Optionee's death; or

(ii) The expiration of twelve (12) months from the date of the Optionee's Termination of Directorship by reason of his permanent and total disability (within the meaning of Section 22(e)(3) of the Code); or

(iii) The expiration of three (3) months from the date of the Optionee's Termination of Directorship for any reason other than such

Optionee's death or his permanent and total disability, unless the Optionee dies within said three-month period.

(iv) Notwithstanding (i) through (iii) above, an Option may not be exercised later than the Option's Expiration Date.

ARTICLE V

EXERCISE OF OPTIONS

(a) A written notice complying with the applicable rules established by the Committee (or the Board in the case of Options granted to Independent Directors), the Company or the Partnership stating that the Option, or a portion thereof, is exercised. The notice shall be signed by the Optionee or other person then entitled to exercise the Option or such portion;

(b) Such representations and documents as the Committee (or the Board, in the case of Options granted to Independent Directors), in its absolute discretion, deems

necessary or advisable to effect compliance with all applicable provisions of the Securities Act of 1933, as amended, and any other federal or state securities laws or regulations. The Committee or Board 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 10.1 by any person or persons other than the Optionee, appropriate proof of the right of such person or persons to exercise the Option; and

(d) Full cash payment to (i) the Secretary of the Company for the shares with respect to which the Option, or portion thereof, is exercised. However, the Committee (or the Board, in the case of Options granted to Independent Directors), may in its discretion (i) allow a delay in payment up to thirty (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 owned by the Optionee, 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 Committee or the Board; (vi) allow payment, in whole or in part, through the delivery of a notice that the Optionee 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; 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 Committee (or the Board, in the case of Options granted to Independent Directors) 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.

(b) the price per share of the shares subject to the Option as determined pursuant to Section 4.2.

(c) As soon as practicable after receipt of the Partnership Purchased Shares by the Partnership, the Partnership shall transfer such shares to the Optionee at no additional cost, as additional compensation.

(c) as soon as practicable after receipt of the Services Company Purchased Shares by the Partnership, the Partnership shall transfer such shares to the Services Company at no additional cost;

(d) as soon as practicable after receipt of the Services Company Purchased Shares by the Services Company, the Services Company shall transfer such shares to the Optionee at no additional cost, as additional compensation; and

(e) the value of any Options, Restricted Stock and other benefits provided by the Partnership to the Services Company under this Plan are deemed to constitute an additional development fee to the Services Company from the Partnership under the Development Services Contract equal to the value of such Options, Restricted Stock and other benefits.

(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 Committee or Board 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 Committee or Board 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 Committee or Board 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.

(a) the Optionee's or any other person's ownership of Capital Stock being in violation of the Stock Ownership Limit; or

(b) income to the Company that could impair the Company's status as a real estate investment trust, within the meaning of Sections 856 through 860 of the Code.

ARTICLE VI

AWARD OF RESTRICTED STOCK

(a) The Committee may from time to time, in its absolute discretion:

(i) Select from among the key Employees or consultants (including Employees or consultants who have previously received other awards under this Plan) such of them as in its opinion should be awarded Restricted Stock; and

(ii) Determine the purchase price, if any, and other terms and conditions (including without limitation, in the case of awards to Partnership Employees, Services Company Employees and Services Company Directors, the mechanism for the transfer of the Restricted Stock and payment therefor) applicable to such Restricted Stock, consistent with this Plan.

(c) Upon the selection of a key Employee or consultant to be awarded Restricted Stock, the Committee shall instruct the Secretary of the Company to issue such Restricted Stock and may impose such conditions on the issuance of such Restricted Stock as it deems appropriate.

the Company, any Company Subsidiary, the Partnership, any Partnership Subsidiary, the Services Company or any Services Company Subsidiary or (ii) interfere with or restrict in any way the rights of the Company, any Company Subsidiary, the Partnership, any Partnership Subsidiary, the Services Company or any Services Company Subsidiary, which are hereby expressly reserved, to discharge any Restricted Stockholder at any time for any reason whatsoever, with or without good cause.

ARTICLE VII

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 Grantee 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 Grantee (or other person entitled to exercise the Option pursuant to this 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 or the Partnership, as provided in the CSAR agreement, 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.

(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 in such installments as the Committee may determine. An ISAR shall cover such number of shares of Common Stock as the Committee may determine; provided, however, that unless the Committee otherwise provides in the terms of the ISAR or otherwise, no ISAR granted to a person subject to
Section 16 of the Exchange Act shall be exercisable until at least six months have elapsed from (but excluding) the date on which the Option was granted. The exercise price per share of Common Stock subject to each ISAR shall be set by the Committee. An ISAR is exercisable only while the Grantee is an Employee or consultant; provided that the Committee may determine that the ISAR may be exercised subsequent to Termination of Employment or Termination of Consultancy without cause, or following a change in control of the Company or the Partnership, or because of the Grantee's retirement, death or disability, or otherwise.

(b) An ISAR shall entitle the Grantee (or other person entitled to exercise the ISAR pursuant to this 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 or the Partnership, as provided in the ISAR agreement, 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.

(a) Payment of the amount determined under Section 8.2(c) and 8.3(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 effected in Common Stock it shall be made subject to satisfaction of all provisions of Section 5.6 and Section 5.8 hereinabove pertaining to Options.

(b) Grantees 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 Board or Committee.

ARTICLE VIII

ADMINISTRATION

may resign at any time by delivering written notice to the Board. Vacancies in the Committee may be filled by the Board.

ARTICLE IX

MISCELLANEOUS PROVISIONS

During the lifetime of the Optionee or Grantee, only he may exercise an Option or other right or award (or any portion thereof) granted to him under the Plan, unless it has been disposed of pursuant to a QDRO. After the death of the Optionee or Grantee, any exercisable portion of an Option or other right or award may, prior to the time when such portion becomes unexercisable under the Plan or the applicable Stock Option Agreement or other agreement, be exercised by his personal representative or by any person empowered to do so under the deceased Optionee's or Grantee's will or under the then applicable laws of descent and distribution.

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

(b) The expiration of ten years from the date the Plan is approved by the Company's stockholders under Section 9.4.

(a) Subject to Section 9.3(e), in the event that the Committee (or the Board, in the case of Options granted to Independent Directors) 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 (including, but not limited to, a Corporate Transaction), 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 Committee's sole discretion (or in the case of Options granted to Independent Directors, the Board's sole discretion), affects the Common Stock such that an adjustment is determined by the Committee 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 Option, Restricted Stock award or Stock Appreciation Right, then the Committee (or the Board, in the case of Options granted to Independent Directors) shall, in such manner as it may deem equitable, adjust any or all of

(i) the number and kind of shares of Common Stock (or other securities or property) with respect to which Options or Stock Appreciation Rights may be granted under the Plan, or which may be granted as Restricted Stock (including, but not limited to, adjustments of the limitations in
Section 2.1 on the maximum number and kind of shares which may be issued and adjustments of the Award Limit),

(ii) the number and kind of shares of Common Stock (or other securities or property) subject to outstanding Options or Stock Appreciation Rights, and in the number and kind of shares of outstanding Restricted Stock, and

(iii) the grant or exercise price with respect to any Option or Stock Appreciation Right.

(b) Subject to Section 9.3(e), in the event of any corporate transaction or other transaction or event described in Section 9.3(a) which results in shares of Common Stock being exchanged for or converted into cash, securities (including securities of another corporation) or other property, the Committee will have the right to terminate this Plan as of the date of the event or transaction, in which case all options, rights and other awards

granted under this Plan shall become the right to receive such cash, securities or other property, net of any applicable exercise price.

(c) Subject to Sections 9.3(e), in the event of any Corporate Transaction or other transaction or event described in Section 9.3(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 Committee (or the Board, in the case of Options granted to Independent Directors) in its discretion is hereby authorized to take any one or more of the following actions whenever the Committee (or the Board, in the case of Options granted to Independent Directors) determines that such action is 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 any option, right or other award under this Plan, to facilitate such transactions or events or to give effect to such changes in laws, regulations or principles:

(i) In its sole and absolute discretion, and on such terms and conditions as it deems appropriate, the Committee (or the Board, in the case of Options granted to Independent Directors) may provide, either by the terms of the agreement or by action taken prior to the occurrence of such transaction or event and either automatically or upon the optionee's request, for either the purchase of any such Option, Stock Appreciation Right or any Restricted Stock for an amount of cash equal to the amount that could have been attained upon the exercise of such option, right or award or realization of the optionee's rights had such option, right or award been currently exercisable or payable or fully vested as the replacement of such option, right or award with other rights or property selected by the Committee (or the Board, in the case of Options granted to Independent Directors) in its sole discretion;

(ii) In its sole and absolute discretion, the Committee (or the Board, in the case of Options granted to Independent Directors) may provide, either by the terms of such Option, Stock Appreciation Right or Restricted Stock or by action taken prior to the occurrence of such transaction or event that it cannot be exercised after such event;

(iii) In its sole and absolute discretion, and on such terms and conditions as it deems appropriate, the Committee (or the Board, in the case of Options granted to Independent Directors) may provide, either by the terms of such Option, Stock Appreciation Right or Restricted Stock or by action taken prior to the occurrence of such transaction or event, that for a specified period of time prior to such transaction or event, such option, right or award shall be exercisable as to all shares covered thereby, notwithstanding anything to the contrary in (i) Section 4.4 or
(ii) the provisions of such Option, Stock Appreciation Right or Restricted Stock;

(iv) In its sole and absolute discretion, and on such terms and conditions as it deems appropriate, the Committee (or the Board, in the case of Options granted to Independent Directors) may provide, either by the terms of such Option, Stock Appreciation Right or Deferred Stock or by action taken prior to the

occurrence of such transaction or event, that upon such event, such option, right or 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;

(v) In its sole and absolute discretion, and on such terms and conditions as it deems appropriate, the Committee (or the Board, in the case of Options granted to Independent Directors) may make adjustments in the number and type of shares of Common Stock (or other securities or property) subject to outstanding Options, Stock Appreciation Rights, and in the number and kind of outstanding Restricted 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; and

(vi) In its sole and absolute discretion, and on such terms and conditions as it deems appropriate, the Committee may provide either by the terms of a Restricted Stock award or by action taken prior to the occurrence of such event that, for a specified period of time prior to such event, the restrictions imposed under a Restricted Stock Agreement upon some or all shares of Restricted Stock may be terminated and some or all shares of such Restricted Stock may cease to be subject to repurchase under
Section 6.6 or forfeiture under Section 6.5 after such event;

(d) Subject to Section 9.3(e) and 9.8, the Committee (or the Board, in the case of Options granted to Independent Directors) may, in its discretion, include such further provisions and limitations in any Option, Stock Appreciation Right or Restricted Stock agreement or certificate, as it may deem equitable and in the best interests of the Company.

(e) With respect to Incentive Stock Options and Options and Stock Appreciation Rights intended to qualify as performance-based compensation under
Section 162(m), no adjustment or action described in this Section 9.3 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 Section 422(b)(1) of the Code or would cause such option or stock appreciation right to fail to so qualify under Section 162(m), as the case may be, or any successor provisions thereto. 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 Committee (or the Board, in the case of Options granted to Independent Directors) determines that the option or other award is not to comply with such exemptive conditions. The number of shares of Common Stock subject to any option, right or award shall always be rounded to the next whole number.

Restricted Stock may be awarded prior to such stockholder approval, provided that such Options or Stock Appreciation Rights shall not be exercisable and such Restricted Stock shall not vest prior to the time when this Plan is approved by the stockholders, and provided further that if such approval has not been obtained at the end of said twelve-month period, all Options or Stock Appreciation Rights previously granted and all Restricted Stock previously awarded under this Plan shall thereupon be canceled and become null and void.

Appreciation Rights and Restricted Stock granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive rule. Furthermore, notwithstanding any other provision of this Plan, any Option or Stock Appreciation Right intended to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code shall be subject to any additional limitations set forth in Section 162(m) of the Code (including any amendment to Section 162(m) of the Code) or any regulations or rulings issued thereunder that are requirements for qualification as performance-based compensation as described in Section 162(m)(4)(C) of the Code, and this Plan shall be deemed amended to the extent necessary to conform to such requirements.

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers duly authorized on this 31st day of January, 1997.

Kilroy Realty Corporation, a Maryland corporation.

By _____________________________________ John B. Kilroy, Jr.

Chief Executive Officer

Attest:

Secretary

Kilroy Realty, L.P., a Delaware limited
partnership.

By _____________________________________
John B. Kilroy, Jr.
Chief Executive Officer
On Behalf of Kilroy Realty
Corporation, a Maryland corporation,
in its capacity as General Partner

Secretary

Kilroy Services, Inc., a Maryland corporation.

By _____________________________________ Campbell Hugh Greenup Chief Executive Officer

Attest:

Secretary

EXHIBIT 10.7

INDEMNIFICATION AGREEMENT

WHEREAS, the Indemnitee has agreed to serve as a Director and/or Officer of the Company and the Company wishes the Indemnitee to continue in such capacity. The Indemnitee is willing, under certain circumstances, to continue serving as a Director and Officer of the Company;

WHEREAS, Section 2-418 of the General Corporation Law of the State of Maryland, under which law the Company is organized, empowers corporations to indemnify any person who is or was serving as a director, officer, employee or agent of the corporation or any person who, while a director of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee or agent of another corporation, partnership, limited liability company, association, joint venture, trust or other enterprise. As used in this Agreement, the term "other enterprise" shall include, without limitation, employee benefit plans and administrative committees thereof. In addition, the Company includes any domestic or foreign predecessor entity of the Company in a merger, consolidation or other transaction in which the predecessor's existence ceased upon consummation of the transaction; and

WHEREAS, said Section 2-418 and the Bylaws of the Company specify that the indemnification set forth in said Section 2-418 and in the Bylaws, respectively, shall not be deemed to limit the right of the Corporation to indemnify any other person against any liability and expenses to the fullest extent permitted by law, nor shall it be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any agreement, the Articles or Bylaws of the Company, a vote of stockholders or disinterested directors or otherwise, both as to action in such person's official capacity as an officer or director and as to action in another capacity, as the request of the Corporation, while acting as an officer or director of the Corporation;

NOW, THEREFORE, in order to induce the Indemnitee to serve as a Director and/or Officer of the Company and in consideration of his continued service, the Company hereby agrees to indemnify the Indemnitee as follows:

(a) to the extent that payment is actually made to the Indemnitee under a valid, enforceable and collectible insurance policy;

(b) to the extent that the Indemnitee is indemnified and actually paid otherwise than pursuant to this Agreement;

(c) in connection with a judicial action by or in the right of the Company, in respect of any claim, issue or matter as to which the Indemnitee shall have been adjudged to be liable to the Company, unless and only to the extent that any court in which such action was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for such expenses as such court shall deem proper;

(d) if it is established by final judgment in a court of law or other final adjudication that the act or omission of the Indemnitee that (i) the act or omission of the director or officer was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty, (ii) the director or officer actually received an improper personal benefit in money, property or services, or (iii) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful;

(e) if it is proved by final judgment in a court of law or other final adjudication to have been based upon or attributable to the Indemnitee having gained any personal profit or advantage to which he was not legally entitled;

(f) for a disgorgement of profits made from the purchase and sale by the Indemnitee of securities pursuant to Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any state statutory law or common law; or

(g) for any judgment, fine or penalty which the Company is prohibited by applicable law from paying as indemnity or for any other reason.

(a) The termination of any Proceeding, which is covered by this Agreement, by judgment, order or settlement, shall not of itself create a presumption for the purposes of this Agreement that the Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

(b) The termination of any proceeding by conviction, or by a plea of nolo contendere or its equivalent, or an entry of an order of probation prior to judgment, creates a rebuttable presumption that the director did not meet the requisite standard of conduct for good faith or otherwise.

any provision of the Articles of Incorporation or Bylaws of the Company and amendments thereto or under law.

If to the Indemnitee:    ______________________

If to the Company:       Kilroy Realty Corporation
                         2250 East Imperial Highway
                         El Segundo, California 90245

                             5

                         Attention: President and CEO
                         Facsimile: (310) 322-5981

(Signature Page Follows)

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and signed as of the day and year first above written .

KILROY REALTY CORPORATION,
a Maryland corporation

By_______________________________________
Name:
Title:

KILROY REALTY, L.P.
a Delaware limited partnership

By_______________________________________
Name:
Title:

INDEMNITEE

EXHIBIT 10.34

NONCOMPETITION AGREEMENT

WHEREAS, Kilroy Realty, L.P., the Director and certain other parties have entered into an Omnibus Option Agreement, dated as of October 30, 1996 (the "Omnibus Option Agreement"), pursuant to which the Director has transferred all of his right, title and interest in certain office and industrial buildings, the related fee or leasehold real property interests, and the development, management and leasing businesses in connection with therewith (collectively, the "Contributed Properties"), in exchange for a limited partnership interest in Kilroy Realty, L.P.;

WHEREAS, the Company and the Director agree that, in connection with the contribution of the Contributed Properties to Kilroy Realty, L.P. and the designation of the Director to serve on the Board, the Director will not engage in competition with the Company and Kilroy Realty, L.P. pursuant to the terms and conditions hereof;

NOW, THEREFORE, in furtherance of the foregoing and in exchange for good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto hereby agree as follows:

If to the Director:              John B. Kilroy, Sr.
                                 [Address]


If to the Company
and to Kilroy Realty, L.P.:      Kilroy Realty Corporation
                                 2250 East Imperial Highway
                                 El Segundo, California 90245
                                 Attention:  Secretary
                                 Facsimile:  (310) 322-5981

(Signature Page Follows)

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

KILROY REALTY CORPORATION

President and Chief Executive Officer

KILROY REALTY, L.P.

By Kilroy Realty Corporation, its
general partner

President and Chief Executive Officer

John B. Kilroy, Sr.

EXHIBIT 10.35

NONCOMPETITION AGREEMENT

WHEREAS, Kilroy Realty, L.P., the Executive and certain other parties have entered into an Omnibus Option Agreement, dated as of October 30, 1996 (the "Omnibus Option Agreement"), pursuant to which the Executive has transferred all of his right, title and interest in certain office and industrial buildings, the related fee or leasehold real property interests, and the development, management and leasing businesses in connection with therewith (collectively, the "Contributed Properties"), in exchange for a limited partnership interest in Kilroy Realty, L.P.;

WHEREAS, the Company, Kilroy Realty, L.P. and the Executive agree that, in connection with the contribution of the Contributed Properties to Kilroy Realty, L.P. and the execution of the Employment Agreement and the Executive's employment, the Executive will not engage in competition with the Company and Kilroy Realty, L.P. pursuant to the terms and conditions hereof;

NOW, THEREFORE, in furtherance of the foregoing and in exchange for good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto hereby agree as follows:

(d) In the event that the Executives employment is terminated pursuant to Sections 5.4, 5.5 or 5.7 of the Employment Agreement, the prohibitions and restrictions set forth in Section 1(a) of this Agreement shall apply only for so long as the Executive is a member of the Company's Board of Directors. Except as set for in this Section 1(d), nothing herein shall relieve or limit Executive's obligation to comply with the terms of this Agreement and the Employment Agreement.

(Signature Page Follows)

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

KILROY REALTY CORPORATION

Executive Vice President,
Chief Financial Officer and
Secretary

KILROY REALTY, L.P.

By Kilroy Realty Corporation, its
general partner

Executive Vice President,
Chief Financial Officer and
Secretary