Exhibit 10.8

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

 

DEFERRED COMPENSATION PLAN

FOR DIRECTORS

 

 

ORIGINAL EFFECTIVE DATE: JANUARY 1, 2002

 

AMENDED AND RESTATED EFFECTIVE: JANUARY 1, 2005

 

 

TABLE OF CONTENTS

 

 

 

PAGE

 

 

 

1.

INTRODUCTION AND PURPOSE

1

 

 

 

2.

DEFINITIONS

1

 

 

 

 

2.1

“Annual Retainer”

1

 

 

 

 

 

2.2

“Beneficiary”

1

 

 

 

 

 

2.3

“Board”

1

 

 

 

 

 

2.4

“Cause”

1

 

 

 

 

 

2.5

“Change of Control”

2

 

 

 

 

 

2.6

“Code”

3

 

 

 

 

 

2.7

“Company”

3

 

 

 

 

 

2.8

“Compensation”

3

 

 

 

 

 

2.9

“Deferred Compensation”

3

 

 

 

 

 

2.10

“Disability”

3

 

 

 

 

 

2.11

“Effective Date”

3

 

 

 

 

 

2.12

“Election”

3

 

 

 

 

 

2.13

“Exchange Act”

3

 

 

 

 

 

2.14

“Incentive Plan”

3

 

 

 

 

 

2.15

“Market Value”

3

 

 

 

 

 

2.16

“Meeting Fee”

3

 

 

 

 

 

2.17

“Non-Employee Director”

4

 

 

 

 

 

2.18

“Nonrestricted Units”

4

 

 

 

 

 

2.19

“Participant”

4

 

 

 

 

 

2.20

“Phantom Stock Unit”

4

 

 

 

 

 

2.21

“Phantom Stock Unit Account”

4

 

 

 

 

 

2.22

“Plan”

4

 

 

 

 

 

2.23

“Plan Year”

4

 

 

 

 

 

2.24

“Restricted Period”

4

 

 

 

 

 

2.25

“Restricted Stock Award”

4

 

 

 

 

 

2.26

“Restricted Unit”

4

 

 

 

 

 

2.27

“Retirement”

4

 

 

 

 

 

2.28

“Section 409A Grandfathered Amount”

4

 

i.

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TABLE OF CONTENTS

(CONTINUED)

 

 

 

 

PAGE

 

 

 

 

 

2.29

“Section 409A Non-Grandfathered Amount”

4

 

 

 

 

 

2.30

“Stock”

5

 

 

 

 

 

2.31

“Tax Gross-Up Payment”

5

 

 

 

 

 

2.32

“Unforeseeable Emergency”

5

 

 

 

 

 

2.33

“Vesting Commencement Date”

5

 

 

 

 

3.

PARTICIPATION IN THE PLAN

5

 

 

 

 

4.

DEFERRED COMPENSATION ELECTIONS; ELECTION TO FOREGO RESTRICTED STOCK AWARD

5

 

 

 

 

 

4.1

Election to Defer Annual Retainer and Meeting Fees

5

 

 

 

 

 

4.2

Election to Forego Restricted Stock Award

6

 

 

 

 

 

4.3

Election to Defer Tax Gross-Up Payment

6

 

 

 

 

 

4.4

Manner of Elections

7

 

 

 

 

5.

PHANTOM STOCK UNIT ACCOUNT

7

 

 

 

 

 

5.1

Establishment of Phantom Stock Unit Account

7

 

 

 

 

 

5.2

Unsecured Creditors; Unfunded Plan

7

 

 

 

 

 

5.3

Timing of Credits

7

 

 

 

 

 

5.4

Amount of Credits; Vesting

8

 

 

 

 

 

5.5

Restricted Units

8

 

 

 

 

6.

DISTRIBUTION OF PLAN BENEFITS

9

 

 

 

 

 

6.1

Form of Benefit

9

 

 

 

 

 

6.2

Distribution Elections

9

 

 

 

 

 

6.3

Termination of Service on the Board or Change of Control

10

 

 

 

 

 

6.4

Early Distribution of Section 409A Grandfathered Amounts

10

 

 

 

 

 

6.5

Unforeseeable Emergency

11

 

 

 

 

 

6.6

No Assignment or Alienation

11

 

 

 

 

7.

ADMINISTRATION

11

 

 

 

 

 

7.1

Plan Administrator

11

 

 

 

 

 

7.2

Account Statements

12

 

 

 

 

 

7.3

Claims, Inquiries and Appeals

12

 

 

 

 

8.

BENEFICIARY DESIGNATION

14

 

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TABLE OF CONTENTS

(CONTINUED)

 

 

 

 

PAGE

 

 

 

 

9.

MISCELLANEOUS

14

 

 

 

 

 

9.1

Effective Date; Amendment and Termination

14

 

 

 

 

 

9.2

No Employment or Service Rights

14

 

 

 

 

 

9.3

Arbitration

14

 

 

 

 

 

9.4

Governing Law

15

 

 

 

 

 

9.5

Severability

15

 

 

 

 

 

9.6

Notice

15

 

 

 

 

 

9.7

Successors

15

 

iii

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ALEXANDRIA REAL ESTATE EQUITIES, INC.

 

DEFERRED COMPENSATION PLAN

FOR DIRECTORS

 

1.                                    INTRODUCTION AND PURPOSE

 

This Plan was originally adopted by the Company effective as of January 1,
2002.  The Plan was amended and restated effective as of January 1, 2005.

 

The purpose of the Plan is to provide supplemental retirement (and related tax)
benefits to Non-Employee Directors of Alexandria Real Estate Equities, Inc.  The
Plan is intended to be administered in compliance with Section 409A of the Code
with respect to all Section 409A Non-Grandfathered Amounts, and the provisions
of the Plan regarding Section 409A Grandfathered Amounts are intended to be
administered so as not to subject such amounts to Section 409A of the Code.

 

2.                                    DEFINITIONS

 

2.1                            “Annual Retainer” means the annual fees payable
to a Non-Employee Director in arrears on the last day of each calendar quarter
for his or her service as a Director, but shall exclude expense reimbursements,
all Meeting Fees, and any remuneration or other payments paid to the
Non-Employee Director for services or otherwise in any capacity other than as a
Non-Employee Director.

 

2.2                            “Beneficiary” means the person or persons so
designated by a Participant in accordance with Section 8 hereof.

 

2.3                            “Board” means the Board of Directors of
Alexandria Real Estate Equities, Inc.

 

2.4                            “Cause” means the following:

 

(a)                              The Participant’s (i) material breach,
repudiation or failure to comply with or perform any of the Participant’s duties
or any of the Company’s policies or procedures (including, without limitation,
any such policies or procedures relating to conflicts of interest or standard
business conduct) or (ii) deliberate interference with the compliance by any
other member of the Board or any employee of the Company with any of the
foregoing;

 

(b)                              The conviction of the Participant for, or
pleading by the Participant of no contest or a guilty plea (or similar plea) to,
fraud, embezzlement, misappropriation of assets, malicious mischief, or any
felony, other than a crime for which vicarious liability is imposed upon the
Participant solely by reason of the Participant’s position with the Company and
not by reason of the Participant’s conduct; or

 

1.

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(c)                               Any other act, omission, event or condition
constituting cause for the discharge of any employee or other service provider
under applicable law.

 

2.5                            “Change of Control” means the occurrence of any
of the following events:

 

(a)                              Any Person (as such term is used in section
3(a)(9) of the Exchange Act, as modified and used in sections 13(d) and
14(d) thereof, except that such term shall not include (A) the Company or any of
its subsidiaries, (B) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its affiliates, (C) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (D) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company) becomes the Beneficial Owner, as such term is
defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of
securities of the Company (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company or its affiliates
other than in connection with the acquisition by the Company or its affiliates
of a business) representing twenty-five percent (25%) or more of the combined
voting power of the Company’s then outstanding securities; or

 

(b)                              The following individuals cease for any reason
to constitute a majority of the number of directors then serving:  individuals
who, on the date hereof, constitute the Board and any new director (other than a
director whose initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election by the Company’s
stockholders was approved or recommended by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors on the date
hereof or whose appointment, election or nomination for election was previously
so approved or recommended; or

 

(c)                               There is consummated a merger or consolidation
of the Company with any other corporation, other than (A) a merger or
consolidation in which the stockholders of the Company immediately prior to such
merger or consolidation, continue to own, in combination with the ownership of
any trustee or other fiduciary holding securities under an employee benefit plan
of the Company or any subsidiary of the Company, at least seventy-five percent
(75%) of the combined voting power of the securities of the Company (or the
surviving entity or any parent thereof) outstanding immediately after such
merger or consolidation in substantially the same proportions as their ownership
of the Company immediately prior to such merger or consolidation, or (B) a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired directly
from the Company or its affiliates other than in connection with the acquisition
by the Company or its affiliates of a business) representing twenty-five percent
(25%) or more of the combined voting power of the Company’s then outstanding
securities; or

 

2.

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(d)                              The stockholders of the Company approve a plan
of complete liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or substantially all
of the Company’s assets, other than a sale or disposition by the Company of all
or substantially all of the Company’s assets to an entity, at least seventy-five
(75%) of the combined voting power of the voting securities of which are owned
by stockholders of the Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale.

 

2.6                            “Code” means the Internal Revenue Code of 1986,
as amended from time to time, and the regulations and other applicable guidance
promulgated thereunder.

 

2.7                            “Company” means Alexandria Real Estate
Equities, Inc.

 

2.8                            “Compensation” means the Annual Retainer and
Meeting Fees paid to a Non-Employee Director by the Company in connection with
his or her service as a Director of the Company.

 

2.9                            “Deferred Compensation” means the amount of
Compensation that a Participant elects to defer, any Restricted Stock Award that
a Participant elects to forego and any Tax Gross-Up Payment that a Participant
elects to defer pursuant to his or her Election.

 

2.10                    “Disability” (i) prior to May 22, 2008, means the
inability of a Participant to work by reason of disability for one hundred
eighty (180) days during any three hundred sixty-five (365) day period, and
(ii) on and after May 22, 2008, has the meaning set forth in Section 2.10 of the
Incentive Plan, or any successor provision.

 

2.11                    “Effective Date” means January 1, 2002.

 

2.12                    “Election” means the election of a Participant pursuant
to the terms of the Plan to defer Compensation, forego a Restricted Stock Award
or defer a Tax Gross-Up Payment, which election shall be made on such form or
forms as the Company may prescribe from time to time.

 

2.13                    “Exchange Act” means the Securities Exchange Act of
1934, as amended.

 

2.14                    “Incentive Plan” means the Alexandria Real Estate
Equities, Inc. Amended and Restated 1997 Stock Award and Incentive Plan, and any
successor plan thereto.

 

2.15                    “Market Value” means the closing sales price per share
of Stock on the national securities exchange on which the Stock is principally
traded on the date upon which such Market Value is to be determined for the
purpose of crediting a Participant’s Phantom Stock Unit Account or making a
distribution to a Participant therefrom.

 

2.16                    “Meeting Fee” means any meeting attendance fee paid to a
Non-Employee Director for his or her attendance at a meeting of the Board, but
shall exclude expense reimbursements, the Annual Retainer and any remuneration
or other payments paid to the

 

3.

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Non- Employee Director for services or otherwise in any capacity other than as a
Non-Employee Director.

 

2.17                    “Non-Employee Director” means a member of the Board who
is not currently an employee or officer of the Company.

 

2.18                    “Nonrestricted Units” has the meaning set forth in
Section 5.4.

 

2.19                    “Participant” means each Non-Employee Director who
elects to participate in the Plan.

 

2.20                    “Phantom Stock Unit” means a single unit of value
granted under the Plan, which when redeemed shall be a right to receive a share
of Stock from the Company.

 

2.21                    “Phantom Stock Unit Account” means an account maintained
by the Company on its books for a Participant, to which shall be credited the
Participant’s Deferred Compensation, which credited amounts shall be recorded as
Phantom Stock Units and thus treated as if they had been used to purchase shares
of Stock of the Company on the date on which the Participant’s Deferred
Compensation is credited to such account, as adjusted for dividends, cash
distributions, stock splits and similar adjustments determined under Section 5
and reduced by any distributions under the Plan made to a Participant or
Beneficiary.

 

2.22                    “Plan” means this Deferred Compensation Plan for
Directors.

 

2.23                    “Plan Year” means the calendar year.

 

2.24                    “Restricted Period” has the meaning set forth in
Section 5.5(a).

 

2.25                    “Restricted Stock Award” means an award of shares of
Stock pursuant to Section 6.4 of the Incentive Plan as in effect on the
Effective Date, or any successor provision.

 

2.26                    “Restricted Unit” has the meaning set forth in
Section 5.4.

 

2.27                    “Retirement” has the meaning set forth in Section 2.21
of the Incentive Plan, or any successor provision.

 

2.28                    “Section 409A Grandfathered Amount”  means any Deferred
Compensation that was credited to a Participant’s Phantom Stock Unit Account
under the Plan prior to January 1, 2005, plus any amounts credited to such
Phantom Stock Unit Account with respect to such Deferred Compensation pursuant
to Section 5.4(a).

 

2.29                    “Section 409A Non-Grandfathered Amount”  means any
Deferred Compensation that was credited to a Participant’s Phantom Stock Unit
Account under the Plan on or after January 1, 2005, plus any amounts credited to
such Phantom Stock Unit Account with respect to such Deferred Compensation
pursuant to Section 5.4(a).

 

4.

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2.30                    “Stock” means common stock, par value $.01 per share, of
the Company.

 

2.31                    “Tax Gross-Up Payment”  means a cash amount approved by
the Company as a tax gross-up payment in respect of a Restricted Stock Award.

 

2.32                    “Unforeseeable Emergency” has the meaning set forth in
Section 6.5.

 

2.33                    “Vesting Commencement Date” has the meaning set forth in
Section 5.5(b).

 

3.                                    PARTICIPATION IN THE PLAN

 

Eligibility for participation in the Plan shall be limited to Non-Employee
Directors.

 

4.            DEFERRED COMPENSATION ELECTIONS; ELECTION TO FOREGO RESTRICTED
STOCK AWARD

 

4.1                            Election to Defer Annual Retainer and Meeting
Fees.

 

(a)                              Prior to the beginning of each Plan Year, each
Non-Employee Director may elect to defer one hundred percent (100%) of his or
her Annual Retainer and/or Meeting Fees payable with respect to such Plan Year. 
The amount of Annual Retainer and/or Meeting Fees deferred shall be subject to
the provisions of Section 4.1(c).  In order to defer his or her Annual Retainer
and/or Meeting Fees, a Non-Employee Director must complete and return an
executed Election to the Company prior to the time announced by the Company,
which in any event shall be prior to the beginning of the Plan Year to which
such Election relates.  Notwithstanding the foregoing, with respect to each Plan
Year, if a Non-Employee Director first becomes eligible to participate in the
Plan during such Plan Year, such Election shall be filed within thirty (30) days
following the date on which the Non-Employee Director is first eligible to
participate and shall apply to Annual Retainer and/or Meeting Fees payable in
respect of services to be rendered during the portion of such Plan Year
following such Election.

 

(b)                              A Non-Employee Director’s Election to defer his
or her Annual Retainer and/or Meeting Fees for a Plan Year shall apply only for
such Plan Year and shall be irrevocable; provided, however, that a Non-Employee
Director may (i) cancel such Election due to an Unforeseeable Emergency (as
defined in Section 6.5) or a hardship distribution pursuant to
Section 1.401(k)-1(d)(3) of the Treasury Regulations or (ii) amend such Election
in accordance with Section 6.2(b).  In order to defer his or her Annual Retainer
and/or Meeting Fees for a subsequent Plan Year, a Non-Employee Director must
make a new Election in accordance with Section 4.1(a).

 

(c)                               The amount of Annual Retainer and/or Meeting
Fees deferred shall be withheld and deducted from the Participant’s Compensation
without reduction for any income or employment tax withholding (except to the
extent required by law) and shall be credited to a Phantom Stock Unit Account
for the Participant as provided in Sections 5.3 and 5.4.

 

5.

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4.2                            Election to Forego Restricted Stock Award.

 

(a)                              Prior to the beginning of each Plan Year, each
Non-Employee Director may elect to forgo his or her right to receive Restricted
Stock Award(s) that may be granted in such Plan Year.  In order to elect to
forego a Restricted Stock Award, a Non-Employee Director must complete and
return an executed Election to the Company prior to the time announced by the
Company, which in any event shall be prior to the beginning of the Plan Year to
which such Election relates.  Notwithstanding the foregoing, with respect to
each Plan Year, if a Non-Employee Director first becomes eligible to participate
in the Plan during such Plan Year, such Election shall be filed within thirty
(30) days following the date on which the Non-Employee Director is first
eligible to participate and shall apply to Restricted Stock Award(s) that may be
granted during the portion of such Plan Year following such Election.

 

(b)                              A Non-Employee Director’s Election to forego a
Restricted Stock Award for a Plan Year shall apply only for such Plan Year and
shall be irrevocable; provided, however, that a Non-Employee Director may
(i) cancel such Election due to an Unforeseeable Emergency (as defined in
Section 6.5) or a hardship distribution pursuant to Section 1.401(k)-1(d)(3) of
the Treasury Regulations or (ii) amend such Election in accordance with
Section 6.2(b).  In order to forego a Restricted Stock Award for a subsequent
Plan Year, a Non-Employee Director must make a new Election in accordance with
Section 4.2(a).

 

(c)                               Each forgone Restricted Stock Award, without
reduction for any income or employment tax withholding (except to the extent
required by law), shall result in credits to a Phantom Stock Unit Account for
the Participant as provided in Sections 5.3 and 5.4.

 

4.3                            Election to Defer Tax Gross-Up Payment.

 

(a)                              Prior to the beginning of each Plan Year, each
Non-Employee Director may elect to defer one hundred percent (100%) of any Tax
Gross-Up Payment that he or she may be eligible to receive in the Plan Year
following such Plan Year.  In order to defer such Tax Gross-Up Payment, a
Non-Employee Director must complete and return an executed Election to the
Company prior to the time announced by the Company, which in any event shall be
more than one (1) year prior to the beginning of the Plan Year in which such Tax
Gross-Up Payment otherwise would have been received by the Non-Employee
Director.  Notwithstanding the foregoing, if a Non-Employee Director first
becomes eligible to participate in the Plan during the Plan Year, such Election
shall be filed within thirty (30) days following the date on which the
Non-Employee Director is first eligible to participate and shall apply to any
Tax Gross-Up Payment payable during the following Plan Year.

 

(b)                              A Non-Employee Director’s Election to defer his
or her Tax Gross-Up Payment for a Plan Year shall apply only for such Plan Year
and shall be irrevocable; provided, however, that a Non-Employee Director may
(i) cancel such Election due to an Unforeseeable Emergency (as defined in
Section 6.5) or a hardship distribution pursuant to Section 1.401(k)-1(d)(3) of
the Treasury Regulations or (ii) amend such Election in accordance with Section

 

6.

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6.2(b).  In order to defer his or her Tax Gross-Up Payment for a subsequent Plan
Year, a Non-Employee Director must make a new Election in accordance with
Section 4.3(a).

 

(c)                               Each deferred Tax Gross-Up Payment, without
reduction for any income or employment tax withholding (except to the extent
required by law), shall be credited to a Phantom Stock Unit Account for the
Participant as provided in Sections 5.3 and 5.4.

 

4.4                            Manner of Elections.  The Company may establish
rules and procedures, and from time to time modify or change such rules and
procedures, governing the manner of Elections to defer Compensation or Tax
Gross-Up Payments or forego Restricted Stock Awards under the Plan, as it may
determine in its sole discretion, including (but not limited to) establishing
and changing any minimum or maximum amounts of Compensation, or percentages of
any component of Compensation, that may be deferred hereunder.

 

5.                                    PHANTOM STOCK UNIT ACCOUNT

 

5.1                            Establishment of Phantom Stock Unit Account.  The
Company shall establish a Phantom Stock Unit Account with respect to Deferred
Compensation for each Participant.  The establishment of a Phantom Stock Unit
Account constitutes only a method, by bookkeeping entry, of determining the
amount of deferred benefits to be distributed under the Plan.  The Company shall
be under no obligation to acquire or hold any Stock or any other securities or
specific assets by reason of the credits made to the Phantom Stock Unit Accounts
hereunder.

 

5.2                            Unsecured Creditors; Unfunded Plan.  A
Participant’s or Beneficiary’s rights to receive distributions under this Plan
are those of an unsecured general creditor of the Company.  Such rights
constitute a promise by the Company to make distributions to Participants and
their Beneficiaries in the future.  All amounts under the Plan, including a
Participant’s Phantom Stock Unit Account, shall remain (until paid to the
Participant or Beneficiary) the property of the Company and shall be subject to
the claims of the Company’s creditors in the event of the Company’s bankruptcy
or insolvency.  The Plan shall be unfunded for federal tax purposes.  The
obligation of the Company may, in its sole discretion, be satisfied from any
source of funds, including, but not limited to, payment from a trust or trusts
established by the Company which permit such payments to be made therefrom;
provided, however, that such trust or trusts constitute unfunded arrangements
subject to the claims of the Company’s creditors in the event of its bankruptcy
or insolvency.  No Participant or Beneficiary shall have any secured or
beneficial interest in any property, rights or investments held by the Company,
whether or not held in connection with the Plan, including but not limited to
any assets held in any trust established by the Company in connection with the
Plan.

 

5.3                            Timing of Credits.  A Participant’s Deferred
Compensation shall be credited to a Phantom Stock Unit Account as soon as
practicable following the time at which such amounts would have been paid or
transferred to the Participant in the absence of an Election; provided, however,
that one-fourth (¼) of the full amount elected to be deferred from a
Participant’s Annual Retainer for a Plan Year and/or all of the Meeting Fees
payable for the applicable calendar quarter shall be credited to the Phantom
Stock Unit Account on the last day of each

 

7.

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calendar quarter on which Stock is traded on the New York Stock Exchange, except
that no such amount shall be credited for any quarter of the Plan Year that
begins after the Participant has ceased service as a Non-Employee Director.  A
Participant’s foregone Restricted Stock Award shall be credited to a Phantom
Stock Unit Account as of the date on which such Restricted Stock Award would
have been awarded to the Participant in the absence of an Election to forego
such Restricted Stock Award.

 

5.4                            Amount of Credits; Vesting.  Deferred
Compensation (excluding foregone Restricted Stock Award(s) credited to a Phantom
Stock Unit Account) shall be converted into Phantom Stock Units, the number of
which shall be equal to such Deferred Compensation to be credited to the Phantom
Stock Unit Account divided by the Market Value of a share of Stock on the date
of such credit, and such Phantom Stock Units shall be fully vested and
nonforfeitable at all times.  The number of Phantom Stock Units to be credited
as Deferred Compensation by reason of an election to forego a Restricted Stock
Award shall be equal to the number of shares of Stock subject to the foregone
Restricted Stock Award, and such Phantom Stock Units shall be subject to (i) the
same vesting and forfeiture restrictions to which the foregone Restricted Stock
Award would have been subject and (ii) the vesting restrictions set forth in
Section 6.6 of the Incentive Plan.  Phantom Stock Units subject to vesting or
forfeiture restrictions are referred to in this Plan as “Restricted Units,” and
fully vested and nonforfeitable Phantom Stock Units are referred to in this Plan
as “Nonrestricted Units.”  Phantom Stock Unit Accounts shall be adjusted on
account of dividends, cash distributions, stock splits and similar events as
follows:

 

(a)                              As of the date when any cash dividend or other
cash distribution is payable with respect to the Stock, there shall be credited
to the Phantom Stock Unit Account an amount equal to the value which would have
been payable with respect to shares of Stock equal in number to the number of
Phantom Stock Units then credited to the Phantom Stock Unit Account.  Such
amount shall then be converted into a number of Phantom Stock Units based upon
the amount to be credited divided by the Market Value of a share of Stock on the
date of the credit.  All Phantom Stock Units credited under this
Section 5.4(a) shall be Nonrestricted Units, without regard to whether the
Phantom Stock Units from which they are derived are Restricted Units or
Nonrestricted Units.

 

(b)                              In the event of any change in the number of
shares of outstanding Stock by reason of any stock split, stock dividend,
recapitalization, or the like, whereby the outstanding shares of Stock are
adjusted, the number of Phantom Stock Units credited to the Phantom Stock Unit
Account shall be equitably adjusted to reflect such change.  Any adjustments
provided in this Section 5.4(b) with respect to Nonrestricted Units shall be in
the form of Nonrestricted Units.  Any adjustments provided in this
Section 5.4(b) with respect to Restricted Units shall be in the form of
Restricted Units, which shall be subject to the same vesting and forfeiture
terms and conditions applicable to the original Restricted Units from which they
are derived.

 

5.5                            Restricted Units.

 

(a)                              Restricted Units shall be subject to the terms
and conditions set forth in Section 5.5(b) until the end of the specified
restricted period applicable to such Restricted Units

 

8.

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(the “Restricted Period”).  Restricted Units not previously forfeited shall vest
and become nonforfeitable during the applicable Restricted Period and shall
thereafter be Nonrestricted Units.

 

(b)                              The “Vesting Commencement Date” for Restricted
Units credited to a Participant’s Phantom Stock Unit Account in respect of a
foregone Restricted Stock Award shall be the date on which such Restricted Stock
Award would have been received by the Participant in the absence of an Election
to forego such Restricted Stock Award.  The Restricted Period for such
Restricted Units credited to a Participant’s Phantom Stock Unit Account shall be
determined by the Company and communicated to the Participant in advance of the
time the Participant must make his or her Election for a Plan Year.

 

(c)                               During the applicable Restricted Period, if a
Participant is removed from the Board for Cause or if the Participant
voluntarily terminates his or her service with the Board, any Phantom Stock
Units credited to such Participant that remain Restricted Units shall be
forfeited, and all rights of the Participant to receive any benefits under the
Plan attributable to such forfeited Restricted Units shall terminate.  Prior to
May 22, 2008, in the event of a Change of Control or if a Participant’s service
on the Board is involuntarily terminated for any reason other than Cause,
including the Participant’s death or Disability, then the Restricted Period
shall terminate as to all Restricted Units, and any Phantom Stock Units that are
then Restricted Units shall immediately become Nonrestricted Units.  Effective
on and following May 22, 2008, in the event of a Change of Control or if a
Participant’s service on the Board is terminated due to Retirement, death or
Disability, the Restricted Period shall terminate as to all Restricted Units and
any Phantom Stock Units that are then Restricted Units shall immediately become
Nonrestricted Units; provided, however, that the Committee (as defined in the
Incentive Plan) may determine, pursuant to and subject to the limitations of
Section 6.6 of the Incentive Plan, that such acceleration shall also occur upon
the involuntary termination of a Participant’s service for any other reason,
other than for Cause.

 

6.                                    DISTRIBUTION OF PLAN BENEFITS

 

6.1                            Form of Benefit.  All benefits paid under this
Plan shall be paid in a single sum in the form of whole shares of Stock under
the Incentive Plan, with any fractional shares of Stock being paid in a single
sum in the form of cash based on the Market Value of a share of Stock on the
date of the payment.  The portion of such shares paid in respect of any deferred
Annual Retainer, Meeting Fees and Tax Gross-Up Payment shall be paid pursuant to
Section 6.5 of the Incentive Plan and the portion of such shares paid in respect
of any foregone Restricted Stock Award shall be paid pursuant to Section 6.6 of
the Incentive Plan.

 

6.2                            Distribution Elections.

 

(a)                              At the time of each Election pursuant to
Sections 4.1, 4.2 or 4.3 to defer receipt of Compensation, forego receipt of a
Restricted Stock Award or defer receipt of a Tax Gross-Up Payment, a Participant
also shall elect, on such form as the Company prescribes, the date of
distribution of the portion of his or her Phantom Stock Unit Account
attributable to the amount of Deferred Compensation specified in such Election;
provided, however, that if the

 

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Participant elects to forego receipt of a Restricted Stock Award pursuant to
such Election, the Participant must elect a date of distribution for the entire
portion of his or her Phantom Stock Unit Account attributable to the amount of
Deferred Compensation specified in such Election that is on or after the end of
the applicable Restricted Period for the foregone Restricted Stock Award.

 

(b)                              A Participant may change his or her
distribution election in accordance with procedures determined by the Company,
provided, however, that:

 

(i)                                  With respect to Section 409A Grandfathered
Amounts, any changed election shall not be effective unless a full calendar year
passes between the calendar year in which such changed election is submitted and
the calendar year in which the distribution date designated in such change
election occurs; and

 

(ii)                              With respect to Section 409A Non-Grandfathered
Amounts, any changed election (A) shall not take effect until at least twelve
(12) months after the date on which the change is made, (B) must be made more
than twelve (12) months prior to the date distribution otherwise would have been
made and (C) must designate a new date for distribution that is at least five
(5) years following the date distribution otherwise would have been made.

 

(c)                               No elections under this Section 6.2 may be
made or changed as to distributions from a Participant’s Phantom Stock Unit
Account unless the Board has approved in advance such election or change of
election in a manner, if any, that satisfies the requirements for exemption of
Phantom Stock Unit Account transactions pursuant to Rule 16b-3 promulgated under
the Exchange Act.

 

6.3                            Termination of Service on the Board or Change of
Control.  As soon as administratively practicable following the termination of a
Participant’s service on the Board, and notwithstanding any election that the
Participant has made under the Plan pursuant to Section 6.2, the Company shall
pay to such Participant or to the Participant’s Beneficiary in a lump sum all
amounts then credited to the Participant’s Phantom Stock Unit Account as
Nonrestricted Units (including formerly Restricted Units which become
Nonrestricted Units on account of such termination in accordance with
Section 5.5(c)), and any Restricted Units shall be forfeited; provided, however,
that with respect to Section 409A Non-Grandfathered Amounts, if a Change of
Control occurs prior to any such elected date of distribution pursuant to
Section 6.2 or termination of service, payment of such amounts shall be made in
a lump sum as soon as administratively feasible after the effective date of the
Change of Control, provided that the Change of Control constitutes a change in
the ownership or effective control of the Company, or in the ownership of a
substantial portion of the assets of the Company, as determined in accordance
with Section 1.409A-3(i)(5) of the Treasury Regulations.

 

6.4                            Early Distribution of Section 409A Grandfathered
Amounts.  A Participant may elect to receive a distribution of all or any
portion of the amount of Section 409A Grandfathered Amounts then credited to the
Participant’s Phantom Stock Unit Account as Nonrestricted Units on a date prior
to that established under the Plan, including the Participant’s

 

10.

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distribution election under Section 6.2; provided, however, that (i) the amount
distributed shall be equal to ninety percent (90%) of the amount elected by the
Participant, and (ii) the remaining ten percent (10%) of the amount elected by
the Participant shall be treated as forfeited by the Participant.  A Participant
may not receive any early distributions of any Section 409A Non-Grandfathered
Amounts pursuant to this Section 6.4.

 

6.5                            Unforeseeable Emergency.  Upon application by a
Participant, the Company may direct the distribution in a lump sum of all or a
portion of the remaining amount credited to the Participant’s Phantom Stock Unit
Account as Nonrestricted Units in the event of an Unforeseeable Emergency.  Any
such application must set forth the circumstances constituting such
Unforeseeable Emergency.  The determination as to whether an Unforeseeable
Emergency exists and as to the amount distributable under the Plan as a result
of such Unforeseeable Emergency shall be made by the Company in its sole
discretion.

 

For purposes of the Plan, an “Unforeseeable Emergency” shall mean any severe
financial hardship to the Participant resulting from (i) a sudden and unexpected
illness or accident of the Participant or a dependent (as defined in
Section 152(a) of the Code) of the Participant, (ii) loss of the Participant’s
property due to casualty, or (iii) other similar extraordinary and unforeseen
circumstances arising as a result of events beyond the control of the
Participant.  Any distribution pursuant to this provision is limited to the
amount necessary to meet the Unforeseeable Emergency, and any amounts necessary
to pay any federal, state or local income taxes or penalties reasonably
anticipated to result from such distribution.  The distribution may not exceed
the then vested portion of the Participant’s Account.  The circumstances that
will constitute an Unforeseeable Emergency will depend upon the facts of each
case, but, in any case, payment may not be made to the extent that such
emergency is or may be relieved (i) through reimbursement or compensation by
insurance or otherwise; (ii) by liquidation of the Participant’s assets, to the
extent the liquidation of such assets would not itself cause severe financial
hardship; or (iii) by cessation of deferrals under the Plan.  Furthermore,
examples of events that would not be considered Unforeseeable Emergencies
include the need to send a Participant’s child to college or the desire to
purchase a home.

 

6.6                            No Assignment or Alienation.  The right to
receive a distribution under this Plan shall not be subject to anticipation,
alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to
anticipate, alienate, sell, assign, pledge, encumber, or charge such right shall
be void.  No distribution or right to distribution shall in any manner be liable
for or subject to debts, contracts, liabilities or torts of the Participant or
the Participant’s Beneficiary.

 

7.                                    ADMINISTRATION

 

7.1                            Plan Administrator.  The Company shall be the
sole administrator of the Plan and will administer the Plan and interpret,
construe and apply its provisions in accordance with its terms. The Company
shall further establish, adopt or revise such rules and regulations as it may
deem necessary or advisable for the administration of the Plan.  All
determinations and interpretations made by the Company in good faith shall not
be subject to review by any person and shall be final, binding and conclusive on
all persons.

 

11.

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7.2                            Account Statements.  Each Participant will
receive an annual statement in such form as the Company deems desirable setting
forth the balance standing to the credit of the Participant’s Phantom Stock Unit
Account.

 

7.3                            Claims, Inquiries and Appeals.

 

(a)                              Applications for Benefits and Inquiries.  Any
application for benefits, inquiries about the Plan or inquiries about present or
future rights under the Plan must be submitted to the Company in writing by an
applicant (or his or her authorized representative) to the following address:

 

Alexandria Real Estate Equities, Inc.

Attention:  Chief Executive Officer/Chief Financial Officer

385 E. Colorado Boulevard, Suite 299

Pasadena, CA 91101

 

(b)                              Denial of Claims.  In the event that any
application for benefits is denied in whole or in part, the Company must provide
the applicant with written or electronic notice of the denial of the
application, and of the applicant’s right to review the denial.  The notice of
denial will be set forth in a manner designed to be understood by the applicant
and will include the following:

 

(i)                                  the specific reason or reasons for the
denial;

 

(ii)                              references to the specific Plan provisions
upon which the denial is based;

 

(iii)                          a description of any additional information or
material that the Company needs to complete the review and an explanation of why
such information or material is necessary; and

 

(iv)                          an explanation of the Plan’s review procedures and
the time limits applicable to such procedures.

 

This notice of denial will be given to the applicant within ninety (90) days
after the Company receives the application, unless special circumstances require
an extension of time, in which case, the Company has up to an additional ninety
(90) days for processing the application.  If an extension of time for
processing is required, written notice of the extension will be furnished to the
applicant before the end of the initial ninety (90) day period.

 

This notice of extension will describe the special circumstances necessitating
the additional time and the date by which the Company is to render its decision
on the application.

 

(c)                               Request for a Review.  Any person (or that
person’s authorized representative) for whom an application for benefits is
denied, in whole or in part, may appeal

 

12.

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the denial by submitting a request for a review to the Company within sixty (60)
days after the application is denied.  A request for a review shall be in
writing and shall be addressed to:

 

Alexandria Real Estate Equities, Inc.

Attention:  Chief Executive Officer/Chief Financial Officer

385 E. Colorado Boulevard, Suite 299

Pasadena, CA 91101

 

A request for review must set forth all of the grounds on which it is based, all
facts in support of the request and any other matters that the applicant feels
are pertinent.  The applicant (or his or her representative) shall have the
opportunity to submit (or the Company may require the applicant to submit)
written comments, documents, records, and other information relating to his or
her claim.  The applicant (or his or her representative) shall be provided, upon
request and free of charge, reasonable access to, and copies of, all documents,
records and other information relevant to his or her claim.  The review shall
take into account all comments, documents, records and other information
submitted by the applicant (or his or her representative) relating to the claim,
without regard to whether such information was submitted or considered in the
initial benefit determination.

 

(d)                              Decision on Review.  The Company will act on
each request for review within sixty (60) days after receipt of the request,
unless special circumstances require an extension of time (not to exceed an
additional sixty (60) days), for processing the request for a review.  If an
extension for review is required, written notice of the extension will be
furnished to the applicant within the initial sixty (60) day period.  This
notice of extension will describe the special circumstances necessitating the
additional time and the date by which the Company is to render its decision on
the review.  The Company will give prompt, written or electronic notice of its
decision to the applicant.  In the event that the Company confirms the denial of
the application for benefits in whole or in part, the notice will set forth, in
a manner calculated to be understood by the applicant, the following:

 

(i)                                  the specific reason or reasons for the
denial;

 

(ii)                              references to the specific Plan provisions
upon which the denial is based; and

 

(iii)                          a statement that the applicant is entitled to
receive, upon request and free of charge, reasonable access to, and copies of,
all documents, records and other information relevant to his or her claim.

 

(e)                              Rules and Procedures.  The Company will
establish rules and procedures, consistent with the Plan, as necessary and
appropriate in carrying out its responsibilities in reviewing benefit claims. 
The Company may require an applicant who wishes to submit additional information
in connection with an appeal from the denial of benefits to do so at the
applicant’s own expense.

 

13.

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(f)                                 Exhaustion of Remedies.  No legal action for
benefits under the Plan may be brought until the claimant (i) has submitted a
written application for benefits in accordance with the procedures described by
Section 7.3(a) above, (ii) has been notified by the Company that the application
is denied, (iii) has filed a written request for a review of the application in
accordance with the appeal procedure described in Section 7.3(c) above, and
(iv) has been notified that the Company has denied the appeal.  Notwithstanding
the foregoing, if the Company does not respond to a Participant’s claim or
appeal within the relevant time limits specified in this Section 7.3, the
Participant may bring legal action for benefits under the Plan.

 

8.                                    BENEFICIARY DESIGNATION

 

Each Participant shall have the right, at any time, to designate any person or
persons as Beneficiary or Beneficiaries (both primary as well as contingent) to
whom distributions under this Plan shall be made in the event of the
Participant’s death prior to complete distribution to the Participant of the
benefits due the Participant under the Plan.  Each Beneficiary designation shall
become effective only when filed in writing with the Company during the
Participant’s lifetime on a form prescribed by the Company.  The filing of a new
Beneficiary designation form will cancel all Beneficiary designations previously
filed.  The spouse of a married Participant domiciled in a community property
jurisdiction shall join in any designation of Beneficiary or Beneficiaries other
than the spouse.  If a Participant fails to designate a Beneficiary as provided
above, or if all designated Beneficiaries predecease the Participant or die
prior to complete distribution of the Participant’s benefits, then the Company
shall direct the distribution of such benefits to the Participant’s estate.

 

9.                                    MISCELLANEOUS

 

9.1                            Effective Date; Amendment and Termination.  This
Plan shall be effective January 1, 2002, with continuation thereafter
contemplated, subject to review of its operation.  However, this Plan shall at
all times remain subject to amendment, modification or termination by action of
the Company or the Board; provided, however, in the event of termination of the
Plan, any Nonrestricted Units held in a Participant’s Phantom Stock Unit Account
shall be distributed to the Participant in accordance with Section 6 hereof, and
any Restricted Units shall continue to vest in accordance with the terms of
their vesting schedules and, upon becoming Nonrestricted Units, shall be
distributed to the Participant in accordance with Section 6 hereof.

 

9.2                            No Employment or Service Rights.  This Plan shall
not be deemed to constitute a contract of employment or service between the
Company and any Participant.  Nothing contained in this Plan shall be deemed to
give any Participant the right to be retained in the service of the Company or
to interfere with the right of the Company or the Board to discharge any
Participant at any time regardless of the effect which such discharge shall have
upon such individual as a Participant in the Plan.

 

9.3                            Arbitration.  All disputes, claims, or causes of
action arising from or relating to this Plan shall be resolved to the fullest
extent permitted by law by final, binding and confidential arbitration, by a
single arbitrator, in Los Angeles, California, conducted by JAMS

 

14.

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under the then applicable JAMS rules.  All Participants and the Company shall be
deemed to have waived the right to resolve any such dispute through a trial by
jury or judge or administrative proceeding.  The arbitrator shall: (a) have the
authority to compel adequate discovery for the resolution of the dispute and to
award such relief as would otherwise be permitted by law; and (b) issue a
written arbitration decision, to include the arbitrator’s essential findings and
conclusions and a statement of the award.  The arbitrator shall be authorized to
award any or all remedies that the parties would be entitled to seek in a court
of law.  The Company shall pay all JAMS’ arbitration fees in excess of the
amount of court fees that would be required if the dispute were decided in a
court of law.  Nothing in this Plan is intended to prevent either the Company or
a Participant from obtaining injunctive relief in court to prevent irreparable
harm pending the conclusion of any such arbitration.

 

9.4                            Governing Law.  This Plan shall be construed in
accordance with and governed by the laws of the State of California.

 

9.5                            Severability.  In the event any provision of this
Plan is held invalid, void or unenforceable, the same shall not affect, in any
respect whatsoever, the validity of any other provisions of this Plan.

 

9.6                            Notice.  Any notice of filing required or
permitted to be given to the Company under the Plan shall be sufficient if in
writing and hand delivered, or sent by registered or certified mail, to the
principal office of the Company, directed to the attention of the Chief
Financial Officer for the Company.  Such notice shall be deemed given as of the
date of delivery or, the postmark on the receipt for registration or
certification.

 

9.7                            Successors.  This Plan shall be binding upon the
Company and its successors and assigns.

 

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