Document:

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                         THE THIRD AMENDED AND RESTATED
                      1997 STOCK OPTION AND INCENTIVE PLAN
                                       OF
                            AMB PROPERTY CORPORATION
                             AND AMB PROPERTY, L.P.

            AMB Property Corporation, a Maryland corporation (the "Company") and
AMB Property, L.P., a Delaware limited partnership (the "Partnership") adopted
The 1997 Stock Option and Incentive Plan of AMB Property Corporation and AMB
Investment Management, Inc. and their Respective Subsidiaries (as such term is
defined below), effective November 26, 1997, for the benefit of their eligible
employees, consultants and directors and those of their Subsidiaries. The 1997
Stock Option and Incentive Plan of AMB Property Corporation and AMB Investment
Management, Inc. and their Respective Subsidiaries was amended and restated in
its entirety in the form of the First Amended and Restated 1997 Stock Option and
Incentive Plan of AMB Property Corporation and AMB Investment Management, Inc.
and their Respective Subsidiaries, effective March 5, 1999, as amended by the
First Amendment to the First Amended and Restated 1997 Stock Option and
Incentive Plan, effective March 5, 1999 (as amended, the "First Amended and
Restated 1997 Stock Option and Incentive Plan"). The First Amended and Restated
1997 Stock Option and Incentive Plan of AMB Property Corporation and AMB
Investment Management, Inc. and their Respective Subsidiaries was amended and
restated in its entirety in the form of the second Amended and Restated 1997
Stock Option and Incentive Plan of AMB Property Corporation and AMB Investment
Management, Inc. and their Respective Subsidiaries, effective May 7, 1999, as
amended by the First Amendment to the Second Amended and Restated 1997 Stock
Option and Incentive Plan, effective February 29, 2000 (as amended, the "Second
Amended and Restated 1997 Stock Option and Incentive Plan"). The Second Amended
and Restated 1997 Stock Option and Incentive Plan is hereby amended and restated
in its entirety in the form of this Third Amended and Restated 1997 Stock Option
and Incentive Plan of AMB Property Corporation and AMB Property, L.P. (as
amended and restated, the "Plan"), effective as of January 1, 2002. The Plan
consists of two plans, one for the benefit of employees, consultants and
independent directors of the Company and its subsidiaries and one for the
benefit of the employees and consultants of the Partnership and its
subsidiaries.

            The purposes of this Plan are as follows:

            (1) To provide an additional incentive for directors, key Employees
and consultants to further the growth, development and financial success of the
Company by personally benefiting through the ownership of Company stock and/or
rights which recognize such growth, development and financial success.

            (2) To enable the Company and the Partnership, and their respective
Subsidiaries, to obtain and retain the services of directors, key Employees and
consultants considered essential to the long range success of the Company by
offering them an opportunity to own stock in the Company and/or rights which
will reflect the growth, development and financial success of the Company.
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                                   ARTICLE I.
                                   DEFINITIONS

            1.1. General. Wherever the following terms are used in this Plan
they shall have the meanings specified below, unless the context clearly
indicates otherwise.

            1.2. Award Limit. "Award Limit" shall mean 1 million shares of
Common Stock, as adjusted pursuant to Section 10.3.

            1.3. Board. "Board" shall mean the Board of Directors of the
Company.

            1.4. Cause. "Cause," unless otherwise defined in an Employee's
employment agreement, or a consultant's consulting agreement, with the Company,
the Partnership or one of their Subsidiaries, shall mean (i) gross negligence or
willful misconduct, (ii) an uncured breach of any of the employee's material
duties under their employment agreement, (iii) fraud or other conduct against
the material best interests of the Company and/or the Partnership or (iv) a
conviction of a felony if such conviction has a material adverse effect on the
Company and/or the Partnership.

            1.5. Change in Control. "Change in Control" shall mean a change in
ownership or control of the Company effected through either of the following
transactions:

            (a) any person or related group of persons (other than the Company
or a person that directly or indirectly controls, is controlled by, or is under
common control with, the Company) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) of
securities possessing more than fifty percent (50%) of the total combined voting
power of the Company's outstanding securities pursuant to a tender or exchange
offer made directly to the Company's stockholders which the Board does not
recommend such stockholders to accept; or

            (b) there is a change in the composition of the Board over a period
of thirty-six (36) consecutive months (or less) such that a majority of the
Board members (rounded up to the nearest whole number) ceases, by reason of one
or more proxy contests for the election of Board members, to be comprised of
individuals who either (i) have been Board members continuously since the
beginning of such period or (ii) have been elected or nominated for election as
Board members during such period by at least a majority of the Board members
described in clause (i) who were still in office at the time such election or
nomination was approved by the Board.

            1.6. Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.

            1.7. Committee. "Committee" shall mean, the Compensation Committee
of the Board, or another committee or subcommittee of the Board, appointed as
provided in Section 9.1; provided, however, that in the case of a person who is
an "officer or director of the issuer" within the meaning of Rule 16-3(a) under
the Securities Exchange Act of 1934, as

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amended, the grant of any award under this Plan to such person shall be made by
the Compensation Committee of the Board.

            1.8. Common Stock. "Common Stock" shall mean the common stock of the
Company, par value $.01 per share, and any equity security of the Company issued
or authorized to be issued in the future, but excluding any preferred stock and
any warrants, options or other rights to purchase Common Stock. Debt securities
of the Company convertible into Common Stock shall be deemed equity securities
of the Company.

            1.9. Company. "Company" shall mean AMB Property Corporation, a
Maryland corporation.

            1.10. Company Employee. "Company Employee" shall mean any officer or
other employee (as defined in accordance with Section 3401(c) of the Code) of
the Company or of any Company Subsidiary.

            1.11. Consultant. "Consultant" shall mean any consultant or adviser
if:

            (a) the consultant or adviser renders bona fide services to the
Company, the Partnership or their respective subsidiaries;

            (b) the services rendered by the consultant or adviser are not in
connection with the offer or sale of securities in a capital-raising transaction
and do not directly or indirectly promote or maintain a market for the
securities of the Company, the Partnership or their respective subsidiaries; and

            (c) the consultant or adviser is a natural person who has contracted
directly with the Company, the Partnership or their respective subsidiaries, as
applicable, to render such services.

            1.12. Corporate Transaction. "Corporate Transaction" shall mean any
of the following stockholder-approved transactions to which the Company is a
party:

            (a) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the State in which the Company is incorporated, form a holding company or
effect a similar reorganization as to form whereupon this Plan and all Options
are assumed by the successor entity;

            (b) the sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company, in complete liquidation or
dissolution of the Company in a transaction not covered by the exceptions to
clause (a), above; or

            (c) any reverse merger in which the Company is the surviving entity
but in which securities possessing more than fifty percent (50%) of the total
combined voting power of the Company's outstanding securities are transferred or
issued to a person or persons different from those who held such securities
immediately prior to such merger.

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            1.13. Deferred Stock. "Deferred Stock" shall mean Common Stock
awarded under Article VII of this Plan.

            1.14. Director. "Director" shall mean an Independent Director or a
Non-Employee Director.

            1.15. Dividend Equivalent. "Dividend Equivalent" shall mean a right
to receive the equivalent value (in cash or Common Stock) of dividends or
regular cash distributions paid on Common Stock, awarded under Article VII of
this Plan.

            1.16. Employee. "Employee" shall mean any Company Employee or any
Partnership Employee.

            1.17. Exchange Act. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.

            1.18. Fair Market Value. "Fair Market Value" of a share of Common
Stock as of a given date shall be (i) the closing price of a share of Common
Stock on the principal exchange on which shares of Common Stock are then
trading, if any (or as reported on any composite index which includes such
principal exchange), on the trading day previous to such date, or if shares were
not traded on the trading day previous to such date, then on the next preceding
date on which a trade occurred, or (ii) if Common Stock is not traded on an
exchange but is quoted on Nasdaq or a successor quotation system, the mean
between the closing representative bid and asked prices for the Common Stock on
the trading day previous to such date as reported by Nasdaq or such successor
quotation system; or (iii) if Common Stock is not publicly traded on an exchange
and not quoted on Nasdaq or a successor quotation system, the Fair Market Value
of a share of Common Stock as established by the Committee (or the Board, in the
case of awards granted to Independent Directors) acting in good faith.
Notwithstanding anything to the contrary herein, the Fair Market Value at the
time of grant of a share of Common Stock underlying an option grant or other
award made under this Plan and in connection with the initial public offering of
the Company shall be the initial offering price per share.

            1.19. General Partner Interest. "General Partner Interest" shall
mean an ownership interest in the Partnership that is a general partner interest
and includes any and all benefits to which the holder of such an interest may be
entitled as provided in the Partnership Agreement, together with all obligations
of such holder to comply with the terms and provisions of such agreement.

            1.20. Grantee. "Grantee" shall mean an Employee or consultant
granted a Performance Award, Dividend Equivalent, Stock Payment or Stock
Appreciation Right, or an award of Deferred Stock, under this Plan.

            1.21. Incentive Stock Option. "Incentive Stock Option" shall mean an
option which conforms to the applicable provisions of Section 422 of the Code
and which is designated as an Incentive Stock Option by the Committee.

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            1.22. Initial Independent Director. "Initial Independent Director"
shall have the meaning given to such term in Section 3.4(d) hereof.

            1.23. Independent Director. "Independent Director" shall mean a
member of the Board who is not an employee, officer or affiliate of the Company
or a subsidiary or division thereof, or a relative of a principal executive
officer, and who is not an individual member of an organization acting as an
advisor, consultant or legal counsel receiving compensation on a continuing
basis from the Company in addition to director's fees.

            1.24. Non-Employee Director.  "Non-Employee Director" shall mean
a member of the Board who is not an Independent Director or an Employee.

            1.25. Non-Qualified Stock Option. "Non-Qualified Stock Option" shall
mean an Option which is not designated as an Incentive Stock Option by the
Committee.

            1.26. Option. "Option" shall mean a stock option granted under
Article III of this Plan. An Option granted under this Plan shall, as determined
by the Committee, be either a Non-Qualified Stock Option or an Incentive Stock
Option; provided, however, that Options granted to anyone other than Company
Employees shall be Non-Qualified Stock Options.

            1.27. Optionee. "Optionee" shall mean an Employee, consultant or
Director granted an Option under this Plan.

            1.28. Partnership. "Partnership" shall mean AMB Property, L.P., a
Delaware limited partnership.

            1.29. Partnership Agreement. "Partnership Agreement" shall mean the
Fifth Amended and Restated Agreement of Limited Partnership of the Partnership,
as amended by Amendment No. 1 thereto, as the same may be amended, modified or
restated from time to time.

            1.30. Partnership Employee. "Partnership Employee" shall mean any
officer, other employee (as defined in accordance with Section 3401(c) of the
Code) of the Partnership, or any entity which is then a Partnership Subsidiary.

            1.31. Partnership Purchase Price. "Partnership Purchase Price" shall
have the meaning set forth in Section 5.4

            1.32. Partnership Purchased Shares. "Partnership Purchased Shares"
shall have the meaning set forth in Section 5.4.

            1.33. Partnership Subsidiary. "Partnership Subsidiary" shall mean
(i) a corporation, association or other business entity of which 50% or more of
the total combined voting power of all classes of capital stock is owned,
directly or indirectly, by the Partnership or by one or more Partnership
Subsidiaries or by the Partnership and one or more Partnership Subsidiaries,
(ii) any partnership or limited liability company of which 50% or more of the
capital and profits interests is owned, directly or indirectly, by the
Partnership or by one or more

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Partnership Subsidiaries or by the Partnership and one or more Partnership
Subsidiaries, and (iii) any other entity not described in clauses (i) or (ii)
above of which 50% or more of the ownership and the power, pursuant to a written
contract or agreement, to direct the policies and management or the financial
and the other affairs thereof, are owned or controlled by the Partnership or by
one or more other Partnership Subsidiaries or by the Partnership and one or more
Partnership Subsidiaries.

            1.34. Performance Award. "Performance Award" shall mean a cash
bonus, stock bonus or other performance or incentive award that is paid in cash,
Common Stock or a combination of both, awarded under Article VII of this Plan.

            1.35. Plan. "Plan" shall mean the Third Amended and Restated 1997
Stock Option and Incentive Plan of AMB Property Corporation and AMB Property,
L.P.

            1.36. Restricted Stock. "Restricted Stock" shall mean Common Stock
awarded under Article VI of this Plan.

            1.37. Restricted Stockholder. "Restricted Stockholder" shall mean an
Employee or consultant granted an award of Restricted Stock under Article VI of
this Plan.

            1.38. Rule 16b-3. "Rule 16b-3" shall mean that certain Rule 16b-3
under the Exchange Act, as such Rule may be amended from time to time.

            1.39. Section 162(m) Participant. "Section 162(m) Participant" shall
mean any key Employee designated by the Committee as a key Employee whose
compensation for the fiscal year in which the key Employee is so designated or a
future fiscal year may be subject to the limit on deductible compensation
imposed by Section 162(m) of the Code.

            1.40. Stock Appreciation Right. "Stock Appreciation Right" shall
mean a stock appreciation right granted under Article VIII of this Plan.

            1.41. Stock Payment. "Stock Payment" shall mean (i) a payment in the
form of shares of Common Stock, or (ii) an option or other right to purchase
shares of Common Stock, as part of a deferred compensation arrangement, made in
lieu of all or any portion of the compensation, including without limitation,
salary, bonuses and commissions, that would otherwise become payable to a key
Employee or consultant in cash, awarded under Article VII of this Plan.

            1.42. Subsidiary. "Subsidiary" shall mean any Company Subsidiary or
Partnership Subsidiary.

            1.43. Termination of Consultancy. "Termination of Consultancy" shall
mean the time when the engagement of an Optionee, Grantee or Restricted
Stockholder as a consultant to the Company, a Company Subsidiary, the
Partnership or a Partnership Subsidiary is terminated for any reason, with or
without Cause, including, but not by way of limitation, by resignation,
discharge, death or retirement; but excluding terminations where there is a
simultaneous

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commencement of employment with the Company, a Company Subsidiary, the
Partnership or a Partnership Subsidiary. The Committee, in its absolute
discretion, shall determine the effect of all matters and questions relating to
Termination of Consultancy, including, but not by way of limitation, the
question of whether a Termination of Consultancy resulted from a discharge for
Cause, and all questions of whether a particular leave of absence constitutes a
Terminations of Consultancy. Notwithstanding any other provision of this Plan,
the Company, a Company Subsidiary, the Partnership or a Partnership Subsidiary
has an absolute and unrestricted right to terminate a consultant's service at
any time for any reason whatsoever, with or without Cause, except to the extent
expressly provided otherwise in writing.

            1.44. Termination of Directorship. "Termination of Directorship"
shall mean the time when an Optionee, Grantee or Restricted Stockholder who is
an Independent Director ceases to be a Director for any reason, including, but
not by way of limitation, a termination by resignation, failure to be elected,
death or retirement; but excluding, at the discretion of the Committee,
terminations (i) where there is a simultaneous reemployment or continuing
employment of an Optionee, Grantee or Restricted Stockholder by the Company, a
Company Subsidiary, the Partnership or a Partnership Subsidiary and (ii) which
are followed by the simultaneous establishment of a directorship with the
Company, a Company Subsidiary, the Partnership or a Partnership Subsidiary. The
Board, in its sole and absolute discretion, shall determine the effect of all
matters and questions relating to Termination of Directorship with respect to
Independent Directors in accordance with the Company's bylaws.

            1.45. Termination of Employment. "Termination of Employment" shall
mean the time when the employee-employer relationship between an Optionee,
Grantee or Restricted Stockholder and the Company or the Partnership, or any of
their respective Subsidiaries, is terminated for any reason, with or without
Cause, including, but not by way of limitation, a termination by resignation,
discharge, death, disability or retirement; but excluding (i) terminations where
there is a simultaneous reemployment or continuing employment of an Optionee,
Grantee or Restricted Stockholder by the Company, a Company Subsidiary, the
Partnership or a Partnership Subsidiary, (ii) at the discretion of the
Committee, terminations which result in a temporary severance of the
employee-employer relationship, and (iii) at the discretion of the Committee,
terminations which are followed by the simultaneous establishment of a
consulting relationship by the Company, a Company Subsidiary, the Partnership or
a Partnership Subsidiary with the former employee. The Committee, in its
absolute discretion, shall determine the effect of all matters and questions
relating to Termination of Employment, including, but not by way of limitation,
the question of whether a Termination of Employment resulted from a discharge
for Cause, and all questions of whether a particular leave of absence
constitutes a Termination of Employment; provided, however, that, with respect
to Incentive Stock Options unless otherwise determined by the Committee in its
discretion, a leave of absence, change in status from an employee to an
independent contractor or other change in the employee-employer relationship
shall constitute a Termination of Employment if, and to the extent that, such
leave of absence, change in status or other change interrupts employment for the
purposes of Section 422(a)(2) of the Code and the then applicable regulations
and revenue rulings under said Section. Notwithstanding any other provision of
this Plan, the Company, a Company Subsidiary, the Partnership or a Partnership
Subsidiary has an absolute and unrestricted

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right to terminate an Employee's employment at any time for any reason
whatsoever, with or without Cause, except to the extent expressly provided
otherwise in writing.

                                   ARTICLE II.
                             SHARES SUBJECT TO PLAN

            2.1. Shares Subject to Plan.

            (a) The shares of stock subject to Options, awards of Restricted
Stock, Performance Awards, Dividend Equivalents, awards of Deferred Stock, Stock
Payments or Stock Appreciation Rights shall be shares of Common Stock. The
aggregate number of such shares which may be issued upon exercise of such
Options or rights or upon any such awards under the Plan shall not exceed Eight
Million Nine Hundred Fifty Thousand (8,950,000). The shares of Common Stock
issuable upon exercise of such Options or rights or upon any such awards may be
either previously authorized but unissued shares or treasury shares.

            (b) The maximum number of shares which may be subject to Options,
awards of Restricted Stock, Performance Awards, Dividend Equivalents, awards of
Deferred Stock, Stock Payments or Stock Appreciation Rights granted under the
Plan to any individual in any calendar year shall not exceed the Award Limit.

            2.2. Add-back of Options and Other Rights. If any Option, or other
right to acquire shares of Common Stock under any other award under this Plan,
expires or is canceled without having been fully exercised, or is exercised in
whole or in part for cash as permitted by this Plan, the number of shares
subject to such Option or other right but as to which such Option or other right
was not exercised prior to its expiration, cancellation or exercise may again be
optioned, granted or awarded hereunder, subject to the limitations of Section
2.1. Furthermore, any shares subject to Options or other awards which are
adjusted pursuant to Section 10.3 and become exercisable with respect to shares
of stock of another corporation shall be considered canceled and may again be
optioned, granted or awarded hereunder, subject to the limitations of Section
2.1. Shares of Common Stock which are delivered by the Optionee or Grantee or
withheld by the Company upon the exercise of any Option or other award under
this Plan, in payment of the exercise price thereof, may again be optioned,
granted or awarded hereunder, subject to the limitations of Section 2.1. If any
share of Restricted Stock is forfeited by the Grantee or repurchased by the
Company pursuant to Section 6.6 hereof, such share may again be optioned,
granted or awarded hereunder, subject to the limitations of Section 2.1.
Notwithstanding the provisions of this Section 2.2, no shares of Common Stock
may again be optioned, granted or awarded if such action would cause an
Incentive Stock Option to fail to qualify as an incentive stock option under
Section 422 of the Code.

                                  ARTICLE III.
                               GRANTING OF OPTIONS

            3.1.  Eligibility.  Any Employee, consultant or Non-Employee
Director selected by the Committee pursuant to Section 3.4(a)(i) shall be
eligible to be granted an Option.

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Independent Directors of the Company shall be eligible to be granted Options at
the times and in the manner set forth in Section 3.4(d).

            3.2. Disqualification for Stock Ownership. No person may be granted
an Incentive Stock Option under this Plan if such person, at the time the
Incentive Stock Option is granted, owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or any then existing Subsidiary or parent corporation (within the meaning of
Section 422 of the Code) unless such Incentive Stock Option conforms to the
applicable provisions of Section 422 of the Code.

            3.3. Qualification of Incentive Stock Options. No Incentive Stock
Option shall be granted to any person who is not an Employee, or to any Employee
of a Subsidiary which does not constitute a "subsidiary corporation" within
Section 424(f) of the Code.

            3.4. Granting of Options

            (a) The Committee shall from time to time, in its absolute
discretion, and subject to applicable limitations of this Plan:

                  (i) Determine which Employees are key Employees and select
      from among the key Employees, consultants and Non-Employee Directors
      (including Employees, consultants and Non-Employee Directors who have
      previously received Options or other awards under this Plan) such of them
      as in its opinion should be granted Options;

                  (ii) Subject to the Award Limit, determine the number of
      shares to be subject to such Options granted to the selected key Employees
      or consultants;

                  (iii) Subject to Section 3.3, determine whether such Options
      are to be Incentive Stock Options or Non-Qualified Stock Options and
      whether such Options are to qualify as performance-based compensation as
      described in Section 162(m)(4)(C) of the Code; and

                  (iv) Determine the terms and conditions of such Options,
      consistent with this Plan; provided, however, that the terms and
      conditions of Options intended to qualify as performance-based
      compensation as described in Section 162(m)(4)(C) of the Code shall
      include, but not be limited to, such terms and conditions as may be
      necessary to meet the applicable provisions of Section 162(m) of the Code.

            (b) Upon the selection of a key Employee or consultant to be granted
an Option, the Committee shall instruct the Secretary of the Company to issue
the Option and may impose such conditions on the grant of the Option as it deems
appropriate.

            (c) Any Incentive Stock Option granted under this Plan may be
modified by the Committee, with the consent of the Optionee, to disqualify such
Option from treatment as an "incentive stock option" under Section 422 of the
Code.

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            (d) During the term of the Plan, each person who is named as an
Independent Director in the Company's registration statement in connection with
the Company's initial public offering of its Common Stock (an "Initial
Independent Director") as of the date upon which such Independent Director's
term as a director commences, automatically shall be granted (i) an Option to
purchase twenty-six thousand two hundred fifty (26,250) shares of Common Stock
(subject to adjustment as provided in Section 10.3) on the date of such initial
public offering and (ii) an Option to purchase fifteen thousand (15,000) shares
of Common Stock (subject to adjustment as provided in Section 10.3) on the date
of each annual meeting of stockholders after such initial public offering at
which the Independent Director is reelected to the Board commencing with the
annual meeting to be held in 1999. During the term of the Plan, a person, other
than an Initial Independent Director, who is initially elected to the Board
after the consummation of the initial public offering of Common Stock and who is
an Independent Director at the time of such initial election automatically shall
be granted (i) an Option to purchase twenty thousand (20,000) shares of Common
Stock (subject to adjustment as provided in Section 10.3) on the date of such
initial election and (ii) at the Independent Director's option, (A) an Option to
purchase fifteen thousand (15,000) shares of Common Stock (subject to adjustment
as provided in Section 10.3) or (B) an Option to purchase six thousand (6,000)
shares of Common Stock and an award of one thousand (1,000) shares of Restricted
Stock, on the date of each annual meeting of stockholders after such initial
election at which the Independent Director is reelected to the Board. Members of
the Board who are employees of the Company who subsequently retire from the
Company and remain on the Board will not receive an initial Option grant
pursuant to clause (i) of the preceding sentence, but to the extent that they
are otherwise eligible, will receive, after retirement from employment with the
Company, Options and/or Restricted Stock as described in clause (ii) of the
preceding sentence. All the foregoing Option grants and Restricted Stock awards
authorized by this Section 3.4(d) are subject to stockholder approval of the
Plan.

                                   ARTICLE IV.
                                TERMS OF OPTIONS

            4.1. Option Agreement. Each Option shall be evidenced by a written
Stock Option Agreement, which shall be executed by the Optionee and an
authorized officer of the Company and which shall contain such terms and
conditions as the Committee (or the Board, in the case of Options granted to
Independent Directors) shall determine, consistent with this Plan. Stock Option
Agreements evidencing Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code. Stock Option Agreements evidencing Incentive Stock
Options shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.

            4.2. Option Price. The price per share of the shares subject to each
Option shall be set by the Committee; provided, however, that (i) in the case of
Incentive Stock Options such price shall not be less than 100% of the Fair
Market Value of a share of Common Stock on the date the Option is granted (or
the date the Option is modified, extended or renewed for purposes of Section
424(h) of the Code); (ii) in the case of Incentive Stock Options granted to an

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individual then owning (within the meaning of Section 424(d) of the Code) more
than 10% of the total combined voting power of all classes of stock of the
Company or any Subsidiary or parent corporation thereof (within the meaning of
Section 422 of the Code), such price shall not be less than 110% of the Fair
Market Value of a share of Common Stock on the date the Option is granted (or
the date the Option is modified, extended or renewed for purposes of Section
424(h) of the Code); (iii) in the case of Options granted to Independent
Directors, such price shall equal 100% of the Fair Market Value of a share of
Common Stock on the date the Option is granted; provided, however, that the
price of each share subject to each Option granted to Initial Independent
Directors pursuant to Section 3.4(d) hereof shall equal the initial public
offering price per share of Common Stock; and (iv) in the case of all other
Options granted, such price shall be not less than 100% of the Fair Market Value
of a share of Common Stock on the date the Option is granted. Notwithstanding
any other provision of this Plan to the contrary, the Committee shall not have
the authority to amend the terms of any outstanding Option to reduce its
exercise price.

            4.3. Option Term. The term of an Option shall be set by the
Committee in its discretion; provided, however, that, (i) no Option shall be
granted with a term of more than ten (10) years from the date the Option is
granted, (ii) in the case of Options granted to Independent Directors, the term
shall be ten (10) years from the date the Option is granted, and (iii) in the
case of Incentive Stock Options, the term shall not be more than five (5) years
from the date the Incentive Stock Option is granted, if the Incentive Stock
Option is granted to an individual then owning (within the meaning of Section
424(d) of the Code) more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary or parent corporation thereof
(within the meaning of Section 422 of the Code). Except as limited by
requirements of Section 422 of the Code and regulations and rulings thereunder
applicable to Incentive Stock Options, the Committee may extend the term of any
outstanding Option in connection with any Termination of Employment, Termination
of Consultancy or Termination of Directorship of the Optionee, or amend any
other term or condition of such Option relating to such a termination.

            4.4. Option Vesting

            (a) The period during which the right to exercise an Option in whole
or in part vests in the Optionee shall be set by the Committee and the Committee
may determine that an Option may not be exercised in whole or in part for a
specified period after it is granted; provided, however, that, unless the
Committee otherwise provides in the terms of the Option or otherwise, no Option
shall be exercisable by any Optionee who is then subject to Section 16 of the
Exchange Act within the period ending six months and one day after the date the
Option is granted; and provided, further, that, unless the Board otherwise
provides in the terms of the Options or otherwise, Options granted to
Independent Directors shall become fully exercisable on first anniversary of the
date of Option grant, except as provided in Section 10.3(b). At any time after
grant of an Option, the Committee may, in its sole and absolute discretion and
subject to whatever terms and conditions it selects, accelerate the period
during which an Option (except an Option granted to an Independent Director)
vests.

                                       11
<PAGE>
            (b) No portion of an Option which is unexercisable at Termination of
Employment, Termination of Directorship or Termination of Consultancy, as
applicable, shall thereafter become exercisable, except as may be otherwise
provided by the Committee in the case of Options granted to Employees or
consultants either in the Stock Option Agreement or by action of the Committee
following the grant of the Option.

            (c) To the extent that the aggregate Fair Market Value of stock with
respect to which "incentive stock options" (within the meaning of Section 422 of
the Code, but without regard to Section 422(d) of the Code) are exercisable for
the first time by an Optionee during any calendar year (under the Plan and all
other incentive stock option plans of the Company and any parent or subsidiary
corporation (within the meaning of Section 422 of the Code) of the Company)
exceeds $100,000, such Options shall be treated as Non-Qualified Options to the
extent required by Section 422 of the Code. The rule set forth in the preceding
sentence shall be applied by taking Options into account in the order in which
they were granted. For purposes of this Section 4.4(c), the Fair Market Value of
stock shall be determined as of the time the Option with respect to such stock
is granted.

            4.5. Consideration. In consideration of the granting of an Option,
the Optionee shall agree, in the written Stock Option Agreement, to remain in
the employ of (or to consult for or to serve as an Independent Director of, as
applicable) the Company, a Company Subsidiary, the Partnership or a Partnership
Subsidiary for a period of at least one year (or such shorter period as may be
fixed in the Stock Option Agreement or by action of the Committee following
grant of the Option) after the Option is granted (or, in the case of an
Independent Director, until the next annual meeting of stockholders of the
Company). Nothing in this Plan or in any Stock Option Agreement hereunder shall
(i) confer upon any Optionee any right to (a) continue in the employ of, or as a
consultant for, the Company, a Company Subsidiary, the Partnership or a
Partnership Subsidiary, or as a Director, or (b) receive any severance pay from
the Company, a Company Subsidiary, the Partnership or a Partnership Subsidiary
or (ii) interfere with or restrict in any way the rights of the Company, a
Company Subsidiary, the Partnership or a Partnership Subsidiary, which are
hereby expressly reserved, to discharge any Optionee at any time for any reason
whatsoever, with or without Cause.

                                   ARTICLE V.
                               EXERCISE OF OPTIONS

            5.1. Partial Exercise. An exercisable Option may be exercised in
whole or in part. However, an Option shall not be exercisable with respect to
fractional shares and the Committee (or the Board, in the case of Options
granted to Independent Directors) may require that, by the terms of the Option,
a partial exercise be with respect to a minimum number of shares.

            5.2.  Manner of Exercise.  All or a portion of an exercisable
Option shall be deemed exercised upon delivery of all of the following to the
Secretary of the Company (or such other officer as identified in the
applicable Stock Option Agreement):

                                       12
<PAGE>
            (a) A written notice complying with the applicable rules established
by the Committee (or the Board, in the case of Options granted to Independent
Directors) stating that the Option, or a portion thereof, is exercised. The
notice shall be signed by the Optionee or other person then entitled to exercise
the Option or such portion of the Option;

            (b) Such representations and documents as the Committee (or the
Board, in the case of Options granted to Independent Directors), in its absolute
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended, and any other
federal or state securities laws or regulations. The Committee or Board may, in
its absolute discretion, also take whatever additional actions it deems
appropriate to effect such compliance including, without limitation, placing
legends on share certificates and issuing stop-transfer notices to agents and
registrars;

            (c) In the event that the Option shall be exercised pursuant to
Section 10.1 by any person or persons other than the Optionee, appropriate proof
of the right of such person or persons to exercise the Option; and

            (d) Full cash payment to the Secretary of the Company for the shares
with respect to which the Option, or portion thereof, is exercised. However, the
Committee (or the Board, in the case of Options granted to Independent
Directors), 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 Common Stock
owned by the Optionee, duly endorsed for transfer to the Company with a Fair
Market Value on the date of delivery equal to the aggregate exercise price of
the Option or exercised portion thereof; (iii) allow payment, in whole or in
part, through the surrender of shares of Common Stock then issuable upon
exercise of the Option having a Fair Market Value on the date of Option exercise
equal to the aggregate exercise price of the Option or exercised portion
thereof; (iv) allow payment, in whole or in part, through the delivery of a full
recourse promissory note bearing interest (at no less than such rate as shall
then preclude the imputation of interest under the Code) and payable upon such
terms as may be prescribed by the Committee or the Board; or (v) allow payment
through any combination of the consideration provided in the foregoing
subparagraphs (ii), (iii) and (iv). In the case of a promissory note, the
Committee (or the Board, in the case of Options granted to Independent
Directors) may also prescribe the form of such note and the security 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 where such loan or other
extension of credit is prohibited by law.

            5.3. Transfer of Shares to a Company Employee, Consultant or
Independent Director. As soon as practicable after receipt by the Company,
pursuant to Section 5.2(d), of payment for the shares with respect to which an
Option (which in the case of a Company Employee, consultant or Independent
Director was issued to and is held by such Optionee in such capacity), or
portion thereof, is exercised by an Optionee who is a Company Employee,
Independent Director or a consultant to the Company, with respect to each such
exercise, the Company shall transfer to the Optionee the number of shares equal
to

                                       13
<PAGE>
            (a) The amount of the payment made by the Optionee to the Company
pursuant to Section 5.2(d), divided by

            (b) The price per share of the shares subject to the Option as
determined pursuant to Section 4.2.

            5.4. Transfer of Shares to a Partnership Employee, Consultant or
Independent Director. (a) At the time that an Optionee who is an Employee,
Independent Director or consultant of the Partnership or a Partnership
Subsidiary exercises all or any part of an Option pursuant to the terms of this
Plan, such Optionee shall remit to the Partnership or the Partnership
Subsidiary, as the case may be, an amount equal to the product of the exercise
price per share of such Option and the number of shares with respect to such
Option being exercised by such Optionee.

            (b) As soon as practicable after receipt by the Operating
Partnership of a notice of the exercise of shares with respect to which an
Option (which was issued to and is held by a Partnership Employee, consultant or
Independent Director in such capacity), or portion thereof, is exercised by an
Optionee who is a Partnership Employee, Independent Director or consultant, with
respect to each such exercise the Company shall sell to the Partnership, or the
Partnership Subsidiary in the case of an Optionee who is an Employee, consultant
or Independent Director of Partnership Subsidiary, the number of shares (the
"Partnership Purchased Shares") equal to the number of shares subject to such
exercise by such Optionee at a purchase price equal to the Fair Market Value of
a share of Common Stock at the time of the exercise (the "Partnership Purchase
Price");

            (c) As soon as practicable after receipt of the Partnership
Purchased Shares by the Partnership, or the Partnership Subsidiary in the case
of an Optionee who is an Employee, Independent Director or consultant of a
Partnership Subsidiary, the Partnership or the Partnership Subsidiary, as the
case may be, shall transfer such shares to the Optionee at no additional cost.

            5.5. Transfer of Payment to the Partnership. As soon as practicable
after receipt by the Company of the amount described in Section 5.2(d), 5.4(b)
and 5.5(b) the Company shall contribute to the Partnership an amount of cash
equal to such payment and the Partnership shall issue an additional interest in
the Partnership on the terms set forth in the Partnership Agreement.

            5.6. Conditions to Issuance of Stock Certificates. The Company or
the Partnership shall not be required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of any Option or
portion thereof prior to fulfillment of all of the following conditions:

            (a) The admission of such shares to listing on all stock exchanges
on which such class of stock is then listed;

            (b) The completion of any registration or other qualification of
such shares under any state or federal law, or under the rulings or regulations
of the Securities and Exchange

                                       14
<PAGE>
Commission or any other governmental regulatory body which the Committee or
Board shall, in its absolute discretion, deem necessary or advisable;

            (c) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Committee (or Board, in the case of
Options granted to Independent Directors) shall, in its absolute discretion,
determine to be necessary or advisable;

            (d) The lapse of such reasonable period of time following the
exercise of the Option as the Committee (or Board, in the case of Options
granted to Independent Directors) may establish from time to time for reasons of
administrative convenience; and

            (e) The receipt by the Company or the Partnership of full payment
for such shares, including payment of any applicable withholding tax.

            5.7. Rights as Stockholders. The holders of Options shall not be,
nor have any of the rights or privileges of, stockholders of the Company in
respect of any shares purchasable upon the exercise of any part of an Option
unless and until certificates representing such shares have been issued by the
Company to such holders.

            5.8. Ownership and Transfer Restrictions. The Committee (or Board,
in the case of Options granted to Independent Directors), in its absolute
discretion, may impose such restrictions on the ownership and transferability of
the shares purchasable upon the exercise of an Option as it deems appropriate.
Any such restriction shall be set forth in the respective Stock Option Agreement
and may be referred to on the certificates evidencing such shares. The Committee
may require the Employee to give the Company prompt notice of any disposition of
shares of Common Stock acquired by exercise of an Incentive Stock Option within
(i) two years from the date of granting (including the date the Option is
modified, extended or renewed for purposes of Section 424(h) of the Code) such
Option to such Employee or (ii) one year after the transfer of such shares to
such Employee. The Committee may direct that the certificates evidencing shares
acquired by exercise of an Option refer to such requirement to give prompt
notice of disposition.

            5.9. Limitations on Exercise of Options Granted to an Optionee. The
Committee (or the Board, in the case of Options granted to Independent
Directors), in its absolute discretion, may impose such limitations and
restrictions on the exercise of Options as it deems appropriate. Any such
limitation shall be set forth in the respective Stock Option Agreement.
Notwithstanding the foregoing, an Option is not exercisable if in the sole and
absolute discretion of the Committee the exercise of such Option would likely
result in any of the following:

            (a) the Optionee's or any other person's ownership of capital stock
being in violation of the Stock Ownership Limit (as defined in the Company's
Articles of Incorporation); or

            (b) income to the Company that could impair the Company's status as
a real estate investment trust, within the meaning of Sections 856 through 860
of the Code.

                                       15
<PAGE>
                                   ARTICLE VI.
                            AWARD OF RESTRICTED STOCK

            6.1. Eligibility. Subject to the Award Limit, Restricted Stock may
be awarded to any Employee who the Committee determines is a key Employee or any
Director or consultant whom the Committee determines should receive such an
award.

            6.2. Award of Restricted Stock

            (a) The Committee may from time to time, in its absolute discretion:

                  (i) Determine which Employees are key Employees and select
      from among the key Employees, Directors or consultants (including
      Employees, Directors or consultants who have previously received other
      awards under this Plan) such of them as in its opinion should be awarded
      Restricted Stock; and

                  (ii) Determine the purchase price, if any, and other terms and
      conditions (including, without limitation, in the case of awards to
      Employees, consultants or Independent Directors of the Partnership or any
      Partnership Subsidiary, the mechanism for the transfer of the Restricted
      Stock and payment therefor and, in the case of the repurchase of shares of
      Restricted Stock subject to restrictions in effect at the time of the
      Termination of Employment, Directorship or Consultancy of such Employee,
      Director or consultant, as the case may be) applicable to such Restricted
      Stock, consistent with this Plan.

            (b) The Committee shall establish the purchase price, if any, and
form of payment for Restricted Stock; provided, however, that such purchase
price shall be no less than the par value of the Common Stock to be purchased,
unless otherwise permitted by applicable state law. In all cases, legal
consideration shall be required for each issuance of Restricted Stock.

            (c) Upon the selection of a key Employee or consultant to be awarded
Restricted Stock, the Committee shall instruct the Secretary of the Company to
issue such Restricted Stock and may impose such conditions on the issuance of
such Restricted Stock as it deems appropriate.

            6.3. Restricted Stock Agreement. Restricted Stock shall be issued
only pursuant to a written Restricted Stock Agreement, which shall be executed
by the selected key Employee or consultant and an authorized officer of the
Company and which shall contain such terms and conditions as the Committee shall
determine, consistent with this Plan.

            6.4. Consideration. As consideration for the issuance of Restricted
Stock, in addition to payment of any purchase price, the Restricted Stockholder
shall agree, in the written Restricted Stock Agreement, to remain in the employ
of, or to consult for, the Company, a Company Subsidiary, the Partnership or a
Partnership Subsidiary for a period of at least one year after the Restricted
Stock is issued (or such shorter period as may be fixed in the Restricted Stock
Agreement or by action of the Committee following grant of the Restricted Stock)
or, in the case

                                       16
<PAGE>
of a Director, complete the remainder of such Director's elected term. Nothing
in this Plan or in any Restricted Stock Agreement hereunder shall (i) confer on
any Restricted Stockholder any right to (a) continue in the employ of, as a
Director of or as a consultant for, the Company, a Company Subsidiary, the
Partnership or a Partnership Subsidiary or (b) receive any severance pay from
the Company, a Company Subsidiary, the Partnership or a Partnership Subsidiary
or (ii) interfere with or restrict in any way the rights of the Company, a
Company Subsidiary, the Partnership or a Partnership Subsidiary, which are
hereby expressly reserved, to discharge the Employee or consultant at any time
for any reason whatsoever, with or without Cause, or any Director pursuant to
the Company's bylaws.

            6.5. Rights as Stockholders. Subject to Section 6.6, upon delivery
of the shares of Restricted Stock to the escrow holder pursuant to Section 6.8,
the Restricted Stockholder shall have, unless otherwise provided by the
Committee, all the rights of a stockholder with respect to said shares, subject
to the restrictions in his Restricted Stock Agreement, including the right to
receive all dividends and other distributions paid or made with respect to the
shares; provided, however, that in the discretion of the Committee, any
extraordinary distributions with respect to the Common Stock shall be subject to
the restrictions set forth in Section 6.6.

            6.6. Restriction. All shares of Restricted Stock issued under this
Plan (including any shares received by holders thereof with respect to shares of
Restricted Stock as a result of stock dividends, stock splits or any other form
of recapitalization) shall, in the terms of each individual Restricted Stock
Agreement, be subject to such restrictions as the Committee shall provide, which
restrictions may include, without limitation, restrictions concerning voting
rights and transferability and restrictions based on duration of employment with
the Company, Company performance and individual performance; provided, however,
that, unless the Committee otherwise provides in the terms of the Restricted
Stock Agreement or otherwise, no share of Restricted Stock granted to a person
subject to Section 16 of the Exchange Act shall be sold, assigned or otherwise
transferred until at least six months and one day have elapsed from the date on
which the Restricted Stock was issued, and provided, further, that, except with
respect to shares of Restricted Stock granted pursuant to Section 6.10, by
action taken after the Restricted Stock is issued, the Committee may, on such
terms and conditions as it may determine to be appropriate, remove any or all of
the restrictions imposed by the terms of the Restricted Stock Agreement.
Restricted Stock may not be sold or encumbered until all restrictions are
terminated or expire. If no consideration was paid by the Restricted Stockholder
upon issuance, a Restricted Stockholder's rights in unvested Restricted Stock
shall lapse upon a Termination of Employment or, if applicable, upon a
Termination of Directorship or a Termination of Consultancy; provided, however,
that the Committee in its sole and absolute discretion may provide that such
rights shall not lapse in the event of a Termination of Employment or
Termination of Directorship following a "change of ownership control" (within
the meaning of Treasury Regulation Section 1.62-27(e)(2)(v) or any successor
regulation thereto) of the Company or because of the Restricted Stockholder's
death or disability.

            6.7. Repurchase of Restricted Stock. The Committee shall provide in
the terms of each individual Restricted Stock Agreement that the Company shall
have the right to repurchase from the Restricted Stockholder the Restricted
Stock then subject to restrictions under

                                       17
<PAGE>
the Restricted Stock Agreement immediately upon a Termination of Employment or,
if applicable, upon a Termination of Directorship or a Termination of
Consultancy, at a cash price per share equal to the price paid by the Restricted
Stockholder for such Restricted Stock; provided, however, that the Committee in
its sole and absolute discretion may provide that no such right of repurchase
shall exist in the event of a Termination of Employment, Termination of
Directorship or Termination of Consultancy following a "change of ownership or
control" (within the meaning of Treasury Regulation Section 1.162-27(e)(2)(v) or
any successor regulation thereto) of the Company or because of the Restricted
Stockholder's death or disability; provided, further, that, except with respect
to shares of Restricted Stock granted pursuant to Section 6.10, the Committee in
its sole and absolute discretion may provide that no such right of repurchase
shall exist in the event of a Termination of Employment, Termination of
Directorship or a Termination of Consultancy without Cause, following any change
in control or ownership of the Company, because of the Restricted Stockholder's
retirement, or otherwise.

            6.8. Escrow. The Secretary of the Company or such other escrow
holder as the Committee may appoint shall retain physical custody of each
certificate representing Restricted Stock until all of the restrictions imposed
under the Restricted Stock Agreement with respect to the shares evidenced by
such certificate expire or shall have been removed.

            6.9. Legend. In order to enforce the restrictions imposed upon
shares of Restricted Stock hereunder, the Committee shall cause a legend or
legends to be placed on certificates representing all shares of Restricted Stock
that are still subject to restrictions under Restricted Stock Agreements, which
legend or legends shall make appropriate reference to the conditions imposed
thereby.

            6.10. Provisions Applicable to Section 162(m) Participants.

            (a) Notwithstanding anything in the Plan to the contrary, the
Committee may grant Restricted Stock to a Section 162(m) Participant the
restrictions with respect to which lapse upon the attainment of performance
goals for the Company which are related to one or more of the following business
criteria: (i) pre-tax income, (ii) operating income, (iii) cash flow, (iv)
earnings per share, (v) return on equity, (vi) return on invested capital or
assets, (vii) cost reductions or savings, (viii) funds from operations, (ix)
appreciation in the fair market value of Common Stock and (x) earnings before
any one or more of the following items: interest, taxes, depreciation or
amortization.

            (b) To the extent necessary to comply with the performance-based
compensation requirements of Section 162(m)(4)(C) of the Code, with respect to
Restricted Stock which may be granted to one or more Section 162(m)
Participants, no later than ninety (90) days following the commencement of any
fiscal year in question or any other designated fiscal period or period of
service (or such other time as may be required or permitted by Section 162(m) of
the Code), the Committee shall, in writing, (i) designate one or more Section
162(m) Participants, (ii) select the performance goal or goals applicable to the
fiscal year or other designated fiscal period or period of service, (iii)
establish the various targets and amounts of Restricted Stock which may be
earned for such fiscal year or other designated fiscal period or

                                       18
<PAGE>
period of service and (iv) specify the relationship between performance goals
and targets and the amounts of Restricted Stock to be earned by each Section
162(m) Participant for such fiscal year or other designated fiscal period or
period of service. Following the completion of each fiscal year or other
designated fiscal period or period of service, the Committee shall certify in
writing whether the applicable performance targets have been achieved for such
fiscal year or other designated fiscal period or period of service. In
determining the amount earned by a Section 162(m) Participant, the Committee
shall have the right to reduce (but not to increase) the amount payable at a
given level of performance to take into account additional factors that the
Committee may deem relevant to the assessment of individual or corporate
performance for the fiscal year or other designated fiscal period or period of
service.

                                  ARTICLE VII.

                    PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS,
                         DEFERRED STOCK, STOCK PAYMENTS

            7.1. Eligibility. Subject to the Award Limit, one or more
Performance Awards, Dividend Equivalents, awards of Deferred Stock, and/or Stock
Payments may be granted to any Employee whom the Committee determines is a key
Employee or any consultant or Independent Director whom the Committee determines
should receive such an award.

            7.2. Performance Awards. Any key Employee, consultant or Independent
Director selected by the Committee may be granted one or more Performance
Awards. The value of such Performance Awards may be linked to the market value,
book value, net profits or other measure of the value of Common Stock or other
specific performance criteria determined appropriate by the Committee, in each
case on a specified date or dates or over any period or periods determined by
the Committee, or may be based upon the appreciation in the market value, book
value, net profits or other measure of the value of a specified number of shares
of Common Stock over a fixed period or periods determined by the Committee. In
making such determinations, the Committee shall consider (among such other
factors as it deems relevant in light of the specific type of award) the
contributions, responsibilities and other compensation of the particular key
Employee or consultant.

            7.3. Dividend Equivalents. Any key Employee, consultant or
Independent Director selected by the Committee may be granted Dividend
Equivalents based on the dividends declared on Common Stock, to be credited as
of dividend payment dates, during the period between the date an Option, Stock
Appreciation Right, Deferred Stock or Performance Award is granted, and the date
such Option, Stock Appreciation Right, Deferred Stock or Performance Award is
exercised, vests or expires, as determined by the Committee. Such Dividend
Equivalents shall be converted to cash or additional shares of Common Stock by
such formula and at such time and subject to such limitations as may be
determined by the Committee. With respect to Dividend Equivalents granted with
respect to Options intended to be qualified performance-based compensation for
purposes of Section 162(m) of the Code, such Dividend Equivalents shall be
payable regardless of whether such Option is exercised.

                                       19
<PAGE>
            7.4. Stock Payments. Any key Employee, consultant or Independent
Director selected by the Committee may receive Stock Payments in the manner
determined from time to time by the Committee. The number of shares shall be
determined by the Committee and may be based upon the Fair Market Value, book
value, net profits or other measure of the value of Common Stock or other
specific performance criteria determined appropriate by the Committee,
determined on the date such Stock Payment is made or on any date thereafter.

            7.5. Deferred Stock. Any key Employee, consultant or Independent
Director selected by the Committee may be granted an award of Deferred Stock in
the manner determined from time to time by the Committee. The number of shares
of Deferred Stock shall be determined by the Committee and may be linked to the
market value, book value, net profits or other measure of the value of Common
Stock or other specific performance criteria determined to be appropriate by the
Committee, in each case on a specified date or dates or over any period or
periods determined by the Committee. Common Stock underlying a Deferred Stock
award will not be issued until the Deferred Stock award has vested, pursuant to
a vesting schedule or performance criteria set by the Committee. Unless
otherwise provided by the Committee, a Grantee of Deferred Stock shall have no
rights as a Company stockholder with respect to such Deferred Stock until such
time as the award has vested and the Common Stock underlying the award has been
issued.

            7.6. Performance Award Agreement, Dividend Equivalent Agreement,
Deferred Stock Agreement, Stock Payment Agreement. Each Performance Award,
Dividend Equivalent, award of Deferred Stock and/or Stock Payment shall be
evidenced by a written agreement, which shall be executed by the Grantee and an
authorized Officer of the Company and which shall contain such terms and
conditions (including, without limitation, in the case of awards to Employees,
consultants or Independent Directors of the Partnership or any Partnership
Subsidiary, the mechanism for the transfer or rights under such awards) as the
Committee shall determine, consistent with this Plan.

            7.7. Term. The term of a Performance Award, Dividend Equivalent,
award of Deferred Stock and/or Stock Payment shall be set by the Committee in
its discretion.

            7.8. Exercise or Purchase Price. The Committee may establish the
exercise or purchase price of a Performance Award, shares of Deferred Stock, or
shares received as a Stock Payment; provided, however, that such price shall not
be less than the par value for a share of Common Stock, unless otherwise
permitted by applicable state law.

            7.9. Exercise Upon Termination of Employment. A Performance Award,
Dividend Equivalent, award of Deferred Stock and/or Stock Payment is exercisable
or payable only while the Grantee is an Employee or consultant; provided,
however, that the Committee in its sole and absolute discretion may provide that
the Performance Award, Dividend Equivalent, award of Deferred Stock and/or Stock
Payment may be exercised or paid subsequent to a Termination of Employment
following a "change of control or ownership" (within the meaning of Section
1.162-27(e)(2)(v) or any successor regulation thereto) of the Company; provided,
further, that except with respect to Performance Awards granted pursuant to
Section 7.12, the

                                       20
<PAGE>
Committee in its sole and absolute discretion may provide that the Performance
Awards may be exercised or paid following a Termination of Employment or a
Termination of Consultancy without cause, or following a change in control of
the Company, or because of the Grantee's retirement, death or disability, or
otherwise.

            7.10. Payment on Exercise. Payment of the amount determined under
Section 7.1 or 7.2 above shall be in cash, in Common Stock or a combination of
both, as determined by the Committee. To the extent any payment under this
Article VII is effected in Common Stock, it shall be made subject to
satisfaction of all provisions of Section 5.3.

            7.11. Consideration. In consideration of the granting of a
Performance Award, Dividend Equivalent, award of Deferred Stock and/or Stock
Payment, the Grantee shall agree, in a written agreement, to remain in the
employ of, or to consult for, the Company, a Company Subsidiary, the Partnership
or a Partnership Subsidiary for a period of at least one year after such
Performance Award, Dividend Equivalent, award of Deferred Stock and/or Stock
Payment is granted (or such shorter period as may be fixed in such agreement or
by action of the Committee following such grant). Nothing in this Plan or in any
agreement hereunder shall (i) confer on any Grantee any right to (a) continue in
the employ of, or as a consultant for, the Company, a Company Subsidiary, the
Partnership or a Partnership Subsidiary or (b) receive any severance pay from
the Company, a Company Subsidiary, the Partnership or a Partnership Subsidiary
or (ii) interfere with or restrict in any way the rights of the Company, a
Company Subsidiary, the Partnership or a Partnership Subsidiary, which are
hereby expressly reserved, to discharge any Grantee at any time for any reason
whatsoever, with or without Cause.

            7.12. Provisions Applicable to Section 162(m) Participants.

            (a) Notwithstanding anything in the Plan to the contrary, the
Committee may grant any performance or incentive awards described in Article VII
to a Section 162(m) Participant that vest or become exercisable or payable upon
the attainment of performance goals for the Company which are related to one or
more of the following business criteria: (i) pre-tax income, (ii) operating
income, (iii) cash flow, (iv) earnings per share, (v) return on equity, (vi)
return on invested capital or assets, (vii) cost reductions or savings, (viii)
funds from operations, (ix) appreciation in the fair market value of Common
Stock and (x) earnings before any one or more of the following items: interest,
taxes, depreciation or amortization.

            (b) To the extent necessary to comply with the performance-based
compensation requirements of Section 162(m)(4)(C) of the Code, with respect to
performance or incentive awards described in Article VII which may be granted to
one or more Section 162(m) Participants, no later than ninety (90) days
following the commencement of any fiscal year in question or any other
designated fiscal period or period of service (or such other time as may be
required or permitted by Section 162(m) of the Code), the Committee shall, in
writing, (i) designate one or more Section 162(m) Participants, (ii) select the
performance goal or goals applicable to the fiscal year or other designated
fiscal period or period of service, (iii) establish the various targets and
bonus amounts which may be earned for such fiscal year or other designated
fiscal period or period of service and (iv) specify the relationship between

                                       21
<PAGE>
performance goals and targets and the amounts to be earned by each Section
162(m) Participant for such fiscal year or other designated fiscal period or
period of service. Following the completion of each fiscal year or other
designated fiscal period or period of service, the Committee shall certify in
writing whether the applicable performance targets have been achieved for such
fiscal year or other designated fiscal period or period of service. In
determining the amount earned by a Section 162(m) Participant, the Committee
shall have the right to reduce (but not to increase) the amount payable at a
given level of performance to take into account additional factors that the
Committee may deem relevant to the assessment of individual or corporate
performance for the fiscal year or other designated fiscal period or period of
service.

                                  ARTICLE VIII.
                            STOCK APPRECIATION RIGHTS

            8.1. Grant of Stock Appreciation Rights. A Stock Appreciation Right
may be granted to any key Employee or consultant selected by the Committee. A
Stock Appreciation Right may be granted (i) in connection and simultaneously
with the grant of an Option, (ii) with respect to a previously granted Option,
or (iii) independent of an Option. A Stock Appreciation Right shall be subject
to such terms and conditions (including, without limitation, the mechanism for
the transfer of rights under such awards) not inconsistent with this Plan as the
Committee shall impose and shall be evidenced by a written Stock Appreciation
Right Agreement, which shall be executed by the Grantee and an authorized
officer of the Company. The Committee, in its discretion, may determine whether
a Stock Appreciation Right is to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code and Stock Appreciation Right
Agreements evidencing Stock Appreciation Rights intended to so qualify shall
contain such terms and conditions as may be necessary to meet the applicable
provisions of Section 162(m) of the Code.

            8.2. Coupled Stock Appreciation Rights

            (a) A Coupled Stock Appreciation Right ("CSAR") shall be related to
a particular Option and shall be exercisable only when and to the extent the
related Option is exercisable.

            (b) A CSAR may be granted to the Grantee for no more than the number
of shares subject to the simultaneously or previously granted Option to which it
is coupled.

            (c) A CSAR shall entitle the Grantee (or other person entitled to
exercise the Option pursuant to this Plan) to surrender to the Company
unexercised a portion of the Option to which the CSAR relates (to the extent
then exercisable pursuant to its terms) and to receive from the Company in
exchange therefor an amount determined by multiplying the difference obtained by
subtracting the Option exercise price from the Fair Market Value of a share of
Common Stock on the date of exercise of the CSAR by the number of shares of
Common Stock with respect to which the CSAR shall have been exercised, subject
to any limitations the Committee may impose.

                                       22
<PAGE>
            8.3. Independent Stock Appreciation Rights

            (a) An Independent Stock Appreciation Right ("ISAR") shall be
unrelated to any Option and shall have a term set by the Committee. An ISAR
shall be exercisable in such installments as the Committee may determine. An
ISAR shall cover such number of shares of Common Stock as the Committee may
determine; provided, however, that unless the Committee otherwise provides in
the terms of the ISAR or otherwise, no ISAR granted to a person subject to
Section 16 of the Exchange Act shall be exercisable until at least six months
have elapsed from (but excluding) the date on which the Option was granted. The
exercise price per share of Common Stock subject to each ISAR shall be set by
the Committee. An ISAR is exercisable only while the Grantee is an Employee or
consultant; provided that the Committee may determine that the ISAR may be
exercised subsequent to Termination of Employment, Termination of Directorship
or Termination of Consultancy without cause, or following a change in control of
the Company, or because of the Grantee's retirement, death or disability, or
otherwise.

            (b) An ISAR shall entitle the Grantee (or other person entitled to
exercise the ISAR pursuant to this Plan) to exercise all or a specified portion
of the ISAR (to the extent then exercisable pursuant to its terms) and to
receive from the Company an amount determined by multiplying the difference
obtained by subtracting the exercise price per share of the ISAR from the Fair
Market Value of a share of Common Stock on the date of exercise of the ISAR by
the number of shares of Common Stock with respect to which the ISAR shall have
been exercised, subject to any limitations the Committee may impose.

            8.4. Payment and Limitations on Exercise

            (a) Payment of the amount determined under Section 8.2(c) and 8.3(b)
above shall be in cash, in Common Stock (based on its Fair Market Value as of
the date the Stock Appreciation Right is exercised) or a combination of both, as
determined by the Committee. To the extent such payment is effected in Common
Stock it shall be made subject to satisfaction of all provisions of Section 5.3
above pertaining to Options.

            (b) Grantees of Stock Appreciation Rights may be required to comply
with any timing or other restrictions with respect to the settlement or exercise
of a Stock Appreciation Right, including a window-period limitation, as may be
imposed in the discretion of the Board or Committee.

            8.5. Consideration. In consideration of the granting of a Stock
Appreciation Right, the Grantee shall agree, in the written Stock Appreciation
Right Agreement, to remain in the employ of, or to consult for, the Company, a
Company Subsidiary, the Partnership or a Partnership Subsidiary for a period of
at least one year after the Stock Appreciation Right is granted (or such shorter
period as may be fixed in the Stock Appreciation Right Agreement or by action of
the Committee following grant of the Restricted Stock). Nothing in this Plan or
in any Stock Appreciation Right Agreement hereunder shall (i) confer on any
Grantee any right to (a) continue in the employ of, or as a consultant for, the
Company, a Company Subsidiary, the

                                       23
<PAGE>
Partnership or a Partnership Subsidiary or (b) receive any severance pay from
the Company, a Company Subsidiary, the Partnership or a Partnership Subsidiary
or (ii) interfere with or restrict in any way the rights of the Company, a
Company Subsidiary, the Partnership or a Partnership Subsidiary, which are
hereby expressly reserved, to discharge any Grantee at any time for any reason
whatsoever, with or without Cause.

                                   ARTICLE IX.
                                 ADMINISTRATION

            9.1. Compensation Committee. Prior to the Company's initial
registration of Common Stock under Section 12 of the Exchange Act, the
Compensation Committee shall consist of the entire Board. Following such
registration, the Compensation Committee (or another committee or a subcommittee
of the Board assuming the functions of the Committee under this Plan) shall
consist solely of two or more Independent Directors appointed by and holding
office at the pleasure of the Board, each of whom is both a "non-employee
director" as defined by Rule 16b-3 and an "outside director" for purposes of
Section 162(m) of the Code. Appointment of Committee members shall be effective
upon acceptance of appointment. Committee members may resign at any time by
delivering written notice to the Board. Vacancies in the Committee may be filled
by the Board.

            9.2. Duties and Powers of Committee. It shall be the duty of the
Committee to conduct the general administration of this Plan in accordance with
its provisions. The Committee shall have the power to interpret this Plan and
the agreements pursuant to which Options, awards of Restricted Stock or Deferred
Stock, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments are granted or awarded, and to adopt such rules for the
administration, interpretation, and application of this Plan as are consistent
therewith and to interpret, amend or revoke any such rules. Notwithstanding the
foregoing, the full Board, acting by a majority of its members in office, shall
conduct the general administration of the Plan with respect to Options granted
to Independent Directors. Any such grant or award under this Plan need not be
the same with respect to each Optionee, Grantee or Restricted Stockholder. Any
such interpretations and rules with respect to Incentive Stock Options shall be
consistent with the provisions of Section 422 of the Code. In its absolute
discretion, the Board may at any time and from time to time exercise any and all
rights and duties of the Committee under this Plan except with respect to
matters which under Rule 16b-3 or Section 162(m) of the Code, or any regulations
or rules issued thereunder, are required to be determined in the sole discretion
of the Committee.

            9.3. Majority Rule; Unanimous Written Consent. The Committee shall
act by a majority of its members in attendance at a meeting at which a quorum is
present or by a memorandum or other written instrument signed by all members of
the Committee.

            9.4. Compensation; Professional Assistance; Good Faith Actions.
Members of the Committee shall receive such compensation, if any, for their
services as members as may be determined by the Board. All expenses and
liabilities which members of the Committee incur in connection with the
administration of this Plan shall be borne by the Company. The Committee

                                       24
<PAGE>
may, with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers, or other persons. The Committee, the Company and the
Company's officers and Directors shall be entitled to rely upon the advice,
opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee or the Board in good
faith shall be final and binding upon all Optionees, Grantees, Restricted
Stockholders, the Company and all other interested persons. No members of the
Committee or Board shall be personally liable for any action, determination or
interpretation made in good faith with respect to this Plan, Options, awards of
Restricted Stock or Deferred Stock, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments, and all members of the Committee
and the Board shall be fully protected by the Company in respect of any such
action, determination or interpretation.

            9.5. Delegation of Authority to Grant Awards. The Committee may, but
need not, delegate from time to time to a committee consisting of one or more
members of the Committee or of one or more officers of the Company some or all
of the Committee's authority to grant awards under this Plan to eligible
recipients; provided, however, that each such recipient must be an individual
other than an "officer," "director" or "beneficial owner of more than ten per
centum of any class of any equity security" within the meaning of each such term
as it is used under Section 16(b) of the Exchange Act. Any delegation hereunder
shall be subject to the restrictions and limits that the Committee specifies at
the time of such delegation of authority and may be rescinded at any time by the
Committee. At all times, any committee appointed under this Section 9.5 shall
serve in such capacity at the pleasure of the Committee.

                                   ARTICLE X.
                            MISCELLANEOUS PROVISIONS

            10.1. Not Transferable. Options, Restricted Stock awards, Deferred
Stock awards, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments under this Plan may not be sold, pledged,
assigned, or transferred in any manner other than by will or the laws of descent
and distribution, unless and until such rights or awards have been exercised, or
the shares underlying such rights or awards have been issued, and all
restrictions applicable to such shares have lapsed. No Option, Restricted Stock
award, Deferred Stock award, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payment or interest or right therein shall be
liable for the debts, contracts or engagements of the Optionee, Grantee or
Restricted Stockholder or his successors in interest or shall be subject to
disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or
any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except to
the extent that such disposition is permitted by the preceding sentence.

            During the lifetime of the Optionee or Grantee, only he may exercise
an Option or other right or award (or any portion thereof) granted to him under
the Plan. After the death of the Optionee or Grantee, any exercisable portion of
an Option or other right or award may, prior to the time when such portion
becomes unexercisable under the Plan or the applicable Stock Option

                                       25
<PAGE>
Agreement or other agreement, be exercised by his personal representative or by
any person empowered to do so under the deceased Optionee's or Grantee's will or
under the then applicable laws of descent and distribution.

            10.2. Amendment, Suspension or Termination of this Plan. Except as
otherwise provided in this Section 10.2, this Plan may be wholly or partially
amended or otherwise modified, suspended or terminated at any time or from time
to time by the Board or the Committee. However, without approval of the
Company's stockholders given within twelve months before or after the action by
the Board or the Committee, no action of the Board or the Committee may, except
as provided in Section 10.3, increase the limits imposed in Section 2.1 on the
maximum number of shares which may be issued under this Plan or increase the
Award Limit, and no action of the Board or the Committee may be taken that would
otherwise require stockholder approval as a matter of applicable law, regulation
or rule. No amendment, suspension or termination of this Plan shall, without the
consent of the holder of Options, Restricted Stock awards, Deferred Stock
awards, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments, alter or impair any rights or obligations under any Options,
Restricted Stock awards, Deferred Stock awards, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments theretofore granted
or awarded, unless the award itself otherwise expressly so provides. No Options,
Restricted Stock, Deferred Stock, Performance Awards, Stock Appreciation Rights,
Dividend Equivalents or Stock Payments may be granted or awarded during any
period of suspension or after termination of this Plan, and in no event may any
Incentive Stock Option be granted under this Plan after the first to occur of
the following events:

            (a) The expiration of ten years from the date the 1997 Stock Option
and Incentive Plan of AMB Property Corporation and AMB Investment Management,
Inc. and their Respective Subsidiaries was adopted by the Board; or

            (b) The expiration of ten years from the date the 1997 Stock Option
and Incentive Plan of AMB Property Corporation and AMB Investment Management,
Inc. and their Respective Subsidiaries was approved by the Company's
stockholders under Section 10.4.

            10.3. Changes in Common Stock or Assets of the Company, Acquisition
or Liquidation of the Company and Other Corporate Events.

            (a) Subject to Section 10.3(d), in the event that the Committee (or
the Board, in the case of Options granted to Independent Directors) determines
that any dividend or other distribution (whether in the form of cash, Common
Stock, other securities, or other property), recapitalization, reclassification,
stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, liquidation, dissolution, or sale,
transfer, exchange or other disposition of all or substantially all of the
assets of the Company (including, but not limited to, a Corporate Transaction),
or exchange of Common Stock or other securities of the Company, issuance of
warrants or other rights to purchase Common Stock or other securities of the
Company, or other similar corporate transaction or event, in the Committee's
sole discretion (or in the case of Options granted to Independent Directors, the

                                       26
<PAGE>
Board's sole discretion), affects the Common Stock such that an adjustment is
determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan or with respect to an Option, Restricted Stock award, Performance
Award, Stock Appreciation Right, Dividend Equivalent, Deferred Stock award or
Stock Payment, then the Committee (or the Board, in the case of Options granted
to Independent Directors) shall, in such manner as it may deem equitable, adjust
any or all of

                  (i) the number and kind of shares of Common Stock (or other
      securities or property) with respect to which Options, Performance Awards,
      Stock Appreciation Rights, Dividend Equivalents or Stock Payments may be
      granted under the Plan, or which may be granted as Restricted Stock or
      Deferred Stock (including, but not limited to, adjustments of the
      limitations in Section 2.1 on the maximum number and kind of shares which
      may be issued and adjustments of the Award Limit),

                  (ii) the number and kind of shares of Common Stock (or other
      securities or property) subject to outstanding Options, Performance
      Awards, Stock Appreciation Rights, Dividend Equivalents, or Stock
      Payments, and in the number and kind of shares of outstanding Restricted
      Stock or Deferred Stock, and

                  (iii) the grant or exercise price with respect to any Option,
      Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
      Payment.

            (b) Subject to Section 10.3(d), in the event of any Corporate
Transaction or other transaction or event described in Section 10.3(a) or any
unusual or nonrecurring transactions or events affecting the Company, any
affiliate of the Company, or the financial statements of the Company or any
affiliate, or of changes in applicable laws, regulations, or accounting
principles, the Committee (or the Board, in the case of Options granted to
Independent Directors) in its discretion is hereby authorized to take any one or
more of the following actions whenever the Committee (or the Board, in the case
of Options granted to Independent Directors) determines that such action is
appropriate or desirable:

                  (i) In its sole and absolute discretion, and on such terms and
      conditions as it deems appropriate, the Committee (or the Board, in the
      case of Options granted to Independent Directors) may provide, either by
      the terms of the agreement or by action taken prior to the occurrence of
      such transaction or event and either automatically or upon the optionee's
      request, for either the purchase of any such Option, Performance Award,
      Stock Appreciation Right, Dividend Equivalent, or Stock Payment, or any
      Restricted Stock or Deferred Stock for an amount of cash equal to the
      amount that could have been attained upon the exercise of such option,
      right or award or realization of the optionee's rights had such option,
      right or award been currently exercisable or payable or fully vested or
      the replacement of such option, right or award with other rights or
      property selected by the Committee (or the Board, in the case of awards
      granted to Independent Directors) in its sole discretion;

                                       27
<PAGE>
                  (ii) In its sole and absolute discretion, the Committee (or
      the Board, in the case of awards granted to Independent Directors) may
      provide, either by the terms of such Option, Performance Award, Stock
      Appreciation Right, Dividend Equivalent, or Stock Payment, or Restricted
      Stock or Deferred Stock or by action taken prior to the occurrence of such
      transaction or event that it cannot vest, be exercised or become payable
      after such event;

                  (iii) In its sole and absolute discretion, and on such terms
      and conditions as it deems appropriate, the Committee (or the Board, in
      the case of awards granted to Independent Directors) may provide, either
      by the terms of such Option, Performance Award, Stock Appreciation Right,
      Dividend Equivalent, or Stock Payment, or Restricted Stock or Deferred
      Stock or by action taken prior to the occurrence of such transaction or
      event, that for a specified period of time prior to such transaction or
      event, such option, right or award shall be exercisable as to all shares
      covered thereby, notwithstanding anything to the contrary in (i) Section
      4.4 or (ii) the provisions of such Option, Performance Award, Stock
      Appreciation Right, Dividend Equivalent, or Stock Payment, or Restricted
      Stock or Deferred Stock;

                  (iv) In its sole and absolute discretion, and on such terms
      and conditions as it deems appropriate, the Committee (or the Board, in
      the case of awards granted to Independent Directors) may provide, either
      by the terms of such Option, Performance Award, Stock Appreciation Right,
      Dividend Equivalent, or Stock Payment, or Restricted Stock or Deferred
      Stock or by action taken prior to the occurrence of such transaction or
      event, that upon such event, such option, right or award be assumed by the
      successor or survivor corporation, or a parent or subsidiary thereof, or
      shall be substituted for by similar options, rights or awards covering the
      stock of the successor or survivor corporation, or a parent or subsidiary
      thereof, with appropriate adjustments as to the number and kind of shares
      and prices;

                  (v) In its sole and absolute discretion, and on such terms and
      conditions as it deems appropriate, the Committee (or the Board, in the
      case of awards granted to Independent Directors) may make adjustments in
      the number and type of shares of Common Stock (or other securities or
      property) subject to outstanding Options, Performance Awards, Stock
      Appreciation Rights, Dividend Equivalents, or Stock Payments, and in the
      number and kind of outstanding Restricted Stock or Deferred Stock and/or
      in the terms and conditions of, and the criteria included in, outstanding
      options, rights and awards and options, rights and awards which may be
      granted in the future; and

                  (vi) In its sole and absolute discretion, and on such terms
      and conditions as it deems appropriate, the Committee may provide either
      by the terms of a Restricted Stock award or Deferred Stock award or by
      action taken prior to the occurrence of such event that, for a specified
      period of time prior to such event, the restrictions imposed under a
      Restricted Stock Agreement or a Deferred Stock Agreement upon some or all
      shares of Restricted Stock or Deferred Stock may be terminated, and, in

                                       28
<PAGE>
      the case of Restricted Stock, some or all shares of such Restricted Stock
      may cease to be subject to repurchase under Section 6.6 or forfeiture
      under Section 6.5 after such event.

            (c) Subject to Section 10.3(d) and 10.8, the Committee (or the
Board, in the case of awards granted to Independent Directors) may, in its
discretion, include such further provisions and limitations in any Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent, or Stock
Payment, or Restricted Stock or Deferred Stock agreement or certificate, as it
may deem equitable and in the best interests of the Company.

            (d) With respect to Options, Restricted Stock, Deferred Stock, Stock
Appreciation Rights and performance or incentive awards described in Article VII
which are granted to Section 162(m) Participants and are intended to qualify as
performance-based compensation under Section 162(m)(4)(C), no adjustment or
action described in this Section 10.3 or in any other provision of the Plan
shall be authorized to the extent that such adjustment or action would cause the
Plan to violate Section 422(b)(1) of the Code or would cause such option or
stock appreciation right to fail to so qualify under Section 162(m)(4)(C), as
the case may be, or any successor provisions thereto. Furthermore, no such
adjustment or action shall be authorized to the extent such adjustment or action
would result in short-swing profits liability under Section 16 or violate the
exemptive conditions of Rule 16b-3 unless the Committee (or the Board, in the
case of awards granted to Independent Directors) determines that the option or
other award is not to comply with such exemptive conditions. The number of
shares of Common Stock subject to any option, right or award shall always be
rounded to the next whole number.

            10.4. Approval of Plan by Stockholders. This Plan will be submitted
for the approval of the Company's stockholders within twelve months after the
date of the Board's initial adoption of this Plan. Options, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments may be granted
and Restricted Stock or Deferred Stock may be awarded prior to such stockholder
approval, provided that such Options, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments shall not be exercisable and such
Restricted Stock or Deferred Stock shall not vest prior to the time when this
Plan is approved by the stockholders, and provided further that if such approval
has not been obtained at the end of said twelve-month period, all Options,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments previously granted and all Restricted Stock or Deferred Stock
previously awarded under this Plan shall thereupon be canceled and become null
and void.

            10.5. Tax Withholding. The Company shall be entitled to require
payment in cash or deduction from other compensation payable to each Optionee,
Grantee or Restricted Stockholder of any sums required by federal, state or
local tax law to be withheld with respect to the issuance, vesting, exercise or
payment of any Option, Restricted Stock, Deferred Stock, Performance Award,
Stock Appreciation Right, Dividend Equivalent or Stock Payment. The Committee
(or the Board, in the case of awards granted to Independent Directors) may in
its discretion and in satisfaction of the foregoing requirement allow such
Optionee, Grantee or Restricted Stockholder to elect to have the Company
withhold shares of Common Stock

                                       29
<PAGE>
otherwise issuable under such Option or other award (or allow the return of
shares of Common Stock) having a Fair Market Value equal to the sums required to
be withheld.

            10.6. Loans. The Committee may, in its discretion, extend one or
more loans to key Employees in connection with the exercise or receipt of an
Option, Performance Award, Stock Appreciation Right, Dividend Equivalent or
Stock Payment granted under this Plan, or the issuance of Restricted Stock or
Deferred Stock awarded under this Plan. The terms and conditions of any such
loan shall be set by the Committee.

            10.7. Forfeiture Provisions. Pursuant to its general authority to
determine the terms and conditions applicable to awards under the Plan, the
Committee (or the Board, in the case of awards granted to Independent Directors)
shall have the right (to the extent consistent with the applicable exemptive
conditions of Rule 16b-3) to provide, in the terms of Options or other awards
made under the Plan, or to require the recipient to agree by separate written
instrument, that (i) any proceeds, gains or other economic benefit actually or
constructively received by the recipient upon any receipt or exercise of the
award, or upon the receipt or resale of any Common Stock underlying such award,
must be paid to the Company, and (ii) the award shall terminate and any
unexercised portion of such award (whether or not vested) shall be forfeited, if
(a) a Termination of Employment, Termination of Consultancy or Termination of
Directorship occurs prior to a specified date, or within a specified time period
following receipt or exercise of the award, or (b) the recipient at any time, or
during a specified time period, engages in any activity in competition with the
Company, or which is inimical, contrary or harmful to the interests of the
Company, as further defined by the Committee (or the Board, as applicable).

            10.8. Limitations Applicable to Section 16 Persons and
Performance-Based Compensation. Notwithstanding any other provision of this
Plan, this Plan, and any Option, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payment granted, or Restricted Stock or Deferred
Stock awarded, to any individual who is then subject to Section 16 of the
Exchange Act, shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including any
amendment to Rule 16b-3 of the Exchange Act) that are requirements for the
application of such exemptive rule. To the extent permitted by applicable law,
the Plan, Options, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents, Stock Payments, Restricted Stock and Deferred Stock granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule. Furthermore, notwithstanding any other provision
of this Plan, any Option, Stock Appreciation Right or performance or incentive
award described in Article VII which is granted to a Section 162(m) Participant
and is intended to qualify as performance-based compensation as described in
Section 162(m)(4)(C) of the Code shall be subject to any additional limitations
set forth in Section 162(m) of the Code (including any amendment to Section
162(m) of the Code) or any regulations or rulings issued thereunder that are
requirements for qualification as performance-based compensation as described in
Section 162(m)(4)(C) of the Code, and this Plan shall be deemed amended to the
extent necessary to conform to such requirements.

                                       30
<PAGE>
            10.9. Effect of Plan Upon Options and Compensation Plans. The
adoption of this Plan shall not affect any other compensation or incentive plans
in effect for the Company or any Subsidiary. Nothing in this Plan shall be
construed to limit the right of the Company (i) to establish any other forms of
incentives or compensation for Employees, Directors or Consultants of the
Company or any Subsidiary or (ii) to grant or assume options or other rights or
awards otherwise than under this Plan in connection with any proper corporate
purpose including but not by way of limitation, the grant or assumption of
options in connection with the acquisition by purchase, lease, merger,
consolidation or otherwise, of the business, stock or assets of any corporation,
partnership, limited liability company, firm or association.

            10.10. Section 83(b) Election Prohibited. No Grantee, Optionee or
Restricted Stockholder may make an election under Section 83(b) of the Code with
respect to any award or grant under this Plan.

            10.11. Compliance with Laws. This Plan, the granting and vesting of
Options, Restricted Stock awards, Deferred Stock awards, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments under this
Plan and the issuance and delivery of shares of Common Stock and the payment of
money under this Plan or under Options, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments granted or Restricted Stock or
Deferred Stock awarded hereunder are subject to compliance with all applicable
federal and state laws, rules and regulations (including but not limited to
state and federal securities law and federal margin requirements) and to such
approvals by any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in connection
therewith. Any securities delivered under this Plan shall be subject to such
restrictions, and the person acquiring such securities shall, if requested by
the Company, provide such assurances and representations to the Company as the
Company may deem necessary or desirable to assure compliance with all applicable
legal requirements. To the extent permitted by applicable law, the Plan,
Options, Restricted Stock awards, Deferred Stock awards, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such laws, rules and regulations.

            10.12. Titles. Titles are provided herein for convenience only and
are not to serve as a basis for interpretation or construction of this Plan.

            10.13. Governing Law. This Plan and any agreements hereunder shall
be administered, interpreted and enforced under the internal laws of the State
of California without regard to conflicts of laws thereof.

            10.14. Conflicts with Company's Articles of Incorporation.
Notwithstanding any other provision of this Plan, no Optionee, Grantee or
Restricted Stockholder shall acquire or have any right to acquire any Common
Stock, and shall not have other rights under this Plan, which are prohibited
under the Company's Articles of Incorporation.

                  [Remainder of Page Intentionally Left Blank.]

                                       31
<PAGE>
            IN WITNESS WHEREOF, the parties below have caused the foregoing Plan
to be approved by their officers duly authorized on this 1st day of January,
2002.

                                    AMB PROPERTY, L.P., a Delaware limited
                                    partnership

                                    By:  AMB Property Corporation,
                                         its general partner

                                         By: /s/ Tamra D. Browne
                                             ---------------------------------
                                             Tamra D. Browne
                                             Vice President, General Counsel and
                                             Secretary

                                    AMB PROPERTY CORPORATION,
                                    a Maryland corporation

                                    By: /s/ Tamra D. Browne
                                        --------------------------------------
                                        Tamra D. Browne
                                        Vice President, General Counsel
                                        and Secretary

                                      S-1
<PAGE>
            I hereby certify that the foregoing Plan was duly adopted by the
Board of Directors of AMB Property Corporation on January 1, 2002.

            Executed on this 1st day of January, 2002.

                                                /s/ Tamra D. Browne
                                                ------------------------------
                                                Tamra D. Browne
                                                Vice President, General Counsel
                                                and Secretary

                                      S-2<PAGE>
                                                                   EXHIBIT 10.23

                                 AMENDMENT NO. 1

                                     TO THE

         THIRD AMENDED AND RESTATED 1997 STOCK OPTION AND INCENTIVE PLAN

                                       OF

                            AMB PROPERTY CORPORATION

                              AND ITS SUBSIDIARIES

        AMB Property Corporation, a corporation organized under the laws of
State of Maryland (the "Company"), hereby adopts this Amendment No. 1 (this
"Amendment") to the Third Amended and Restated 1997 Stock Option and Incentive
Plan of AMB Property Corporation and its Subsidiaries (the "Plan"). Capitalized
terms used in this Amendment without definition shall have the meanings given to
such terms in the Plan.

        WHEREAS, Section 9.2 of the Plan currently provides that the full Board
of Directors of the Company, acting by a majority of its members in office,
shall conduct the general administration of the Plan with respect to Options
granted to Independent Directors;

        WHEREAS, Section 10.1 of the Plan currently provides that awards under
the Plan are not transferable in any manner other than by will or the laws of
descent and distribution; and

        WHEREAS, the Company's Board of Directors has determined that it is in
the best interests of the Company to amend the Plan in certain respects to (i)
permit the Committee to modify any outstanding Options granted to Independent
Directors and (ii) permit the transferability of awards under the Plan, other
than Incentive Stock Options, with the consent of the Committee or by gift to
family members of the award holder and entities owned by such family members.

        NOW, THEREFORE, the Plan is hereby amended as follows:

               1. Section 9.2. Section 9.2 of the Plan is hereby deleted and
replaced to read in its entirety as follows:

                      "9.2. Duties and Powers of Committee. It shall be the duty
of the Committee to conduct the general administration of this Plan in
accordance with its provisions. The Committee shall have the power to interpret
this Plan and the agreements pursuant to which Options, awards of Restricted
Stock or Deferred Stock, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments are granted or awarded, and to adopt such rules
for the administration, interpretation, and application of this Plan as are
consistent therewith and to interpret, amend or revoke any such rules; provided,
however, that only the full Board, acting by a majority of its members in
office, shall have the power to grant

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<PAGE>

Options to Independent Directors. Any such grant or award under this Plan need
not be the same with respect to each Optionee, Grantee or Restricted
Stockholder. Any such interpretations and rules with respect to Incentive Stock
Options shall be consistent with the provisions of Section 422 of the Code. In
its absolute discretion, the Board may at any time and from time to time
exercise any and all rights and duties of the Committee under this Plan except
with respect to matters which under Rule 16b-3 or Section 162(m) of the Code, or
any regulations or rules issued thereunder, are required to be determined in the
sole discretion of the Committee."

               2. Section 10.1. Section 10.1 of the Plan is hereby deleted and
replaced to read in its entirety as follows:

                      "10.1. Not Transferable. Options, Restricted Stock awards,
Deferred Stock awards, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments under this Plan may not be sold, pledged,
assigned, or transferred in any manner other than by will or the laws of descent
and distribution or pursuant to a qualified domestic relations order as defined
by the Code or Title I of the Employee Retirement Income Security Act of 1974,
as amended, or the rules thereunder (a "QDRO"), unless and until such rights or
awards have been exercised, or the shares underlying such rights or awards have
been issued, and all restrictions applicable to such shares have lapsed;
provided, however, that Non-Qualified Stock Options, Restricted Stock awards,
Deferred Stock awards, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents and Stock Payments may be transferred with the consent of the
Committee or by gift to a "Family Member" (as defined below), in which case the
transferee shall receive and hold the Option or other award so transferred
subject to the provisions of this Plan and the agreement governing such Option
or other award; provided, further, that a transfer of a Non-Qualified Stock
Option, Restricted Stock award, Deferred Stock award, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment to an entity in which
more than fifty percent (50%) of the voting interests are owned by Family
Members (or the Optionee, Grantee or Restricted Stockholder) in exchange for an
interest in that entity shall be considered a gift of such Option or other
award. No Option, Restricted Stock award, Deferred Stock award, Performance
Award, Stock Appreciation Right, Dividend Equivalent or Stock Payment or
interest or right therein shall be liable for the debts, contracts or
engagements of the Optionee, Grantee or Restricted Stockholder or his successors
in interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null and
void and of no effect, except to the extent that such disposition is permitted
by the preceding sentence.

        For purposes of this Section 10.1, the term "Family Member" shall mean
any child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, any person sharing the Optionee's, Grantee's or Restricted
Stockholder's household (other than a tenant or an employee), a trust in which
these persons have more than fifty percent (50%) of the beneficial interest, a
foundation in which these persons

                                       2
<PAGE>

(or the Optionee, Grantee or Restricted Stockholder) control the management of
the assets, and any other entity in which these persons (or the Optionee,
Grantee or Restricted Stockholder) own more than fifty percent (50%) of the
voting interests.

        During the lifetime of the Optionee or Grantee, only he may exercise an
Option or other right or award (or any portion thereof) granted to him under the
Plan unless it has been transferred with the consent of the Committee or
pursuant to a QDRO or by gift to a Family Member, in which case the transferee
may exercise such Option or other award. Unless previously transferred as
permitted by this Section 10.1, after the death of the Optionee or Grantee, any
exercisable portion of an Option or other right or award may, prior to the time
when such portion becomes unexercisable under the Plan or the applicable Stock
Option Agreement or other agreement, be exercised by his personal representative
or by any person empowered to do so under the deceased Optionee's or Grantee's
will or under the then applicable laws of descent and distribution."

                            (SIGNATURE PAGE FOLLOWS)

                                       3
<PAGE>

        I hereby certify that the foregoing Amendment to the Plan was duly
adopted by the Board of Directors of AMB Property Corporation effective as of
February 15, 2002.

        Executed on this 15th day of February, 2002.

                                                  /s/ Tamra D. Browne
                                        ---------------------------------------
                                        Secretary

                                       4

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