<PAGE>   1


                                                                  EXHIBIT 10.6


                             STARWOOD LODGING TRUST
                             1995 SHARE OPTION PLAN
                  (AMENDED AND RESTATED AS OF AUGUST 17, 1995)



                                I.  INTRODUCTION

1.1       PURPOSES AND GENERAL.  The purposes of the 1995 Share Option Plan
(the "Plan") of Starwood Lodging Trust (the "Trust") are to align the interests
of the Trust's shareholders and the recipients of options under this Plan by
increasing the proprietary interest of such recipients in the Trust's growth
and success and to advance the interests of the Trust by attracting and
retaining officers, key employees, consultants and advisers, as well as
qualified persons for service as trustees of the Trust ("Trustees").  For
purposes of this Plan, references to employment by or service as a consultant,
adviser or Trustee of the Trust shall also mean employment by or service as a
consultant, adviser or Trustee of a subsidiary of the Trust.

         This Plan seeks to accomplish the foregoing purposes by providing a
means whereby options to purchase from the Trust shares of beneficial interest,
par value $.01 per share, of the Trust ("Trust Shares") and options to purchase
from the Trust shares of the common stock, par value $.01 per share, of
Starwood Lodging Corporation ("Corporation Shares") may be granted, in
accordance with Section II, to eligible persons and shall be granted, in
accordance with Section III, to Trustees.  Pursuant to an Agreement dated June
25, 1980, as amended, between the Trust and Starwood Lodging Corporation (the
"Corporation"), all outstanding Trust Shares and Corporation Shares are paired
on a one-for-one basis and trade as units consisting of one Trust Share and one
Corporation Share ("Paired Shares").  Accordingly, each option to purchase
Trust Shares (a "Trust Share Option") shall be paired with an option to
purchase an equal number of Corporation Shares (a "Corporation Share Option"
and each such paired Trust Share Option and Corporation Share Option is herein
referred to as a "Paired Option").

         Each Paired Option may be exercised, terminated, cancelled, forfeited,
transferred or otherwise disposed of only in units consisting of Paired Shares.
Accordingly, a Trust Share Option, or portion thereof, may be exercised,
terminated, cancelled, forfeited, transferred or otherwise disposed of only in
connection with, and to the same extent as, the exercise, termination,
cancellation, forfeiture, transfer or other disposition of a Corporation Share
Option.  Each Trust Share Option constituting part of a Paired Option may be
either an incentive share option or a non-qualified share option.  An incentive
share option shall mean a Trust Share Option that meets the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
any successor provision, which
<PAGE>   2
is intended by the Committee (as defined below) to constitute an incentive
share option.  Each Corporation Share Option constituting part of a Paired
Option shall be a non-qualified share option.

1.2       ADMINISTRATION.  This Plan shall be administered by a committee (the
"Committee") designated by the Board of Trustees of the Trust (the "Board")
consisting of two or more members of the Board, each of whom shall be a
"disinterested person" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and an "outside
director" within the meaning of Section 162(m) of the Code, subject to any
transition rules applicable to the definition of outside director.

         The Committee may, subject to the terms of this Plan, select eligible
persons to be granted Paired Options in accordance with Section II and shall
determine the number of Paired Shares subject to each such Paired Option.  The
Committee shall, subject to the terms of this Plan, determine the exercise
price of each Paired Option granted hereunder, including the portion of the
exercise price of such Paired Option which is attributable to the Trust Share
Option and the Corporation Share Option, respectively, the time and conditions
of exercise of such Paired Option and all other terms and conditions of such
Paired Option, including, without limitation, the form of the Agreement
representing such Paired Option.  The Committee may, in its sole discretion and
for any reason at any time, accelerate the exercisability of any Paired Option.
The Committee shall, subject to the terms of this Plan, interpret this Plan and
the application thereof, establish rules and regulations it deems necessary or
desirable for the administration of this Plan and may impose, incidental to the
grant of a Paired Option, conditions with respect to the grant, such as
limiting competitive employment or other activities.  All such interpretations,
rules, regulations and conditions shall be conclusive and binding on all
parties.  Each Paired Option shall be evidenced by a written Agreement (an
"Agreement") between the Trust and the optionee setting forth the terms and
conditions applicable to such Paired Option.

         The Committee may delegate some or all of its power and authority
hereunder to the Chief Executive Officer or Chief Operating Officer or other
executive officer of the Trust as the Committee deems appropriate; provided,
however, that the Committee may not delegate its power and authority with
regard to (i) the grant of a Paired Option to any person who is a "covered
employee" within the meaning of Section 162(m) of the Code or who, in the
Committee's judgment, is likely to be a covered employee at any time during the
period a Paired Option granted to such employee would be outstanding or (ii)
the selection for participation in this Plan of an officer or other person
subject to Section 16 of the Exchange Act or decisions concerning the




                                       -2-
<PAGE>   3
timing, pricing or amount of a grant of a Paired Option to such an officer or
other person.

         A majority of the Committee shall constitute a quorum.  The acts of
the Committee shall be either (i) acts of a majority of the members of the
Committee present at any meeting at which a quorum is present or (ii) acts
approved in writing by a majority of the members of the Committee without a
meeting.

1.3       ELIGIBILITY.  Participants in this Plan shall consist of such
officers, key employees, consultants, advisers and Trustees of the Trust and
its subsidiaries as the Committee in its sole discretion may select from time
to time.  The Committee's selection of a person to participate in this Plan at
any time shall not require the Committee to select such person to participate
in this Plan at any other time.  Trustees shall also be eligible to participate
in this Plan in accordance with Section III.

1.4       SHARES AVAILABLE.  The number of Paired Shares available for grants
of Paired Options under this Plan, other than a Paired Option that includes a
Trust Share Option that is designated as an incentive share option, shall be
1,573,000 (subject to adjustment as provided in Section 4.7) plus eight percent
(8%) of the sum of (i) the number of Paired Shares which may be issued upon the
exchange of limited partnership units ("Units") in SLT Realty Limited
Partnership, a Delaware limited partnership, and SLC Operating Limited
Partnership, a Delaware limited partnership to the extent such Units first
become outstanding after August 17, 1995 (without reduction for subsequent
repurchases, redemptions or similar events involving the Units), plus (ii) the
number of Paired Shares which first become outstanding (without reduction for
subsequent repurchases, redemptions or similar events involving Paired Shares)
after August 17, 1995 (other than by reason of (A) such exchange of Units, (B)
the issuance or delivery of Paired Shares pursuant to any employee benefit plan
of the Trust or the Corporation or (C) the issuance of Paired Shares which were
acquired and held by the Trust or the Corporation prior to their issuance),
reduced by (iii) the aggregate number of Paired Shares which become subject to
(A) outstanding Paired Options under this Plan, including each Paired Option
that includes a Trust Share Option that is designated as an incentive share
option, or (B) outstanding options to purchase Paired Shares under the
Corporation's 1995 Share Option Plan (the "Corporation Plan").  Subject to
adjustment as provided in Section 4.7, the number of Paired Shares available
for grants of Paired Options that include Trust Share Options that are
designated as incentive share options shall be 1,573,000, reduced by the
aggregate number of Paired Shares which become subject to (X) outstanding
Paired Options under this Plan, including each Paired Option that does not
include a Trust Share Option that is designated as an incentive share option,
or (Y) outstanding options to purchase Paired Shares under the Corporation
Plan.  To the extent that Paired Shares subject to an outstanding Paired





                                      -3-
<PAGE>   4
Option or an outstanding option to purchase Paired Shares under the Corporation
Plan are not issued or delivered by reason of the termination, cancellation or
forfeiture of any such option or by reason of the delivery of Paired Shares to
pay all or a portion of the exercise price of any such option, or to satisfy
all or a portion of the tax withholding obligations relating to any such
option, then such Paired Shares shall again be available under this Plan.

         Paired Shares to be delivered under this Plan shall be made available
(i) (A) by the Trust from authorized and unissued Trust Shares issued by the
Trust directly to the optionee and (B) by the Corporation from authorized and
unissued Corporation Shares issued by the Corporation directly to the Trust for
delivery to the optionee, (ii) from authorized and issued Paired Shares
acquired and held by the Trust or (iii) a combination thereof.

         To the extent required by Section 162(m) of the Code and the rules and
regulations thereunder, the maximum number of Paired Shares with respect to
which Paired Options may be granted during any calendar year to any person
shall be 500,000, subject to adjustment as provided in Section 4.7.


                              II.  PAIRED OPTIONS

2.1       GRANTS OF PAIRED OPTIONS.  The Committee may, in its discretion,
grant Paired Options to such eligible persons as may be selected by the
Committee.  Each Trust Share Option, or portion thereof, that is not an
incentive share option, shall be a non- qualified share option.  Each Paired
Option that includes a Trust Share Option that is designated as an incentive
share option shall be granted within ten years of the effective date of this
Plan.  To the extent that the aggregate fair market value (determined as of the
date of grant) of Trust Shares with respect to which Trust Share Options
designated as incentive share options are exercisable for the first time by a
participant during any calendar year (under this Plan or any other plan of the
Trust, or any parent or subsidiary) exceeds the amount (currently $100,000)
established by the Code, such Trust Share Options shall constitute
non-qualified share options.  The "fair market value" of a Trust Share shall be
that portion of the fair market value of a Paired Share which the Committee
determines to be attributable to the Trust Share by applying in good faith a
method of valuation permissible under Section 422 of the Code.  The "fair
market value" of a Paired Share shall mean the closing transaction price of a
Paired Share as reported in the New York Stock Exchange Composite Transactions
on the date as of which such value is being determined or, if there shall be no
reported transaction on such date, on the next preceding date for which a
transaction was reported; provided that if the fair market value of a Paired
Share for any date cannot be determined as above provided, fair market value of
a Paired Share shall be determined by the Committee by whatever means or method
as the Committee, in





                                      -4-
<PAGE>   5
the good faith exercise of its discretion, shall at such time deem appropriate.

2.2       TERMS OF PAIRED OPTIONS.  Paired Options shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of this Plan, as the Committee
shall deem advisable:

         (a)     Number of Paired Shares and Purchase Price.  The number of
Paired Shares subject to a Paired Option and the purchase price per Paired
Share purchasable upon exercise of the Paired Option, including the portions of
the purchase price of a Paired Share which are attributable to a Trust Share
and a Corporation Share, respectively, shall be determined by the Committee;
provided, however, that (i) the purchase price per Paired Share shall not be
less than 100% of the fair market value of a Paired Share on the date of grant
of such Paired Option, (ii) the portion of the purchase price of a Paired Share
which the Committee determines to be attributable to a Trust Share shall not be
less than 100% of the fair market value of a Trust Share on the date of grant
of such Paired Option and (iii) the portion of the purchase price of a Paired
Share which the Committee determines to be attributable to a Corporation Share
shall not be less than 100% of the fair market value of a Corporation Share on
the date of grant of such Paired Option; provided further, that if a Trust
Share Option designated as an incentive share option shall be granted to any
person who, at the time such incentive share option is granted, owns capital
stock possessing more than ten percent of the total combined voting power of
all classes of capital stock of the Trust (or of any parent or subsidiary) (a
"Ten Percent Holder"), the purchase price per Trust Share shall be the price
(currently 110% of fair market value of a Trust Share) required by the Code in
order to constitute an incentive share option.  The "fair market value" of a
Corporation Share shall be that portion of the fair market value of a Paired
Share which the Committee determines to be attributable to the Corporation
Share.

         (b)     Option Period and Exercisability.  The period during which a
Paired Option may be exercised shall be determined by the Committee; provided,
however, that no Paired Option which includes a Trust Share Option designated
as an incentive share option shall be exercised later than ten years after its
date of grant; provided further, that if a Paired Option which includes a Trust
Share Option designated as an incentive share option shall be granted to a Ten
Percent Holder, such Paired Option shall not be exercised later than five years
after its date of grant.  The Committee shall determine whether a Paired Option
shall become exercisable in cumulative or non-cumulative installments and in
part or in full at any time.  An exercisable Paired Option, or portion thereof,
may be exercised only with respect to whole Paired Shares.





                                      -5-
<PAGE>   6
         (c)     Method of Exercise.  A Paired Option may be exercised (i) by
giving written notice to the Trust specifying the number of whole Paired Shares
to be purchased and accompanied by payment therefor in full (or arrangement
made for such payment to the Trust's satisfaction) either (A) in cash, (B) by
delivery of previously owned whole Paired Shares (which the optionee has held
for at least six months prior to the delivery of such Paired Shares or which
the optionee purchased on the open market and for which the optionee has good
title, free and clear of all liens and encumbrances) having a fair market
value, determined as of the date of exercise, equal to the aggregate purchase
price payable by reason of such exercise, (C) in cash by a broker-dealer
acceptable to the Trust to whom the optionee has submitted an irrevocable
notice of exercise or (D) a combination of (A) and (B), in each case to the
extent set forth in the Agreement relating to the Paired Option and (ii) by
executing such documents as the Trust may reasonably request.  The Committee
shall have sole discretion to disapprove of an election pursuant to either
clause (B) or (C) and in the case of an optionee who is subject to Section 16
of the Exchange Act, the Trust may require that the method of making such
payment be in compliance with Section 16 and the rules and regulations
thereunder.  Any fraction of a Paired Share which would be required to pay such
purchase price shall be disregarded and the remaining amount due shall be paid
in cash by the optionee.  No certificate representing a Paired Share shall be
delivered until the full purchase price therefor has been paid.

2.3       TERMINATION OF EMPLOYMENT OR SERVICE.

         (a)   Disability and Death.  Subject to paragraph (e) below and unless
otherwise specified in the Agreement relating to a Paired Option, if an
optionee's employment with the Trust or service as a consultant, adviser or
Trustee terminates by reason of Disability or death, each Paired Option held by
such optionee shall be fully exercisable and may thereafter be exercised by
such optionee (or such optionee's executor, administrator, legal
representative, beneficiary or similar person, as the case may be) until and
including the earliest to occur of (i) the date which is one year (or such
other period as set forth in the Agreement relating to such Paired Option)
after the effective date of such optionee's termination of employment or
service or date of death, as the case may be, and (ii) the expiration date of
the term of such Paired Option.  For purposes of this Plan, "Disability" shall
mean the inability of an optionee substantially to perform such optionee's
duties and responsibilities for a continuous period of at least six months.

         (b) Termination for Cause.  Subject to paragraph (e) below and unless
otherwise specified in the Agreement relating to a Paired Option, if an
optionee's employment with the Trust or service as a consultant, adviser or
Trustee terminates for Cause, each Paired Option held by such optionee, whether
or not then exercisable, shall terminate automatically on the effective date





                                      -6-
<PAGE>   7
of such optionee's termination of employment or service.  For purposes of this
Plan, "Cause" shall mean embezzlement or misappropriation of funds or other
assets, other act of dishonesty, significant activities harmful to the
reputation of the Trust or the Corporation, willful refusal to perform or
substantial disregard of the duties properly assigned to the optionee (other
than as a result of Disability), significant violation of any statutory or
common law duty of loyalty to the Trust or the Corporation or a material breach
by the optionee of the optionee's employment Agreement with the Trust, if any.

         (c)  Other Termination.  Subject to paragraph (e) below and unless
otherwise specified in the Agreement relating to a Paired Option, if an
optionee's employment with the Trust or service as a consultant, adviser or
Trustee terminates for any reason other than Disability, death or Cause, each
Paired Option held by such optionee shall be exercisable only to the extent
that such Paired Option is exercisable on the effective date of such optionee's
termination of employment or service and may thereafter be exercised by such
optionee (or such optionee's legal representative or similar person) until and
including the earliest to occur of (i) the date which is three months (or such
other period as set forth in the Agreement relating to such Paired Option)
after the effective date of such optionee's termination of employment or
service and (ii) the expiration date of the term of such Paired Option.

         (d)  Death Following Termination of Employment or Service.  Subject to
paragraph (e) below and unless otherwise specified in the Agreement relating to
a Paired Option, if an optionee dies during the one-year period following
termination of employment or service by reason of Disability, or if an optionee
dies during the three-month period following termination of employment or
service for any other reason other than Disability or Cause (or, in each case,
such other period as the Committee may specify in the Agreement relating to a
Paired Option), each Paired Option held by such optionee shall be exercisable
only to the extent that such Paired Option is exercisable on the date of such
optionee's death and may thereafter be exercised by such optionee's executor,
administrator, legal representative, beneficiary or similar person, as the case
may be, until and including the earliest to occur of (i) the date which is
three months (or such other period as set forth in the Agreement relating to
such Paired Option) after the date of death and (ii) the expiration date of the
term of such Paired Option.

         (e)  Termination of Employment - Incentive Share Options. Unless
otherwise specified in the Agreement relating to a Paired Option which includes
a Trust Share Option designated as an incentive share option, if the employment
with the Trust of a holder of such a Paired Option terminates by reason of
Permanent and Total Disability (as defined in Section 22(e)(3) of the Code) or
death, each such Paired Option shall be fully exercisable and may thereafter be
exercised by such optionee (or such optionee's





                                      -7-
<PAGE>   8
executor, administrator, legal representative, beneficiary or similar person,
as the case may be) until and including the earliest to occur of (i) the date
which is one year (or such shorter period as set forth in the Agreement
relating to such Paired Option) after the effective date of such optionee's
termination of employment by reason of Permanent and Total Disability or date
of death, as the case may be, and (ii) the expiration date of the term of such
Paired Option.

                 Unless otherwise specified in the Agreement relating to a
Paired Option which includes a Trust Share Option designated as an incentive
share option, if the employment with the Trust of a holder of such a Paired
Option terminates for Cause, each such Paired Option, whether or not then
exercisable, shall terminate automatically on the effective date of such
optionee's termination of employment.

                 If the employment with the Trust of a holder of a Paired
Option which includes a Trust Share Option designated as an incentive share
option terminates for any reason other than Permanent and Total Disability,
death or Cause, each such Paired Option shall be exercisable only to the extent
such Paired Option is exercisable on the effective date of such optionee's
termination of employment and may thereafter be exercised by such holder (or
such holder's legal representative or similar person) until and including the
earliest to occur of (i) the date which is three months after the effective
date of such optionee's termination of employment and (ii) the expiration date
of the term of such Paired Option.

                 If the holder of a Paired Option which includes a Trust Share
Option designated as an incentive share option dies during the one-year period
following termination of employment by reason of Permanent and Total Disability
(or such shorter period as set forth in the Agreement relating to such Paired
Option), or if the holder of such a Paired Option dies during the three-month
period following termination of employment for any reason other than Permanent
and Total Disability or Cause, each such Paired Option held by such optionee
shall be exercisable only to the extent such Paired Option is exercisable on
the date of the optionee's death and may thereafter be exercised by the
optionee's executor, administrator, legal representative, beneficiary or
similar person until and including the earliest to occur of (i) the date which
is three months after the date of death and (ii) the expiration date of the
term of such Paired Option.


                 III.  CERTAIN PROVISIONS RELATING TO TRUSTEES

3.1       ELIGIBILITY.  Each Trustee shall be granted Paired Options in 
accordance with this Section III.  All Trust Share Options and Corporation
Share Options included in the Paired Options granted under this Section III
shall constitute non-qualified share options.





                                      -8-
<PAGE>   9
3.2       GRANTS OF PAIRED OPTIONS.  Each Trustee shall be granted Paired       
Options as follows:

         (a)  Time of Grant.  On the date of the effectiveness of the Trust's
first public offering of Trust Shares which occurs subsequent to the adoption
of this Plan by the Board and prior to June 30, 1996, and on June 30 of each
calendar year beginning in 1996 (or, if later, on the date on which a person is
first elected to serve as a Trustee), each person who is a Trustee on such
date, including each person who has been elected a Trustee as of such date but
who will not begin to serve as a Trustee until a later date, shall be granted a
Paired Option to purchase 6,000 Paired Shares (which amount shall be pro-rated
if such person is first elected to serve as a Trustee on a date other than such
effective date or June 30 of a calendar year, as the case may be) at a purchase
price per Paired Share equal to 100% of the fair market value of a Paired Share
on the date of grant of such Paired Option; provided, however, that the portion
of the purchase price of a Paired Share which is attributable to a Trust Share
shall be 100% of the fair market value of a Trust Share on the date of grant of
such Paired Option and the portion of the purchase price of a Paired Share
which is attributable to a Corporation Share shall be 100% of the fair market
value of a Corporation Share on the date of grant of such Paired Option.

         (b)  Option Period and Exercisability.  Each Paired Option granted
under this Article III shall be fully exercisable on and after its date of
grant, shall expire ten years after its date of grant (notwithstanding
termination of service as a Trustee for any reason prior to such ten-year
anniversary date) and may be exercised in whole or in part only with respect to
whole Paired Shares.  Paired Options granted under this Article III shall be
exercisable in accordance with Section 2.2(c).

         (c)  Death.  If a Trustee dies while a Paired Option is outstanding,
such Paired Option may thereafter be exercised by such Trustee's executor,
administrator, legal representative, beneficiary or similar person, as the case
may be, until and including the expiration date of the term of such Paired
Option.


                                  IV.  GENERAL

4.1       EFFECTIVE DATE AND TERM OF PLAN.  This Plan shall be submitted to     
the shareholders of the Trust for approval within one year after the date of
approval by the Board and, if approved by a majority of all the votes cast at a
meeting of shareholders at which a quorum is present, shall become effective as
of the date of approval by the Board.  No Paired Option may be exercised prior
to the date of such shareholder approval.  This Plan shall terminate ten years
after its effective date unless terminated earlier by the Board.  Termination
of this Plan shall not affect the terms or conditions of any Paired Option
granted prior to termination.





                                      -9-
<PAGE>   10
                 Paired Options may be granted hereunder at any time prior to
the termination of this Plan, provided that no Paired Option may be granted
later than ten years after the effective date of this Plan.  In the event that
this Plan is not approved by the shareholders of the Trust within one year
after the date of approval by the Board, this Plan and any Paired Options
granted hereunder shall be null and void.

4.2       AMENDMENTS.  The Board may amend this Plan as it shall deem advisable,
subject to any requirement of shareholder approval required by applicable law,
rule or regulation including Rule 16b-3 under the Exchange Act and Sections
162(m) and 422 of the Code; provided, however, that the number of Paired Shares
subject to a Paired Option granted to Trustees pursuant to Article III, the
purchase price therefor, the date of grant of any such Paired Option and the
category of persons eligible to be granted such Paired Options shall not be
amended more than once every six months, other than to comply with changes in
the Code and the Employee Retirement Income Security Act of 1974, as amended,
or the rules and regulations thereunder; and provided further, that any
amendment with respect to the persons eligible to participate in this Plan or
the number of Paired Shares available for grants of Paired Options under this
Plan shall not be effective without shareholder approval of such amendment
within 12 months before or after the date such amendment is approved by the
Board.  No amendment may impair the rights of a holder of an outstanding Paired
Option without the consent of such holder.

4.3       AGREEMENT.  No Paired Option may be exercised until an Agreement is
executed by the Trust and the optionee and, upon execution by the Trust and the
optionee and delivery of the Agreement to the Trust, such Paired Option shall
be effective as of the effective date set forth in the Agreement.

4.4       NON-TRANSFERABILITY.  No Paired Option hereunder shall be
transferable other than (i) by will or the laws of descent and distribution or
pursuant to beneficiary designation procedures approved by the Trust or (ii) in
the case of a Paired Option which does not include a Trust Share Option
designated as an incentive share option, as otherwise permitted under Rule
16b-3 under the Exchange Act as set forth in the Agreement relating to such
Paired Option.  Except to the extent permitted by the foregoing sentence, each
Paired Option may be exercised during the optionee's lifetime only by the
optionee or the optionee's legal representative or similar person.  Except as
permitted by the second preceding sentence, no Paired Option shall be sold,
transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed
of (whether by operation of law or otherwise) or be subject to execution,
attachment or similar process.  Upon any attempt to so sell, transfer, assign,
pledge, hypothecate, encumber or otherwise dispose of any Paired Option such
Paired Option and all rights thereunder shall immediately become null and void.





                                      -10-
<PAGE>   11
4.5       TAX WITHHOLDING.  The Trust shall have the right to require, prior to
the delivery of any Paired Shares, payment by the optionee of any Federal,
state, local or other taxes which may be required to be withheld or paid in
connection with a Paired Option hereunder.  An Agreement may provide that the
optionee may satisfy any such obligation by any of the following means:  (A) a
cash payment to the Trust, (B) delivery to the Trust of previously owned whole
Paired Shares (which the optionee has held for at least six months prior to the
delivery of such Paired Shares or which the optionee purchased on the open
market and for which the optionee has good title, free and clear of all liens
and encumbrances) having an aggregate fair market value, determined as of the
date the obligation to withhold or pay taxes arises in connection with the
Paired Option (the "Tax Date"), equal to the amount necessary to satisfy any
such obligation, (C) a cash payment by a broker-dealer acceptable to the Trust
to whom the optionee has submitted an irrevocable notice of exercise or (D) any
combination of (A) and (B), in each case to the extent set forth in the
Agreement relating to the Paired Option; provided, however, that the Committee
shall have sole discretion to disapprove of an election pursuant to any of
clauses (B)-(D) and that in the case of an optionee who is subject to Section
16 of the Exchange Act, the Trust may require that the method of satisfying any
such obligation be in compliance with Section 16 and the rules and regulations
thereunder.  An Agreement may provide for Paired Shares to be delivered having
a fair market value in excess of the minimum amount required to be withheld,
but not in excess of the amount determined by applying the optionee's maximum
marginal tax rate.  Any fraction of a Paired Share which would be required to
satisfy such an obligation shall be disregarded and the remaining amount due
shall be paid in cash by the optionee.

4.6       RESTRICTIONS ON PAIRED SHARES.  Each Paired Option hereunder shall be
subject to the requirement that if at any time the Trust determines that the
listing, registration or qualification of the Paired Shares subject to such
Paired Option upon any securities exchange or under any law, or the consent or
approval of any governmental body, or the taking of any other action is
necessary or desirable as a condition of, or in connection with, the delivery
of Paired Shares thereunder, such Paired Shares shall not be delivered unless
such listing, registration, qualification, consent, approval or other action
shall have been effected or obtained, free of any conditions not acceptable to
the Trust.  The Trust may require that certificates evidencing Paired Shares
delivered pursuant to any Paired Option bear a legend indicating that the sale,
transfer or other disposition thereof by the holder is prohibited except in
compliance with the Securities Act of 1933, as amended, and the rules and
regulations thereunder.

         Notwithstanding any other provision hereunder, no Paired Option
hereunder shall be exercisable if, as a result of either the ability to
exercise or the exercise of such Paired Option,





                                      -11-
<PAGE>   12
the Trust would not satisfy the REIT Requirements in any respect.  For purposes
of the preceding sentence, "REIT Requirements" shall mean the requirements for
the Trust to (i) qualify as a real estate investment trust under the Code and
the rules and regulations promulgated thereunder, (ii) retain its status as
grandfathered pursuant to Section 132(c)(3) of the Deficit Reduction Act of
1984 and (iii) retain the benefits of that certain private letter ruling issued
by the Internal Revenue Service to the Trust dated as of January 4, 1980.

4.7       ADJUSTMENT.  In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Paired Shares other than a regular
cash dividend, the number and class of securities available under this Plan,
the number and class of securities subject to each outstanding Paired Option,
the purchase price per security, and the number of securities subject to each
Paired Option to be granted to Trustees pursuant to Article III shall be
appropriately adjusted by the Committee, such adjustments to be made in the
case of outstanding Paired Options without an increase in the aggregate
purchase price.  The decision of the Committee regarding any such adjustment
shall be final, binding and conclusive.  If any adjustment would result in a
fractional security being (i) available under this Plan, such fractional
security shall be disregarded, or (ii) subject to a Paired Option under this
Plan, the Company shall pay the optionee, in connection with the first exercise
of the Paired Option in whole or in part, occurring after such adjustment, an
amount in cash determined by multiplying (A) the fraction of such security
(rounded to the nearest hundredth) by (B) the excess, if any, of (x) the fair
market value of a Paired Share on the exercise date over (y) the exercise price
of the Paired Option.

         With respect to any optionee who is subject to Section 16 of the
Exchange Act and notwithstanding the exercise periods set forth in paragraphs
(a), (c) and (d) of Section 2.3, paragraph (b) of Section 3.2 or as set forth
pursuant to such paragraphs in any Agreement to which such optionee is a party
(or as may be set forth pursuant to paragraph (b) of Section 2.3), in the event
(i) the Trust is involved in a business combination which is intended to be
treated as a pooling of interests for financial accounting purposes (a "Pooling
Transaction") or pursuant to which such optionee receives a substitute option
to purchase securities of any entity, including any entity directly or
indirectly acquiring the Trust, and (ii) such optionee's employment with the
Trust or service as a Trustee is terminated during the nine-month period
beginning three months prior to the consummation of such business combination,
then each Paired Option (or option in substitution thereof) held by such
optionee shall be exercisable to the extent set forth in such paragraphs until
and including the latest of (x) the date set forth pursuant to the then
applicable paragraph of Section 2.3 or 3.2, as the case may be, (y) the date
which is





                                      -12-
<PAGE>   13
six months and one day after the consummation of such business combination and
(z) the date which is ten business days after the date of expiration of any
period during which such optionee may not dispose of a security issued in the
Pooling Transaction in order for the Pooling Transaction to be accounted for as
a pooling of interests.

4.8      NO RIGHT OF PARTICIPATION OR EMPLOYMENT.  No person shall have any 
right to participate in this Plan.  Neither this Plan nor any Paired Option
granted hereunder shall confer upon any person any right to continued
employment by the Trust, any subsidiary or any affiliate of the Trust or affect
in any manner the right of the Trust, any subsidiary or any affiliate of the
Trust to terminate the employment of any person at any time without liability
hereunder.

4.9      RIGHTS AS SHAREHOLDER.  No person shall have any rights as a 
shareholder of the Trust with respect to any Trust Shares or Corporation Shares
which are subject to a Paired Option hereunder until such person becomes a
shareholder of record with respect to such Trust Shares and Corporation Shares.

4.10     DESIGNATION OF BENEFICIARY.  If permitted by the Trust, an optionee may
file with the Committee a written designation of one or more persons as such
optionee's beneficiary or beneficiaries (both primary and contingent) in the
event of the optionee's death.  To the extent an outstanding Paired Option
granted hereunder is exercisable, such beneficiary or beneficiaries shall be
entitled to exercise such Paired Option.

         Each beneficiary designation shall become effective only when filed in
writing with the Committee during the optionee's lifetime on a form prescribed
by the Committee.  The spouse of a married optionee domiciled in a community
property jurisdiction shall join in any designation of a beneficiary other than
such spouse.  The filing with the Committee of a new beneficiary designation
shall cancel all previously filed beneficiary designations.

         If an optionee fails to designate a beneficiary, or if all designated
beneficiaries of an optionee predecease the optionee, then each outstanding
Paired Option hereunder held by such optionee, to the extent exercisable, may
be exercised by such optionee's executor, administrator, legal representative
or similar person.

4.11     GOVERNING LAW.  This Plan, each Paired Option hereunder and the related
Agreement, and all determinations made and actions taken pursuant thereto, to
the extent not otherwise governed by the Code or the laws of the United States,
shall be governed by the laws of the State of California and construed in
accordance therewith without giving effect to principles of conflicts of laws.





                                      -13-
<PAGE>   14
4.12     TERMINATION OF PAIRING AGREEMENT.  Notwithstanding anything in this 
Plan to the contrary, if at any time the Agreement dated June 25, 1980, by and
between the Trust and the Corporation, pursuant to which Trust Shares and
Corporation Shares are paired on a share-for-share basis, is terminated for any
reason and as a result of such termination Trust Shares and Corporation Shares
no longer are required to be transferred together, then concurrently with such
termination (i) Paired Options will no longer be granted hereunder; (ii) only
Trust Share Options may thereafter be granted hereunder; (iii) each then
outstanding Paired Option shall constitute a wholly separate and independent
Trust Share Option and Corporation Share Option and the Trust, in its
discretion, may require that each Agreement evidencing a Paired Option be
returned to the Trust for cancellation in exchange for separate agreements
evidencing the Trust Share Option and Corporation Share Option subject to such
Paired Option; (iv) Trust Share Options and Corporation Share Options shall no
longer be required to be exercised, terminated, cancelled, forfeited,
transferred or otherwise disposed of together; and (v) the "fair market value"
and the "closing price" of the Trust Shares and Corporation Shares as used
herein shall thereafter be deemed to refer, respectively, to the fair market
value and the closing price of a Trust Share and a Corporation Share.





                                      -14-