Exhibit 10.3
**AMENDMENT NO. 1**
**TO THE**
**2002 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. 1 (this“Amendment”) to the 2002 Stock Option and Incentive Plan of AMB PropertyCorporation and AMB Property, L.P. (the “Plan”). Capitalized terms used inthis Amendment without definition shall have the meanings given to such termsin 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 theCorporation may allow payment of option exercises, in whole or in part, throughdelivery of a full recourse promissory note bearing interest and payable uponsuch terms as may 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 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 may, in its sole and absolute discretion, (i) allow a delay inpayment up to thirty (30) days from the date the Option, or portion thereof, isexercised; (ii) allow payment, in whole or in part, through the delivery ofshares of Common Stock owned by the Optionee, duly endorsed for transfer to theCompany with a Fair Market Value on the date of delivery equal to the aggregateexercise price of the Option or exercised portion thereof; (iii) allow payment,in whole or in part, through the surrender of shares of Common Stock thenissuable upon exercise of the Option having a Fair Market Value on the date ofOption exercise equal to the aggregate exercise price of the Option orexercised portion thereof; (iv) allow payment, in whole or in part, through thedelivery of a full recourse promissory note bearing interest (at no less than amarket rate of interest) and payable upon such terms as may be prescribed bythe Committee; or (v) allow payment through any combination of theconsideration provided in the foregoing subparagraphs (ii), (iii) and (iv);*provided, however*, that, the Committee may not allow payment in the mannerprescribed in subsection (iv) by executive officers or directors of theCompany. In the case of a promissory note, the Committee may also prescribethe form of such note and the security to be given for such note. The Optionmay not be exercised, however, by delivery of a promissory note or by a loanfrom the Company, the Partnership or any Subsidiary when or where such loan orother 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 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; provided, however, that any such loan that bears interest shall bearat least a market rate of interest.”
***(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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