Exhibit 10.4
**AMENDMENT NO. 2**
**TO THE**
**THIRD AMENDED AND RESTATED 1997 STOCK OPTION AND INCENTIVE PLAN**
**OF**
**AMB PROPERTY CORPORATION**
**AND AMB PROPERTY, L.P.**
     AMB Property Corporation, a corporation organized under the laws of Stateof Maryland (the “Company”), hereby adopts this Amendment No. 2 (this“Amendment”) to the Third Amended and Restated 1997 Stock Option and IncentivePlan of AMB Property Corporation and AMB Property, L.P. (the “Plan”).Capitalized terms used in this Amendment without definition shall have themeanings given to such terms in the Plan.
     WHEREAS, Section 402 of the Sarbanes-Oxley Act of 2002 generally prohibitsany issuer from, directly or indirectly, including through any subsidiary,extending or maintaining credit, arranging for the extension of credit, orrenewing an extension of credit, in the form of a personal loan to or for anydirector or executive officer (or equivalent thereof) of that issuer (“Section402”);
     WHEREAS, Section 5.2(d) of the Plan generally provides that the Companymay allow payment of option exercises, in whole or in part, through delivery ofa full recourse promissory note bearing interest and payable upon such terms asmay be prescribed by the Committee;
     WHEREAS, Section 10.6 of the Plan generally provides that the Committeemay, in its discretion, extend one or more loans to key employees in connectionwith the exercise or receipt of an option, performance award, stockappreciation right, dividend equivalent or stock payment granted under thePlan, or the issuance of restricted stock or deferred stock awarded under thePlan;
     WHEREAS, (a) Section 5.2(d) of the Plan provides that the options underthe Plan may not be exercised by delivery of a promissory note or by a loanwhen or where such loan or other extension of credit is prohibited by law, and(b) Section 10.11 of the Plan provides that, to the extent permitted byapplicable law, the Plan, the options, restricted stock awards, deferred stockawards, performance awards, stock appreciation rights, dividend equivalents, orstock payments granted or awarded under the Plan shall be deemed amended to theextent necessary to conform to applicable laws, rules and regulations;
     WHEREAS, Section 10.2 of the Plan provides that unless otherwise providedin Section 10.2 of the Plan, the Plan may be wholly or partially amended orotherwise modified, suspended or terminated at any time or from time to time bythe Board or the Committee;
     WHEREAS, the Board believes it is in the best interest of the Company andits stockholders to amend the Plan to confirm and clarify that the Planconforms to Section 402.
 

 

     NOW, THEREFORE, the Plan is hereby amended as follows:
1. Section 5.2(d). Section 5.2(d) of the Plan is hereby deleted andreplaced to read in its entirety as follows:
                              “(d) Full cash payment to the Secretary of the Company for the shares withrespect to which the Option, or portion thereof, is exercised. However, theCommittee (or the Board, in the case of Options granted to IndependentDirectors), may in its discretion (i) allow a delay in payment up to thirty(30) days from the date the Option, or portion thereof, is exercised; (ii)allow payment, in whole or in part, through the delivery of shares of CommonStock owned by the Optionee, duly endorsed for transfer to the Company with aFair Market Value on the date of delivery equal to the aggregate exercise priceof the Option or exercised portion thereof; (iii) allow payment, in whole or inpart, through the surrender of shares of Common Stock then issuable uponexercise of the Option having a Fair Market Value on the date of Optionexercise equal to the aggregate exercise price of the Option or exercisedportion thereof; (iv) allow payment, in whole or in part, through the deliveryof a full recourse promissory note bearing interest (at no less than such rateas shall then preclude the imputation of interest under the Code) and payableupon such terms as may be prescribed by the Committee or the Board; or (v)allow payment through any combination of the consideration provided in theforegoing subparagraphs (ii), (iii) and (iv); *provided, however*, that, theCommittee may not allow payment in the manner prescribed in subsection (iv) byexecutive officers or directors of the Company. In the case of a promissorynote, the Committee (or the Board, in the case of Options granted toIndependent Directors) may also prescribe the form of such note and thesecurity to be given for such note. The Option may not be exercised, however,by delivery of a promissory note or by a loan from the Company when or wheresuch loan or other extension of credit is prohibited by law.”
2. Section 10.6. Section 10.6 of the Plan is hereby deleted and replacedto read in its entirety as follows:
                              “10.6. Loans. The Committee may, in its discretion, extend one or moreloans to key Employees in connection with the exercise or receipt of an Option,Performance Award, Stock Appreciation Right, Dividend Equivalent or StockPayment granted under this Plan, or the issuance of Restricted Stock orDeferred Stock awarded under this Plan; *provided, however*, that, the Committeemay not extend any such loans to executive officers or directors of theCompany. The terms and conditions of any such loan shall be set by theCommittee.”
***(Signature Page Follows)***
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     I hereby certify that the foregoing Amendment to the Plan was duly adoptedby the Board of Directors of AMB Property Corporation effective as of September23, 2004.
     Executed on this 23rd day of September, 2004.                                             /s/ Tamra D. Browne   Tamra D. Browne   Secretary   
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