exv10w2



 




 




 





 Exhibit 10.2




2006 LONG-TERM INCENTIVE PLAN




SECTION 1




GENERAL



      
1.1     Purpose.
ProLogis, a Maryland real estate investment trust, has
established the Plan to:



     
(a) attract and retain employees and other persons
providing services to ProLogis and the Related Companies;



     
(b) attract and retain as Outside Trustees the highly
competent individuals upon whose judgment, initiative,
leadership and continued efforts the success of ProLogis depends;



     
(c) motivate Participants, by means of appropriate
incentives, to achieve long-range goals;



     
(d) provide incentive compensation opportunities that are
competitive with those of other corporations and real estate
investment trusts; and



     
(e) further identify Participants’ interests with
those of ProLogis’s other shareholders through compensation
that is based on the value of ProLogis’s common shares;




and thereby to promote the long-term financial interest of
ProLogis and the Related Companies, including the growth in
value of ProLogis’s equity and enhancement of long-term
shareholder return.



     
1.2     Defined
Terms. The meaning of capitalized terms used in the
Plan are set forth in Section 8.



     
1.3     Participation.
For purposes of the Plan, a “Participant” is any
person to whom an Award is granted under the Plan. Subject to
the terms and conditions of the Plan, the Committee shall
determine and designate, from time to time, from among the
Eligible Individuals those persons who will be granted one or
more Awards under the Plan and, subject to the terms and
conditions of the Plan, a Participant may be granted any Award
permitted under the provisions of the Plan and more than one
Award may be granted to a Participant. Except as otherwise
agreed by ProLogis and the Participant, or except as otherwise
provided in the Plan, an Award under the Plan shall not affect
any previous Award under the Plan or an award under any other
plan maintained by ProLogis or the Related Companies.




SECTION 2




OPTIONS



      
2.1     Definitions.



     
(a) The grant of an “Option” under the Plan
entitles the Participant to purchase Shares at an Exercise Price
fixed by the Committee at the time the Option is granted.
Options granted under this Section 2 may be either
Incentive Share Options or Non-Qualified Share Options, as
determined in the discretion of the Committee. Options granted
to Outside Trustees shall be Non-Qualified Share Options.



     
(b) A grant of a “share appreciation right” or
“SAR” entitles the Participant to receive, in cash or
Shares (as determined in accordance with the terms of the Plan)
value equal to the excess of: (a) the Fair Market Value of
a specified number of Shares at the time of exercise; over
(b) an Exercise Price established by the Committee at the
time of grant.



     
(c) An Option may but need not be in tandem with an SAR,
and an SAR may but need not be in tandem with an Option (in
either case, regardless of whether the original award was
granted under this Plan or another plan or arrangement). If an
Option is in tandem with an SAR, the exercise price of both the
Option and SAR shall be the same, and the exercise of the Option
or SAR with respect to a Share shall cancel the corresponding
tandem SAR or Option right with respect to such share. If an SAR
is in tandem with an Option but is granted after the grant of
the Option, or if an Option is in tandem with an SAR but is
granted after the grant of the SAR, the later granted tandem
Award shall have the same exercise price as the earlier granted
Award, but in no event less than the Fair Market Value of a
Share at the time of such grant.



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2.2     Eligibility.
The Committee shall designate the Participants to whom Options
or SARs are to be granted under this Section 2 and shall
determine the number of Shares subject to each such Option or
SAR and the other terms and conditions thereof, not inconsistent
with the Plan. Without limiting the generality of the foregoing,
the Committee may grant dividend equivalents (current or
deferred) with respect to any Option or SAR granted under the
Plan.



     
2.3     Limits on Incentive
Share Options. If the Committee grants Incentive
Share Options, then to the extent that the aggregate fair market
value of Shares with respect to which Incentive Share Options
are exercisable for the first time by any individual during any
calendar year (under all plans of ProLogis and all subsidiaries
of ProLogis within the meaning of section 424(f) of the
Code) exceeds $100,000, such Options shall be treated as
Non-Qualified Share Options to the extent required by
section 422 of the Code.



     
2.4     Exercise
Price. The “Exercise Price” of an Option
or SAR shall be established by the Committee at the time the
Option or SAR is granted; provided, however, that in no event
shall such price be less than 100% of the Fair Market Value of a
Share on such date (or, if greater, the par value of a Share on
such date).



     
2.5     Exercise/
Vesting. Except as otherwise expressly provided in
the Plan, an Option or SAR granted under the Plan shall be
exercisable in accordance with the following:



     
(a) The terms and conditions relating to exercise and
vesting of an Option or SAR shall be established by the
Committee to the extent not inconsistent with the Plan, and may
include, without limitation, conditions relating to completion
of a specified period of service, achievement of performance
standards prior to exercise or the achievement of Share
ownership objectives by the Participant. Notwithstanding the
foregoing, in no event shall an Option or SAR granted to any
employee become exercisable or vested prior to the first
anniversary of the date on which it is granted (subject to
acceleration of exercisability and vesting, to the extent
permitted by the Committee, in the event of the
Participant’s death, Disability, Retirement, Change in
Control or involuntary termination).



     
(b) No Option or SAR may be exercised by a Participant
after the Expiration Date applicable to that Option or SAR.



     
2.6     Payment of Exercise
Price. The payment of the Exercise Price of an
Option granted under this Section 2 shall be subject to the
following:



     
(a) Subject to the following provisions of this
subsection 2.6, the full Exercise Price of each Share
purchased upon the exercise of any Option shall be paid at the
time of such exercise (except that, in the case of an exercise
through the use of cash equivalents, payment may be made as soon
as practicable after the exercise) and, as soon as practicable
thereafter, a certificate representing the Shares so purchased
shall be delivered to the person entitled thereto.



     
(b) Subject to applicable law, the Exercise Price shall be
payable in cash or cash equivalents, by tendering, by actual
delivery or by attestation, Shares valued at Fair Market Value
as of the day of exercise or by a combination thereof.



     
2.7     Post-Exercise
Limitations. The Committee, in its discretion, may
impose such restrictions on Shares acquired pursuant to the
exercise of an Option as it determines to be desirable,
including, without limitation, restrictions relating to
disposition of the shares and forfeiture restrictions based on
service, performance, Share ownership by the Participant and
such other factors as the Committee determines to be appropriate.



     
2.8     No
Repricing. Except for either adjustments pursuant to
subsection 4.3 (relating to the adjustment of shares), or
reductions of the Exercise Price approved by ProLogis’s
shareholders, the Exercise Price for any outstanding Option or
SAR may not be decreased after the date of grant nor may an
outstanding Option or SAR granted under the Plan be surrendered
to ProLogis as consideration for the grant of a replacement
Option or SAR with a lower exercise price. In addition, no
repricing of an Option or SAR shall be permitted without the
approval of ProLogis’s shareholders if such approval is
required under the rules of any stock exchange on which Shares
are listed.



     
2.9     Tandem Grants of
Options and SARs. An Option may but need not be in
tandem with an SAR, and an SAR may but need not be in tandem
with an Option (in either case, regardless of whether the
original award was granted under this Plan or another plan or
arrangement). If an Option is in tandem with an SAR, the



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exercise price of both the Option and SAR shall be the same, and
the corresponding tandem SAR or Option shall cancel the
corresponding tandem SAR or Option right with respect to such
share.



     
2.10     Expiration
Date. The “Expiration Date” with respect
to an Option or SAR means the date established as the Expiration
Date by the Committee at the time of the grant; provided,
however, that unless determined otherwise by the Committee at
the time of grant, the Expiration Date with respect to any
Option or SAR shall not be later than the earliest to occur of:



     
(a) the ten-year anniversary of the date on which the
Option or SAR is granted;



     
(b) if the Participant’s Termination Date occurs by
reason of death, Disability or Retirement, the one-year
anniversary of such Termination Date;



     
(c) if the Participant’s Termination Date occurs for
reasons other than Retirement, death, Disability or Cause, the
three-month anniversary of such Termination Date; or



     
(d) if the Participant’s Termination Date occurs for
reasons of Cause, such Termination Date.



     
In no event shall the Expiration Date of an Option or SAR be
later than the ten-year anniversary of the date on which the
Option or SAR is granted.




SECTION 3




FULL VALUE AWARDS AND CASH INCENTIVE AWARDS



      
3.1     Definitions.



     
(a) A “Full Value Award” is a grant of one or
more Shares or a right to receive one or more Shares in the
future, with such grant subject to one or more of the following,
as determined by the Committee:






		
	 	     
    (i) The grant shall be in consideration of a
    Participant’s previously performed services, or surrender
    of other compensation that may be due.
	 
	 	     
    (ii) The grant shall be contingent on the achievement of
    performance or other objectives during a specified period.
	 
	 	     
    (iii) The grant shall be subject to a risk of forfeiture or
    other restrictions that will lapse upon the achievement of one
    or more goals relating to completion of service by the
    Participant or achievement of performance or other objectives.
	 
	 	     
    (iv) The grant of Full Value Awards may also be subject to
    such other conditions, restrictions and contingencies, as
    determined by the Committee, including provisions relating to
    dividend or dividend equivalent rights and deferred payment or
    settlement.



     
(b) A Cash Incentive Award is the grant of a right to
receive a payment of cash (or in the discretion of the
Committee, Shares having value equivalent to the cash otherwise
payable) that is contingent on achievement of performance
objectives over a specified period established by the Committee.
The grant of Cash Incentive Awards may also be subject to such
other conditions, restrictions and contingencies, as determined
by the Committee, including provisions relating to deferred
payment.



     
3.2     Special Vesting
Rules. If an employee’s right to become vested in a
Full Value Award is conditioned on the completion of a specified
period of service with ProLogis or the Related Companies,
without achievement of performance targets or other performance
objectives (whether or not related to performance measures)
being required as a condition of vesting, and without it being
granted in lieu of other compensation, then the required period
of service for full vesting shall be not less than three years
(subject, to the extent provided by the Committee, to pro rated
vesting over the course of such three-year period and to
acceleration of vesting in the event of the Participant’s
death, Disability, Retirement, Change in Control or involuntary
termination). The foregoing requirements shall not apply to
(a) grants made to newly eligible Participants to replace
awards from a prior employer and (b) grants that are a form
of payment of earned performance awards or other incentive
compensation.



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3.3     Performance-Based
Compensation. The Committee may designate a Full Value
Award or Cash Incentive Award granted to any Participant as
“Performance-Based Compensation” within the meaning of
section 162(m) of the Code and regulations thereunder. To
the extent required by section 162(m) of the Code, any Full
Value Award or Cash Incentive Award so designated shall be
conditioned on the achievement of one or more performance
targets as determined by the Committee and the following
additional requirements shall apply:



     
(a) The performance targets established for the performance
period established by the Committee shall be objective (as that
term is described in regulations under section 162(m) of
the Code), and shall be established in writing by the Committee
not later than 90 days after the beginning of the
performance period (but in no event after 25% of the performance
period has elapsed), and while the outcome as to the performance
targets is substantially uncertain. The performance targets
established by the Committee may be with respect to corporate
performance, operating group or sub-group performance,
individual company performance, other group or individual
performance, or division performance, and shall be based on one
or more of the Performance Criteria.



     
(b) A Participant otherwise entitled to receive a Full
Value Award or Cash Incentive Award for any performance period
shall not receive a settlement or payment of the Award until the
Committee has determined that the applicable performance
target(s) have been attained. To the extent that the Committee
exercises discretion in making the determination required by
this subsection 3.3(b), such exercise of discretion may not
result in an increase in the amount of the payment.



     
(c) Except as otherwise provided by the Committee, if a
Participant’s employment terminates because of death or
Disability, or if a Change in Control occurs prior to the
Participant’s Termination Date, the Participant’s Full
Value Award or Cash Incentive Award shall become vested without
regard to whether the Full Value Award or Cash Incentive Award
would be Performance-Based Compensation.




Nothing in this Section 3 shall preclude the Committee from
granting Full Value Awards or Cash Incentive Awards under the
Plan or the Committee, ProLogis or any Related Company from
granting any Cash Incentive Awards outside of the Plan that are
not intended to be Performance-Based Compensation; provided,
however, that, at the time of grant of Full Value Awards or Cash
Incentive Awards by the Committee, the Committee shall designate
whether such Awards are intended to constitute Performance-Based
Compensation. To the extent that the provisions of this
Section 3 reflect the requirements applicable to
Performance-Based Compensation, such provisions shall not apply
to the portion of the Award, if any, that is not intended to
constitute Performance-Based Compensation.




SECTION 4




OPERATION AND ADMINISTRATION



      
4.1     Effective Date,
Approval Date and Effect on Prior Plans. The Plan
will be effective as of the date it is adopted by the Board (the
“Effective Date”); provided, however, that Awards
granted under the Plan prior to the Approval Date will be
contingent on approval of the Plan by ProLogis’s
shareholders. The Plan shall be unlimited in duration and, in
the event of Plan termination, shall remain in effect as long as
any Shares awarded under it are outstanding and not fully
vested; provided, however, that no new Awards shall be made
under the Plan on or after the tenth anniversary of the date on
which the Plan is adopted by the Board Upon the Approval Date,
no further awards will be made under the Prior Plans. Any awards
made under the Prior Plans prior to the Approval Date shall
continue to be subject to the terms and conditions of the
applicable Prior Plan. If the Approval Date does not occur,
awards may continue to be made under the Prior Plans subject to
the terms and conditions thereof.



     
4.2     Shares and Other
Amounts Subject to the Plan. The Shares for which
Awards may be granted under the Plan shall be subject to the
following:



     
(a) The Shares with respect to which Awards may be made
under the Plan shall be shares currently authorized but unissued
or currently held or subsequently acquired by ProLogis as
treasury shares, including shares purchased in the open market
or in private transactions.



     
(b) Subject to the provisions of subsection 4.3, the
number of Shares which may be issued with respect to Awards
under the Plan shall be equal to the sum of:
(i) 5,750,000 Shares; (ii) any Shares available
for issuance



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as of the Approval Date under the Prior Plans and (iii) any
shares that are represented by awards granted under the Prior
Plans that are forfeited, expired, canceled or settled for cash
after the Approval Date without delivery of Shares or which
result in the forfeiture of the Shares to the extent that such
Shares would have been added back to the reserve under the terms
of the applicable Prior Plan. Except as otherwise provided
herein, any Shares subject to an Award which for any reason is
forfeited, expires or is terminated without issuance of Shares
(including Shares that are not issued because Shares are
tendered pursuant to subsection 4.7 and Shares attributable
to Awards that are settled in cash) shall again be available
under the Plan. Shares issued by ProLogis in connection with
awards that are assumed or substituted in connection with a
merger, acquisition or other corporate transaction shall not be
counted against the number of Shares that may be issued with
respect to Awards under the Plan.



     
(c) Except as expressly provided by the terms of this Plan,
the issue by ProLogis of shares of stock of any class, or
securities convertible into shares of stock of any class, for
cash or property or for labor or services, either upon direct
sale, upon the exercise of rights or warrants to subscribe
therefor or upon conversion of shares or obligations of the
Trust convertible into such shares or other securities, shall
not affect, and no adjustment by reason thereof, shall be made
with respect to Awards then outstanding hereunder.



     
(d) To the extent provided by the Committee, any Award may
be settled in cash rather than in Shares.



     
(e) Subject to the following provisions of this
subsection 4.2, the maximum number of Shares that may be
delivered to Participants and their Beneficiaries with respect
to incentive share options under the Plan shall be 5,750,000;
provided, however, that to the extent that shares not delivered
must be counted against this limit as a condition of satisfying
the rules applicable to incentives stock options, such rules
shall apply to the limit on Incentive Share Options granted
under the Plan.



     
(f) The maximum number of shares that may be covered by
Awards granted to any one Participant during any one
calendar-year period pursuant to Section 2 (relating to
Options and SARs) shall be 500,000 shares. For purposes of
this subsection 4.2(f), if an Option is in tandem with an
SAR, such that the exercise of the Option or SAR with respect to
a Share cancels the tandem SAR or Option right, respectively,
with respect to such share, the tandem Option and SAR rights
with respect to each Share shall be counted as covering but one
Share for purposes of applying the limitations of this
subsection 4.2(f).



     
(g) For Full Value Awards that are intended to be
Performance-Based Compensation, no more than 200,000 Shares
may be delivered pursuant to such Awards granted to any one
Participant during any one-calendar-year period (regardless of
whether settlement of the Award is to occur prior to, at the
time of, or after the time of vesting); provided that Awards
described in this 4.2(g) that are intended to be
Performance-Based Compensation shall be subject to the following:






		
	 	     
    (i) If the Awards are denominated in Shares but an
    equivalent amount of cash is delivered in lieu of delivery of
    Shares, the foregoing limit shall be applied based on the
    methodology used by the Committee to convert the number of
    Shares into cash.
	 
	 	     
    (ii) If delivery of Shares or cash is deferred until after
    Shares have been earned, any adjustment in the amount delivered
    to reflect actual or deemed investment experience after the date
    the shares are earned shall be disregarded.



     
(h) For Cash Incentive Value Awards that are intended to be
Performance-Based Compensation, the maximum amount payable to
any Participant with respect to any twelve-month performance
period shall equal $10,000,000 (pro rated for performance
periods that are greater or lesser than twelve months); provided
that Awards described in this subsection 4.2(h) that are
intended to be Performance-Based Compensation, shall be subject
to the following:






		
	 	     
    (i) If the Awards are denominated in cash but an equivalent
    amount of Shares is delivered in lieu of delivery of cash, the
    foregoing limit shall be applied to the cash based on the
    methodology used by the Committee to convert the cash into
    Shares.
	 
	 	     
    (ii) If delivery of Shares or cash is deferred until after
    cash has been earned, any adjustment in the amount delivered to
    reflect actual or deemed investment experience after the date
    the cash is earned shall be disregarded.



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4.3     Adjustments to
Shares. In the event of a corporate transaction
involving ProLogis (including, without limitation, any stock
dividend, stock split, extraordinary cash dividend,
recapitalization, reorganization, merger, consolidation,
split-up, spin-off, sale of assets or subsidiaries, combination
or exchange of shares), the Committee may adjust Awards to
preserve the benefits or potential benefits of the Awards.
Action by the Committee may include: (a) adjustment of the
number and kind of shares which may be delivered under the Plan
(including adjustments to the number and kind of shares that may
be granted to an individual during any specified time as
described in subsection 4.2); (b) adjustment of the
number and kind of shares subject to outstanding Awards;
(c) adjustment of the Exercise Price of outstanding Options
and SARs; and (d) any other adjustments that the Committee
determines to be equitable (which may include, without
limitation, (i) replacement of Awards with other Awards
which the Committee determines have comparable value and which
are based on stock of a company resulting from the transaction,
and (ii) cancellation of the Award in return for cash
payment of the current value of the Award, determined as though
the Award is fully vested at the time of payment, provided that
in the case of an Option or SAR, the amount of such payment may
be the excess of value of the Shares subject to the Option or
SAR at the time of the transaction over the exercise price).



     
4.4     Change in
Control. In the event that (a) a
Participant’s employment or service, as applicable, is
terminated by ProLogis or the successor to ProLogis (or a
Related Company which is his or her employer) for reasons other
than Cause within 24 months following a Change in Control,
or (b) the Plan is terminated by ProLogis or its successor
following a Change in Control without provision for the
continuation of outstanding Awards hereunder, all Options and
related Awards which have not otherwise expired shall become
immediately exercisable and all other Awards shall become fully
vested. For purposes of this subsection 4.4, a
Participant’s employment or service shall be deemed to be
terminated by ProLogis or the successor to ProLogis (or a
Related Company) if the Participant terminates employment or
service after (I) a substantial adverse alteration in the
nature of the Participant’s status or responsibilities from
those in effect immediately prior to the Change in Control, or
(II) a material reduction in the Participant’s annual
base salary and target bonus, if any, or, in the case of a
Participant who is an Outside Trustee, the Participant’s
annual compensation, as in effect immediately prior to the
Change in Control. If, upon a Change in Control, awards in other
shares or securities are substituted for outstanding Awards
pursuant to subsection 4.3, and immediately following the
Change in Control the Participant becomes employed (if the
Participant was an employee immediately prior to the Change in
Control) or a trustee or board member (if the Participant was an
Outside Trustee immediately prior to the Change in Control) of
the entity into which ProLogis merged, or the purchaser of
substantially all of the assets of ProLogis, or a successor to
such entity or purchaser, the Participant shall not be treated
as having terminated employment or service for purposes of this
subsection 4.4 until such time as the Participant
terminates employment or service with the merged entity or
purchaser (or successor), as applicable.



     
4.5     Limit on
Distribution. Distribution of Shares or other
amounts under the Plan shall be subject to the following:



     
(a) Notwithstanding any other provision of the Plan,
ProLogis shall have no liability to deliver any Shares under the
Plan or make any other distribution of benefits under the Plan
unless such delivery or distribution would comply with all
applicable laws and the applicable requirements of any
securities exchange or similar entity.



     
(b) In the case of a Participant who is subject to
Section 16(a) and 16(b) of the Exchange Act, the Committee
may, at any time, add such conditions and limitations to any
Award to such Participant, or any feature of any such Award, as
the Committee, in its sole discretion, deems necessary or
desirable to comply with Section 16(a) or 16(b) and the
rules and regulations thereunder or to obtain any exemption
therefrom.



     
(c) To the extent that the Plan provides for issuance of
certificates to reflect the transfer of Shares, the transfer of
such Shares may be effected on a non-certificated basis, to the
extent not prohibited by applicable law or the rules of any
stock exchange.



     
4.6     Liability for Cash
Payments. Subject to the provisions of this
Section 4, each Related Company shall be liable for payment
of cash due under the Plan with respect to any Participant to
the extent that such benefits are attributable to the service
rendered for that Related Company by the Participant. Any
disputes relating to liability of a Related Company for cash
payments shall be resolved by the Committee.



     
4.7     Withholding.
All Awards and other payments under the Plan are subject to
withholding of all applicable taxes, which withholding
obligations may be satisfied, with the consent of the Committee,
through the



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surrender of Shares which the Participant already owns or to
which a Participant is otherwise entitled under the Plan;
provided, however, previously-owned Shares that have been held
by the Participant or Shares to which the Participant is
entitled under the Plan may only be used to satisfy the minimum
tax withholding required by applicable law (or other rates that
will not have a negative accounting impact).



     
4.8     Transferability.
Awards under the Plan are not transferable except as designated
by the Participant by will or by the laws of descent and
distribution or, to the extent provided by the Committee,
pursuant to a qualified domestic relations order (within the
meaning of the Code and applicable rules thereunder). To the
extent that the Participant who receives an Award under the Plan
has the right to exercise such Award, the Award may be exercised
during the lifetime of the Participant only by the Participant.
Notwithstanding the foregoing provisions of this
subsection 4.8, the Committee may permit Awards under the
Plan to be transferred to or for the benefit of the
Participant’s family (including, without limitation, to a
trust or partnership for the benefit of a Participant’s
family), subject to such procedures as the Committee may
establish. In no event shall an Incentive Share Option be
transferable to the extent that such transferability would
violate the requirements applicable to such option under
section 422 of the Code.



     
4.9     Notices.
Any notice or document required to be filed with the Committee
under the Plan will be properly filed if delivered or mailed by
registered mail, postage prepaid, to the Committee, in care of
ProLogis or the Related Company, as applicable, at its principal
executive offices. The Committee may, by advance written notice
to affected persons, revise such notice procedure from time to
time. Any notice required under the Plan (other than a notice of
election) may be waived by the person entitled to notice.



     
4.10     Form and Time of
Elections. Unless otherwise specified herein, each
election required or permitted to be made by any Participant or
other person entitled to benefits under the Plan, and any
permitted modification or revocation thereof, shall be in
writing filed with the applicable Committee at such times, in
such form, and subject to such restrictions and limitations, not
inconsistent with the terms of the Plan, as the Committee shall
require.



     
4.11     Agreement With
ProLogis or Related Company. At the time of an Award
to a Participant under the Plan, the Committee may require a
Participant to enter into an agreement with ProLogis or the
Related Company, as applicable (the “Agreement”), in a
form specified by the Committee, agreeing to the terms and
conditions of the Plan and to such additional terms and
conditions, not inconsistent with the Plan, as the Committee
may, in its sole discretion, prescribe.



     
4.12     Limitation of Implied
Rights.



     
(a) Neither a Participant nor any other person shall, by
reason of the Plan, acquire any right in or title to any assets,
funds or property of ProLogis or any Related Company whatsoever,
including, without limitation, any specific funds, assets, or
other property which ProLogis or any Related Company, in its
sole discretion, may set aside in anticipation of a liability
under the Plan. A Participant shall have only a contractual
right to the amounts, if any, payable under the Plan, unsecured
by any assets of ProLogis and any Related Company. Nothing
contained in the Plan shall constitute a guarantee by ProLogis
or any Related Company that the assets of such companies shall
be sufficient to pay any benefits to any person.



     
(b) The Plan does not constitute a contract of employment
or continued service, and selection as a Participant will not
give any employee the right to be retained in the employ or
service of ProLogis or any Related Company, nor any right or
claim to any benefit under the Plan, unless such right or claim
has specifically accrued under the terms of the Plan. Except as
otherwise provided in the Plan, no Award under the Plan shall
confer upon the holder thereof any right as a shareholder of
ProLogis prior to the date on which he fulfills all service
requirements and other conditions for receipt of such rights and
Shares are registered in his name.



     
4.13     Evidence.
Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the
person acting on it considers pertinent and reliable, and
signed, made or presented by the proper party or parties.



     
4.14     Action by ProLogis or
Related Company. Any action required or permitted to
be taken by ProLogis or any Related Company shall be by
resolution of its board of trustees or directors, as applicable,
or by action of one or more members of the board (including a
committee of the board) who are duly authorized to



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act for the board or (except to the extent prohibited by
applicable law or the rules of any stock exchange) by a duly
authorized officer of ProLogis.



     
4.15     Gender and
Number. Where the context admits, words in any
gender shall include any other gender, words in the singular
shall include the plural and the plural shall include the
singular.



     
4.16     Applicable
Law. The provisions of the Plan shall be construed
in accordance with the laws of the State of Maryland, without
giving effect to choice of law principles.



     
4.17     Foreign
Employees. Notwithstanding any other provision of
the Plan to the contrary, the Committee may grant Awards to
eligible persons who are foreign nationals on such terms and
conditions different from those specified in the Plan as may, in
the judgment of the Committee, be necessary or desirable to
foster and promote achievement of the purposes of the Plan. In
furtherance of such purposes, the Committee may make such
modifications, amendments, procedures and subplans as may be
necessary or advisable to comply with provisions of laws in
other countries or jurisdictions in which ProLogis or a Related
Company operates or has employees.




SECTION 5




COMMITTEE



      
5.1     Administration.
The authority to control and manage the operation and
administration of the Plan shall be vested in the committee
described in subsection 5.2 (the “Committee”) in
accordance with this Section 5. If the Committee does not
exist, or for any other reason determined by the Board, the
Board may take any action under the Plan that would otherwise be
the responsibility of the Committee.



     
5.2     Selection of
Committee. So long as ProLogis is subject to
Section 16 of the Exchange Act, the Committee shall be
selected by the Board and shall consist of not fewer than two
members of the Board or such greater number as may be required
for compliance with
Rule 16b-3 issued
under the Exchange Act and shall be comprised of persons who are
independent for purposes of applicable stock exchange listing
requirements. Any Award granted under the Plan which is intended
to constitute Performance-Based Compensation (including Options
and SARs) shall be granted by a Committee consisting solely of
two or more “outside directors” within the meaning of
section 162(m) of the Code and applicable regulations.
Notwithstanding any other provision of the Plan to the contrary,
with respect to any Awards to Outside Trustees, the Committee
shall be the Board.



     
5.3     Powers of
Committee. The authority to manage and control the
operation and administration of the Plan shall be vested in the
Committee, subject to the following:



     
(a) Subject to the provisions of the Plan, the Committee
will have the authority and discretion to select individuals who
shall be Eligible Individuals and who, therefore are eligible to
receive Awards under the Plan. The Committee shall have the
authority to determine the time or times of receipt, to
determine the types of Awards and the number of Shares covered
by the Awards, to establish the terms, conditions, performance
targets, restrictions, and other provisions of such Awards, to
cancel or suspend Awards, and to accelerate the exercisability
or vesting of any Award under circumstances designated by it at
the time the Award is granted or thereafter. In making such
Award determinations, the Committee may take into account the
nature of services rendered by the respective employee, the
individual’s present and potential contribution to
ProLogis’s or a Related Company’s success and such
other factors as the Committee deems relevant.



     
(b) Subject to the provisions of the Plan, the Committee
will have the authority and discretion to determine the extent
to which Awards under the Plan will be structured to conform to
the requirements applicable to Performance-Based Compensation,
and to take such action, establish such procedures, and impose
such restrictions at the time such Awards are granted as the
Committee determines to be necessary or appropriate to conform
to such requirements.



     
(c) Subject to the provisions of the Plan, the Committee
will have the authority and discretion to conclusively interpret
the Plan, to establish, amend and rescind any rules and
regulations relating to the Plan, to determine the terms and
provisions of any agreements made pursuant to the Plan and to
make all other determinations that may be necessary or advisable
for the administration of the Plan.



8







 



     
(d) Any interpretation of the Plan by the Committee and any
decision made by it under the Plan is final and binding on all
persons.



     
(e) Except as otherwise expressly provided in the Plan,
where the Committee is authorized to make a determination with
respect to any Award, such determination shall be made at the
time the Award is made, except that the Committee may reserve
the authority to have such determination made by the Committee
in the future (but only if such reservation is made at the time
the Award is granted, is expressly stated in the Agreement
reflecting the Award and is permitted by applicable law).



     
Without limiting the generality of the foregoing, it is the
intention of ProLogis that, to the extent that any provisions of
this Plan or any Awards granted hereunder are subject to
section 409A of the Code, the Plan and the Awards comply
with the requirements of section 409A of the Code and that
the Plan and Awards be administered in accordance with such
requirements and the Committee shall have the authority to amend
any outstanding Awards to conform to the requirements of
section 409A.



     
5.4     Delegation by
Committee. Except to the extent prohibited by
applicable law or the rules of any stock exchange or NASDAQ (if
appropriate), the Committee may allocate all or any portion of
its responsibilities and powers to any one or more of its
members and may delegate all or any part of its responsibilities
and powers to any person or persons selected by it. Any such
allocation or delegation may be revoked by the Committee at any
time.



     
5.5     Information to be
Furnished to Committee. ProLogis and the Related
Companies shall furnish the Committee such data and information
as may be required for it to discharge its duties. The records
of ProLogis and the Related Companies as to an employee’s
or Participant’s employment or provision of services,
termination of employment or cessation of the provision of
services, leave of absence, reemployment and compensation shall
be conclusive on all persons unless determined to be incorrect.
Participants and other persons entitled to benefits under the
Plan must furnish the Committee such evidence, data or
information as the Committee consider desirable to carry out the
terms of the Plan.



     
5.6     Liability and
Indemnification of Committee. No member or
authorized delegate of the Committee shall be liable to any
person for any action taken or omitted in connection with the
administration of the Plan unless attributable to his own fraud
or willful misconduct; nor shall ProLogis or any Related Company
be liable to any person for any such action unless attributable
to fraud or willful misconduct on the part of a trustee,
director or employee of ProLogis or Related Company. The
Committee, the individual members thereof, and persons acting as
the authorized delegates of the Committee under the Plan, shall
be indemnified by ProLogis against any and all liabilities,
losses, costs and expenses (including legal fees and expenses)
of whatsoever kind and nature which may be imposed on, incurred
by or asserted against the Committee or its members or
authorized delegates by reason of the performance of a Committee
function if the Committee or its members or authorized delegates
did not act dishonestly or in willful violation of the law or
regulation under which such liability, loss, cost or expense
arises. This indemnification shall not duplicate but may
supplement any coverage available under any applicable insurance.




SECTION 6




AMENDMENT AND TERMINATION



      
The Board may, at any time, amend or terminate the Plan, and the
Board or the Committee may amend any Award Agreement, provided
that no amendment or termination may, in the absence of written
consent to the change by the affected Participant (or, if the
Participant is not then living, the affected Beneficiary),
adversely affect the rights of any Participant or Beneficiary
under any Award granted under the Plan prior to the date such
amendment is adopted by the Board (or the Committee, if
applicable); and further provided that adjustments pursuant to
subsection 4.3 shall not be subject to the foregoing
limitations of this Section 6; and further provided that
the provisions of subsection 2.8 (relating to Option and
SAR repricing) cannot be amended unless the amendment is
approved by ProLogis’s shareholders. It is the intention of
ProLogis that, to the extent that any provisions of this Plan or
any Awards granted hereunder are subject to section 409A of
the Code, the Plan and the Awards comply with the requirements
of section 409A of the Code and that the Board shall have
the authority to amend the Plan as it deems necessary to conform
to section 409A.



9







 




SECTION 7




DEFINED TERMS



      
(a) “Agreement” has the meaning set forth in
subsection 4.11.



     
(b) “Approval Date” means the date on which the
Plan is approved by ProLogis’s shareholders.



     
(c) “Award” means any award described in
Section 2 or 3 of the Plan.



     
(d) “Beneficiary” means the person or persons the
Participant designates to receive the balance of his or her
benefits under the Plan in the event the Participant’s
Termination Date occurs on account of death. Any designation of
a Beneficiary shall be in writing, signed by the Participant and
filed with the Committee prior to the Participant’s death.
A Beneficiary designation shall be effective when filed with the
Committee in accordance with the preceding sentence. If more
than one Beneficiary has been designated, the balance of the
Participant’s benefits under the Plan shall be distributed
to each such Beneficiary per capita. In the absence of a
Beneficiary designation or if no Beneficiary survives the
Participant, the Beneficiary shall be the Participant’s
estate.



     
(e) “Board” means the Board of Trustees of
ProLogis.



     
(f) “Cause” shall mean (i) the willful and
continued failure by the Participant to substantially perform
his duties with ProLogis or any Related Company after written
notification by ProLogis or the Related Company, (ii) the
willful engaging by the Participant in conduct which is
demonstrably injurious to ProLogis or any Related Company,
monetarily or otherwise, or (iii) the engaging by the
Participant in egregious misconduct involving serious moral
turpitude, determined in the reasonable judgment of the
Committee. For purposes hereof, no act, or failure to act, on
the Participant’s part shall be deemed “willful”
unless done, or omitted to be done, by the Participant not in
good faith and without reasonable belief that such action was in
the best interest of ProLogis or Related Company.



     
(g) “Change in Control” means the first to occur
of any of the following:






		
	 	     
    (i) the consummation of a transaction, approved by the
    shareholders of ProLogis, to merge ProLogis into or consolidate
    ProLogis with another entity, sell or otherwise dispose of all
    or substantially all of its assets or adopt a plan of
    liquidation, provided, however, that a Change in Control shall
    not be deemed to have occurred by reason of a transaction, or a
    substantially concurrent or otherwise related series of
    transactions, upon the completion of which 50% or more of the
    beneficial ownership of the voting power of ProLogis, the
    surviving corporation or corporation directly or indirectly
    controlling ProLogis or the surviving corporation, as the case
    may be, is held by the same persons (although not necessarily in
    the same proportion) as held the beneficial ownership of the
    voting power of ProLogis immediately prior to the transaction or
    the substantially concurrent or otherwise related series of
    transactions, except that upon the completion thereof, employees
    or employee benefit plans of ProLogis may be a new holder of
    such beneficial ownership; or
	 
	 	     
    (ii) the “beneficial ownership” (as defined in
    Rule 13d-3 under
    the Exchange Act) of securities representing 50% or more of the
    combined voting power of ProLogis is acquired, other than from
    ProLogis, by any “person” as defined in
    Sections 13(d) and 14(d) of the Exchange Act (other than
    any trustee or other fiduciary holding securities under an
    employee benefit or other similar equity plan of
    ProLogis); or
	 
	 	     
    (iii) at any time during any period of two consecutive
    years, individuals who at the beginning of such period were
    members of the Board cease for any reason to constitute at least
    a majority thereof (unless the election, or the nomination for
    election by ProLogis’s shareholders, of each new trustee
    was approved by a vote of at least two-thirds of the trustees
    still in office at the time of such election or nomination who
    were trustees at the beginning of such period).



     
(h) “Code” means the Internal Revenue Code of
1986, as amended.



     
(i) “Committee” has the meaning set forth in
subsection 5.1.



     
(j) “Termination Date” means the date on which a
Participant both ceases to be an employee of ProLogis and the
Related Companies and ceases to perform material services for
ProLogis and the Related Companies (whether as a trustee or
otherwise), regardless of the reason for the cessation; provided
that a “Termination



10







 




Date” shall not be considered to have occurred during the
period in which the reason for the cessation of services is a
leave of absence approved by ProLogis or the Related Company
which was the recipient of the Participant’s services; and
provided, further that, with respect to an Outside Trustee,
“Termination Date” means date on which the Outside
Trustee’s service as an Outside Trustee terminates for any
reason.



     
(k) “Disability” means, except as otherwise
provided by the Committee, the Participant’s inability, by
reason of a medically determinable physical or mental
impairment, to engage in the material and substantial duties of
his regular occupation, which condition is expected to be
permanent; provided, however, that in the case of an Outside
Trustee, “Disability” means an injury or illness
which, as determined by the Committee, renders the Participant
unable to serve as a trustee of ProLogis.



     
(l) “Effective Date” has the meaning set forth in
subsection 4.1.



     
(m) “Eligible Individual” means any employee or
trustee of ProLogis or a Related Company, including any member
of the Board who is not an employee of ProLogis or a Related
Company.



     
(n) “Exchange Act” means the Securities Exchange
Act of 1934, as amended.



     
(o) “Expiration Date” has the meaning set forth
in subsection 2.10.



     
(p) “Fair Market Value” of a Share means, as of
any date, the value determined in accordance with the following
rules:






		
	 	     
    (i) If the Shares are at the time listed or admitted to
    trading on any stock exchange, then the Fair Market Value shall
    be the average of the highest and lowest sales price per Share
    on such date on the principal exchange on which the Shares are
    then listed or admitted to trading or, if no such sale is
    reported on that date, on the last preceding date on which a
    sale was so reported.
	 
	 	     
    (ii) If the Shares are not at the time listed or admitted
    to trading on a stock exchange, the Fair Market Value shall be
    the average of the lowest reported bid price and highest
    reported asked price of the Shares on the date in question in
    the over-the-counter
    market, as such prices are reported in a publication of general
    circulation selected by the Committee and regularly reporting
    the market price of Shares in such market.
	 
	 	     
    (iii) If the Shares are not listed or admitted to trading
    on any stock exchange or traded in the
    over-the-counter
    market, the Fair Market Value shall be as determined by the
    Committee in good faith.
	 
	 	     
    (iv) For purposes of determining the Fair Market Value of
    Shares that are sold pursuant to a cashless exercise program,
    Fair Market Value shall be the price at which such Shares are
    sold.



     
(q) “Full Value Award” has the meaning set forth
in Section 3.1.



     
(r) “Incentive Share Option” means an Option that
is intended to satisfy the requirements applicable to an
“incentive stock option” described in section 422
of the Code.



     
(s) “Non-Qualified Share Option” means an Option
that is not intended to be an Incentive Share Option.



     
(t) “Option” has the meaning set forth in
subsection 2.1(a).



     
(u) “Outside Trustee” means a trustee of ProLogis
who is not an officer or employee of ProLogis or the Related
Companies.



     
(v) “Participant” shall have the meaning set
forth in subsection 1.3.



     
(w) “Performance-Based Compensation” shall have
the meaning set forth in subsection 3.3.



     
(x) “Performance Criteria” means performance
targets based on one or more of the following criteria:
(i) earnings including operating income, earnings before or
after taxes, earnings before or after interest, depreciation,
amortization, or extraordinary or special items or book value
per share (which may exclude nonrecurring items) or net
earnings; (ii) pre-tax income or after-tax income;
(iii) earnings per share (basic or diluted);
(iv) operating profit; (v) revenue, revenue growth or
rate of revenue growth; (vi) return on assets (gross or
net), return on investment (including cash flow return on
investment), return on capital (including return on total
capital or return on invested capital), or return on equity;
(vii) returns on sales or revenues; (viii) operating
expenses; (ix) stock price appreciation; (x) cash flow
(before or after dividends), free cash flow, cash flow return



11







 




on investment (discounted or otherwise), net cash provided by
operations, cash flow in excess of cost of capital or cash flow
per share (before or after dividends); (xi) implementation
or completion of critical projects or processes;
(xii) economic value created; (xiii) cumulative
earnings per share growth; (xiv) operating margin or profit
margin; (xv) share price or total shareholder return; (xvi)
cost targets, reductions and savings, productivity and
efficiencies; (xvii) strategic business criteria,
consisting of one or more objectives based on meeting specified
market penetration, geographic business expansion, customer
satisfaction, employee satisfaction, human resources management,
supervision of litigation, information technology, and goals
relating to acquisitions, divestitures, joint ventures and
similar transactions, and budget comparisons; (xviii) personal
professional objectives, including any of the foregoing
performance targets, the implementation of policies and plans,
the negotiation of transactions, the development of long-term
business goals, formation of joint ventures, research or
development collaborations, and the completion of other
corporate transactions; (xix) funds from operations
(FFO) or funds available for distribution (FAD);
(xx) economic value added (or an equivalent metric); (xxi)
share price performance; (xxii) improvement in or
attainment of expense levels or working capital levels; or
(xxiii) any combination of, or a specified increase in, any
of the foregoing. Where applicable, the performance targets may
be expressed in terms of attaining a specified level of the
particular criteria or the attainment of a percentage increase
or decrease in the particular criteria, and may be applied to
one or more of ProLogis, a Related Company, or a division or
strategic business unit of ProLogis, or may be applied to the
performance of ProLogis relative to a market index, a group of
other companies or a combination thereof, all as determined by
the Committee. The performance targets may include a threshold
level of performance below which no payment will be made (or no
vesting will occur), levels of performance at which specified
payments will be made (or specified vesting will occur), and a
maximum level of performance above which no additional payment
will be made (or at which full vesting will occur). Each of the
foregoing performance targets shall be determined in accordance
with generally accepted accounting principles and shall be
subject to certification by the Committee; provided that the
Committee shall have the authority to exclude impact of charges
for restructurings, discontinued operations, extraordinary items
and other unusual or non-recurring events and the cumulative
effects of tax or accounting principles and identified in
financial statements, notes to financial statements,
management’s discussion and analysis or other SEC filings.



     
(y) “Prior Plans” means ProLogis 1997 Long-Term
Incentive Plan and ProLogis 2000 Share Option Plan for
Outside Trustees.



     
(z) “Related Company” means any corporation,
partnership, joint venture or other entity during any period in
which a controlling interest in such entity is owned, directly
or indirectly, by ProLogis (or by any entity that is a successor
to ProLogis), and any other business venture designated by the
Committee in which ProLogis (or any entity that is a successor
to ProLogis) has, directly or indirectly, a significant interest
(whether through the ownership of securities or otherwise), as
determined in the discretion of the Committee.



     
(aa) “Retirement” means, with respect to any
Participant, the occurrence of a Participant’s Termination
Date after the Participant has attained at least age 60 and
provided at least five years of service to ProLogis or the
Related Companies; provided, however, that with respect to any
Award granted to a Participant who is an Outside Trustee,
“Retirement” shall mean the Termination Date after
attaining at least age 60 and providing at least five years
of service as a trustee to ProLogis.



     
(bb) “SAR” or “Share Appreciation
Right” has the meaning set forth in subsection 2.1(b).



     
(cc) “Shares” means common shares of beneficial
interest of ProLogis.



12