EMPLOYMENT AGREEMENT

Exhibit 10.12

EMPLOYMENT AGREEMENT

        This EMPLOYMENT AGREEMENT (the " Agreement ") is made effective as of October 23, 2006 (the " Effective Date ") by and between Douglas Emmett, Inc. (the " Company "), Douglas Emmett Properties, LP (the " Partnership "), and Kenneth Panzer (" Executive ") with respect to the following facts and circumstances:

        WHEREAS, the Company desires to engage Executive as the Chief Operating Officer of the Company, during the Agreement Term (as defined below), on the terms and conditions and for the consideration set forth herein.

        NOW, THEREFORE, in consideration of the premises and mutual covenants herein and for other good and valuable consideration, the parties agree as follows:

1.     Effectiveness; Term of Employment.     Subject to the provisions of Section 8 of this Agreement, Executive shall be employed by the Company on the terms and subject to the conditions set forth in this Agreement for a period commencing on the Effective Date and ending on December 31, 2010. Commencing on January 1, 2011 and on each January 1 thereafter (each an " Extension Date "), the Agreement Term shall be automatically extended for an additional one-year period unless either the Company or Executive provides the other party hereto sixty (60) days' prior written notice before the next Extension Date that the Agreement Term shall not be so extended (the " Agreement Term ").

2.     Position; Duties.     During the Agreement Term, Executive shall serve as Chief Operating Officer of the Company and the Partnership. In such position, Executive shall have such duties and authority commensurate with such position as shall be determined from time to time by the Board of Directors of the Company (the " Board ") including such duties and responsibilities with respect to any subsidiary, affiliate or joint venture of the Company (each a " Subsidiary "). Subject to the discretion of the Nominating Committee of the Board, Executive shall serve as a member of the Board and of the board of directors (or equivalent) of any Subsidiary without additional compensation. Executive's duties will be principally performed at the Company's headquarters, which will be located within the West Side of Los Angeles, with such travel as may be required to perform his duties hereunder as reasonably requested by the Company.

3.     Base Salary.     During the Agreement Term, the Company shall pay Executive a base salary at the annual rate of $950,000, payable in regular installments in accordance with the Company's usual payment practices. Executive's salary shall be reviewed at least annually by the Compensation Committee of the Board (the " Committee ") and Executive shall be entitled to such increases in Executive's base salary, if any, as may be determined from time to time in the sole and absolute discretion of the Committee. Executive's annual base salary, as in effect from time to time, is hereinafter referred to as the " Base Salary ."

4.     Annual Bonus.     With respect to each fiscal year during the Agreement Term, Executive shall be eligible to earn an annual bonus award (the " Annual Bonus ") based upon reasonable criteria to be reasonably established not later than the first thirty (30) days of that fiscal year by the Compensation Committee of the Board in consultation with Executive. The amount of the bonus shall equal the following percentages of Executive's Base Salary during that fiscal year:

Unless otherwise approved by the Board in its discretion, no bonus will be payable to Executive for any year if Executive does not meet the Threshold criteria established for that year. The Company will pay any Annual Bonus earned by Executive with respect to a given fiscal year in accordance with the terms and conditions of the Company's annual bonus plan, but no later than the earlier of (i) the fifteenth day of the third month following the end of such fiscal year or (ii) the date that other senior executives are paid similar bonuses.

5.     Long-Term Incentive Compensation.     

        5.1.     Option Award.     As of the Effective Date, Executive shall be granted an option to purchase 2,488,889 shares of Company stock (the " Option Award ") pursuant to a separate written Non Qualified Stock Option Agreement under the Company's 2006 Omnibus Stock Incentive Plan (the " Plan "). The Option Award shall be subject to the terms and conditions of that agreement and the Plan.

        5.2.     LTIP Award.     As of the Effective Date, Executive shall be granted 420,000 LTIP Units (the " LTIP Award ") pursuant to a separate written LTIP Unit Award Agreement under the Plan. The LTIP Award shall be subject to the terms and conditions of that agreement and the Plan.

6.     Employee Benefits.     During the Agreement Term, Executive shall be entitled to participate in the Company's employee welfare and retirement benefit plans and perquisite programs as in effect, and subject to such modification as the Company may determine necessary or appropriate, from time to time (collectively " Employee Benefits "), on the same basis as those benefits are generally made available to other senior executives of the Company, which shall in any case include (i) the payment or reimbursement of tax/financial services, the use of and payment of all related expenses for an automobile, and a personal umbrella insurance policy all in amounts and on terms not less favorable than those provided to Executive by the Company's predecessor provided that, any such payment or reimbursement by the Company shall be made no later than the fifteenth day of the third month following the end of the calendar year in which Executive incurred such expense, and (ii) medical and dental benefits (without any co payment) for Executive, Executive's spouse and Executive's eligible dependents on terms not less favorable than those provided to Executive by the Company's predecessor. During the Agreement Term, Executive shall have the right (i) to participate in any future compensation plans implemented for executives of the Company on a basis commensurate with his position and (ii) to be indemnified by the Company for all actions taken as an officer, director or agent of the Company or its Subsidiaries to the full extent provided under law or pursuant to the Indemnification Agreement of even date herewith. Subject to the policies and procedures of the Company, in addition to any accrued personal time off (" PTO ") accrued with respect to service to the predecessors of the Company, Executive shall be entitled to accrue twenty five (25) paid days of PTO per year during the Agreement Term.

7.     Business Expenses.     During the Agreement Term, the Company shall reimburse Executive for all reasonable business expenses incurred by Executive in the performance of Executive's duties hereunder in accordance with the Company's policies as in effect from time to time.

8.     Termination.     Notwithstanding any other provision of this Agreement, the provisions of this Section 8 shall exclusively govern Executive's rights upon termination of employment with the Company. Following Executive's termination of employment, except as set forth in this Section 8, Executive (and Executive's legal representative and estate) shall have no further rights to any compensation or any other benefits under this Agreement.

        8.1.     Definitions.     

        " Accrued Rights " means the sum of the following: (i) any accrued but unpaid Base Salary through the date of termination; (ii) a payment in respect of all unpaid, but accrued and unused PTO through the date of termination; (iii) any Annual Bonus earned but unpaid as of the date of termination for any previously completed fiscal year ( i.e., not for the year of employment termination); (iv) reimbursement for any unreimbursed business expenses properly incurred by Executive in accordance with Company policy through the date of termination; (v) such rights, if any, under the Option Award, the LTIP Award and other compensation programs and Employee Benefits to which Executive may be entitled upon termination of employment according to the documents governing such benefits; and (vi) any existing rights to indemnification for prior acts through the date of termination.

        " Cause " means any of the following: (i) any act or omission by Executive which constitutes intentional misconduct or a willful violation of law; (ii) an act of fraud, conversion, misappropriation or embezzlement by Executive or conviction of, indictment for (or its procedural equivalent) or entering a guilty plea or plea of no contest with respect to a felony, the equivalent thereof or any crime involving any moral turpitude with respect to which imprisonment is a common punishment; or (iii) any other failure (other than any failure resulting from

incapacity due to physical or mental illness) by Executive to perform his material and reasonable duties and responsibilities as an employee, director or consultant of the Company or any Subsidiary which continues for ten (10) days following written notice from the Company or any Subsidiary (except in the case of a willful failure to perform his duties or a willful breach, which shall require no notice). For purposes of the foregoing sentence, no act, or failure to act, on Executive's part shall be considered "willful" unless the Executive acted, or failed to act, in bad faith or without reasonable belief that his act or failure to act was in the best interest of the Company or any Subsidiary.

        " Change of Control " shall be deemed to have occurred if

        " Disability " means physical or mental incapacity whereby Executive is unable with or without reasonable accommodation for a period of six (6) consecutive months or for an aggregate of nine (9) months in any twenty-four (24) consecutive month period to perform the essential functions of Executive's duties.

        " Good Reason " shall be present where Executive gives notice to the Board of his voluntary resignation (a) within one hundred and twenty (120) days after the occurrence of any of the following, without Executive's written consent: (i) the failure of the Company to pay or cause to be paid Executive's Base Salary or Annual Bonus, when due hereunder, subject to a ten (10) day cure period by the Company (except in the case of a willful failure which shall require no notice); (ii) diminution in Executive's status, including, title, position, duties, authority or responsibility (including Executive ceasing to be a member of the Board other than as a result of a voluntary

resignation), subject to a thirty (30) day cure period by the Company (except in the case of a willful breach, which shall require no notice); (iii) relocation of the Company's executive offices to a location outside of the West Side of Los Angeles; or (iv) the failure of the Company to obtain the express written assumption of this Agreement pursuant to Section 11.5 hereof (unless such Agreement is assumed by operation of law); (b) within eighteen (18) months after the occurrence of a Change of Control.

        8.2.     Termination by the Company for Cause or By Executive's Resignation without Good Reason.     The Agreement Term and Executive's employment hereunder may be terminated by the Company for Cause and shall terminate upon Executive's resignation without Good Reason, and in either case Executive shall be entitled to receive only his Accrued Rights.

        8.3.     Death/Disability.     The Agreement Term and Executive's employment hereunder shall terminate upon Executive's death or Disability. Upon termination of Executive's employment hereunder due to death or Disability, Executive's legal representative or estate (as the case may be) shall be entitled to receive (i) the Accrued Rights plus (ii) an amount equal to a pro-rated portion of the Annual Bonus Executive otherwise would have been paid for the fiscal year in which such termination of employment occurs, payable when the Annual Bonus would otherwise have been paid to Executive pursuant to Section 4, based upon (a) actual performance for such fiscal year, as determined at the end of such fiscal year and (b) the percentage of such fiscal year that shall have elapsed through the date of Executive's termination of employment; plus (iii) continued medical benefits for Executive and Executive's spouse and eligible dependents who at the time of Executive's termination are enrolled in the Company's medical plan. Such benefits shall be substantially identical to the benefits maintained for other senior executives of the Company and shall be provided for a period of twelve (12) months following Executive's termination of employment. Executive acknowledges that such benefit continuation is intended, and shall be deemed, to satisfy the obligations of the Company and any of its subsidiaries and affiliates to provide continuation of benefits under Section 4980B of the Internal Revenue Code of 1986, as amended (" COBRA ") for such period and that the Company may satisfy such obligation by paying any applicable COBRA premiums.

        8.4.     Termination by the Company without Cause or Resignation by Executive for Good Reason.     The Agreement Term and Executive's employment hereunder may be terminated by the Company without Cause at any time and for any reason or by Executive's resignation for Good Reason at any time upon thirty (30) days written notice by the terminating party, although the Company may waive services during that period. If Executive's employment is terminated by the Company without Cause (other than by reason of death or Disability) or if Executive resigns for Good Reason, Executive shall be entitled to receive (i) the Accrued Rights, plus (ii) provided that Executive first executes and returns to the Company (and does not revoke) a release of all claims that is in form and substance reasonably satisfactory to the Company, and subject to Executive's continued compliance with the provisions of Section 9 of this Agreement (to the extent expressly applicable after the Agreement Term):

        8.5.     Notice of Termination.     Any purported termination of employment by the Company or by Executive (other than due to Executive's death) shall be communicated by written notice to the other party, which indicates the specific termination provision in this Agreement relied upon and sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated and the date of employment termination.

        8.6.     Employee Termination and Board/Committee/Officer Resignation.     Upon termination of Executive's employment for any reason, Executive's employment with each of the Company and each Subsidiary shall be terminated and Executive shall be deemed to resign, as of the date of such termination and to the extent applicable, from the boards of directors (and any committees thereof) of the Company and any Subsidiary and affiliates and as an officer of the Company and any Subsidiary. Executive shall confirm such resignation(s) in writing to the Company.

9.     Covenants.     

        9.1.     Confidentiality.     Executive acknowledges that, in his employment hereunder, he will occupy a position of trust and confidence with the Company and its Subsidiaries. Executive agrees that Executive shall not during the Agreement Term and for two (2) years thereafter, except (i) as may be required to perform his duties hereunder or as required by applicable law or (ii) until such information shall have become public other than by Executive's unauthorized disclosure or (iii) with the prior written consent of the Company, use, disclose or disseminate any trade secrets, confidential information or any other information of a secret, proprietary, confidential or generally undisclosed nature relating to the Company and/or any Subsidiary, or their respective businesses, contracts, projects, proposed projects, revenues, costs, operations, methods or procedures.

        9.2.     Non-solicitation.     Executive agrees that, for a period of one (1)&nb