Document:

exv10w1

 

	 	 	 	 	 

EXHIBIT 10.1

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

     THIS AMENDED AND RESTATED AGREEMENT, made and entered into effective as of May 26, 2006 (the
“Effective Date”) by and between Ted R. Antenucci (the “Executive”) and ProLogis, a Maryland real
estate investment trust (the “Company”),

WITNESSETH THAT:

     WHEREAS, the Executive and the Company are parties to an employment agreement dated June 5,
2005 (the “Original Agreement”); and

     WHEREAS, the parties desire to amend and restate the Original Agreement to reflect certain
changes to the terms and conditions of the Executive’s employment with the Company;

     NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth below, it is
hereby covenanted and agreed by the Executive and the Company as follows:

     1. Term. Subject to the terms and conditions of this Agreement, the Company hereby
agrees to employ the Executive as its President of Global Development for the Agreement Term (as
defined below), and the Employee hereby agrees to remain in the employ of the Company and to
provide services during the Agreement Term in accordance with this Agreement. The “Agreement Term”
shall be the period beginning on the Effective Date and ending on December 31, 2010. Thereafter,
the Agreement Term will be automatically extended for 12-month periods, unless one party to this
Agreement provides notice of non-renewal to the other at least three months before the last day of
the then current Agreement Term.

     2. Performance of Services. The Executive’s employment with the Company shall be
subject to the following:

	(a)	 	During the Agreement Term, while the Executive is employed by the Company, the Executive
shall devote his full time, energies and talents to serving as its President of Global
Development.
	 
	(b)	 	The Executive shall report to the Chief Executive Officer of the Company. The Executive
agrees that he shall perform his duties faithfully and efficiently subject to the directions
of the Chief Executive Officer of the Company. The Executive’s duties may include providing
services for both the Company and the Subsidiaries (as defined below), as determined by the
Board of Trustees of the Company (the “Board”); provided, that the Executive shall not,
without his consent, be assigned tasks that would be inconsistent with those of President of
Global Development. The Executive shall have such authority, power, responsibilities and
duties as are inherent in his positions (and the undertakings applicable to his positions) and
necessary to carry out his responsibilities and the duties required of him hereunder.
	 
	(c)	 	Notwithstanding the foregoing provisions of this paragraph 2, during the Agreement Term, the
Executive may devote reasonable time to activities other than those required under this
Agreement, including the supervision of his personal investments, and

 

 

	 	 	activities involving professional, charitable, community, educational, religious and similar
types of organizations, speaking engagements, membership on the boards of directors of other
organizations, and similar types of activities, to the extent that such other activities do
not in the judgment of the Board, inhibit or prohibit the performance of the Executive’s
duties under this Agreement, or conflict in any material way with the business of the
Company or any Subsidiary; provided, however, that the Executive shall not serve on the
board of any business, or hold any other position with any business, without the consent of
the Board.
	 
	(d)	 	For purposes of this Agreement, the term “Subsidiary” shall mean any corporation,
partnership, joint venture or other entity during any period in which at least a fifty percent
interest in such entity is owned, directly or indirectly, by the Company (or a successor to
the Company).

     3. Compensation. Subject to the terms of this Agreement, during the Agreement Term,
while the Executive is employed by the Company, the Company shall compensate him for his services
as follows:

	(a)	 	The Executive shall receive, for each 12-consecutive month period beginning on the Effective
Date and ending on each anniversary thereof, in substantially equal monthly or more frequent
installments, an annual base salary of not less than $565,000 (the “Salary”).
	 
	(b)	 	The Executive may receive an annual target bonus of $787,500 (the “Target Bonus”); provided,
however, that the actual amount of the Target Bonus that will be earned by and payable to the
Executive in any year will be determined upon the satisfaction of goals and objectives
established by the Chief Executive Officer or a duly authorized committee of the Board thereof
for such year and communicated to the Executive and shall be subject to such other terms and
conditions of the Company’s bonus plan as in effect from time to time; and provided further
that in no event shall the amount of the Executive’s annual bonus be less than 80 percent of
the Target Bonus. The goals and objectives established for the Executive shall be similar in
magnitude to the magnitude of the goals and objectives established for other members of the
senior management of the Company.
	 
	(c)	 	As of the Effective Date, the Executive shall be granted 150,000 restricted stock units (the
“RSUs”) under the Company’s 2006 Long-Term Incentive Plan (the “LTIP”). Such RSUs shall vest
on December 31, 2010 provided that the Executive’s Date of Termination has not occurred prior
to that date. The RSUs shall be subject to such other terms and conditions as determined by
the Management Development and Compensation Committee of the Board (the “Committee”) in
accordance with the LTIP.
	 
	(d)	 	As of the Effective Date, the Executive shall be granted 50,000 performance shares (the
“Performance Shares”) under the LTIP. Such Performance Shares shall vest based on the
Company’s performance as compared to a defined index of 50 publicly traded real estate
companies under the performance program established by the Committee at the time of grant (the
“Performance Measures”). Fifty percent of the Performance Shares will vest based on
satisfaction of the Performance Measures for the period commencing on the

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	 	 	Effective Date and ending on December 31, 2009 and fifty percent of the Performance Shares
will vest based on satisfaction of the Performance Measures for the period commencing on the
Effective Date and ending on December 31, 2010, provided, in each case, that the Executive’s
Date of Termination has not occurred prior to the applicable vesting date. The Performance
Shares shall be subject to such other terms and conditions as determined by the Committee in
accordance with the LTIP.
	 
	(e)	 	For each 12-consecutive-month period during the Agreement Term beginning in December, 2006,
the Executive shall be entitled to grants of equity-based awards under the LTIP having an
annual aggregate value of $1.2 million. The date on which such grants shall occur, the types
of grants and the terms and conditions applicable to such awards shall be determined by the
Committee in its discretion under the LTIP (or a successor plan thereto), provided that the
intent is that the awards made pursuant to this paragraph 3(e) will be made at the same time
as annual LTIP awards are made to other senior executives of the Company and that the first
such grant will be made in December, 2006.
	 
	(f)	 	Except as otherwise specifically provided to the contrary in this Agreement, the Executive
shall be eligible to participate in the Company’s employee benefit plans, programs, policies
and arrangements to the same extent and on the same terms as those benefits are provided by
the Company from time to time to the Company’s other similarly situated senior management
employees. However, the Company shall not be required to provide a benefit under this
subparagraph 3(f) if such benefit would duplicate (or otherwise be of the same type as) a
benefit specifically required to be provided under another provision of this Agreement. The
Executive shall complete all forms and physical examinations, and otherwise take all other
similar actions to secure coverage and benefits described in this subparagraph 3(f), to the
extent determined to be necessary or appropriate by the Company.
	 
	(g)	 	The Executive is authorized to incur reasonable expenses for entertainment, traveling, meals,
lodging and similar items in promoting the Company’s business. The Company will reimburse the
Executive for all reasonable expenses so incurred in accordance with the normal practices of
the Company.
	 
	(h)	 	Change in Control. Notwithstanding the foregoing provisions of subparagraphs 3(c),
3(d) and 3(e), in the event that (i) following a Change in Control, the Executive’s Date of
Termination occurs as a result of termination by the Company (or a successor) for reasons
other than Cause or the Executive terminates his employment for Good Reason (as defined in
subparagraph 4(d)), or (ii) the LTIP is terminated by the Company or a successor following a
Change in Control without provision for the continuation of the outstanding equity-based
awards granted to the Executive pursuant to the Original Agreement (the “Protected Awards”),
any portion of the then outstanding Protected Awards shall become immediately fully vested
and, to the extent applicable, exercisable. For purposes of this Agreement, a “Change in
Control” means the happening of any of the following:

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	 	(i)	 	The consummation of a transaction, approved by the shareholders of the Company,
to merge the Company into or consolidate the Company 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 the Company, the surviving corporation or corporation
directly or indirectly controlling the Company or the surviving corporation, as the
case may be, is held by the same persons (as defined below) (although not necessarily
in the same proportion) as held the beneficial ownership of the voting power of the
Company 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 the Company may be a new holder of such
beneficial ownership.
	 
	 	(ii)	 	The “beneficial ownership” (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) of securities representing 50%
of more of the combined voting power of the Company is acquired, other than from the
Company, 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 stock plan of the Company).
	 
	 	(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 the
Company’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).
	 
	 	(iv)	 	For purposes of this Agreement, the following terms shall be defined as
indicated:

               (1) The term “Beneficial Owner” shall mean beneficial owner as defined in Rule 13d-3 under the
Exchange Act.

               (2) Entities shall be treated as being under “common control” during any period in which they
are “affiliates” of each other as that term is defined in the Exchange Act.

               (3) The term “person” shall be as defined in Sections 13(d) and 14(d) of the Exchange Act, but
shall exclude any trustee or other fiduciary holding securities under an employee benefit or other
similar stock plan of the Company.

If, upon a Change in Control, awards in other shares or securities are substituted pursuant to the
LTIP for outstanding Protected Awards, and immediately following the Change in Control, the
Executive becomes employed by the entity into which the Company merged, or the purchaser of
substantially all of the assets of the Company, or a successor to such entity or purchaser, the

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Executive shall not be treated as having terminated employment for purposes of this subparagraph
3(h) until such time as the Executive terminates employment with the merged entity or purchaser (or
successor), as applicable.

	(i)	 	Executive Protection Agreement. As soon as practicable following the Effective Date,
the Company and the Executive shall enter into an Executive Protection Agreement in the
Company’s standard form as modified to take into account the provisions of this Agreement.

     4. Termination. The Executive’s employment with the Company during the Agreement
Term may be terminated by the Company or the Executive without any breach of this Agreement only
under the circumstances described in subparagraphs 4(a) through 4(f):

	(a)	 	Death. The Executive’s employment hereunder will terminate upon his death.
	 
	(b)	 	Permanent Disability. The Company may terminate the Executive’s employment during
any period in which he is Permanently Disabled. The Executive shall be considered
“Permanently Disabled” during any period in which he is unable, by reason of a medically
determinable physical or mental impairment, to engage in the material and substantial duties
of his regular occupation, and such condition is expected to be permanent, as determined by
the Board.
	 
	(c)	 	Cause. The Company may terminate the Executive’s employment hereunder at any time
for Cause. For purposes of this Agreement, the term “Cause” shall mean in the reasonable
judgment of the Board (i) the willful and continued failure by the Executive to substantially
perform his duties with the Company or any subsidiary after written notification by the
Company or subsidiary, (ii) the willful engaging by the Executive in conduct which is
demonstrably injurious to the Company or any subsidiary, monetarily or otherwise, or (iii) the
engaging by the Executive in egregious misconduct involving serious moral turpitude. For
purposes hereof, no act, or failure to act, on the Executive’s part shall be deemed “willful”
unless done, or omitted to be done, by the Executive not in good faith and without reasonable
belief that such action was in the best interest of the Company or subsidiary.
	 
	(d)	 	Constructive Discharge. If (I) the Executive provides written notice to the Company
of the occurrence of Good Reason (as defined below) within a reasonable time after the
Executive has knowledge of the circumstances constituting Good Reason, which notice shall
specifically identifies the circumstances which the Executive believes constitute Good Reason;
(II) the Company fails to notify the Executive of the Company’s intended method of correction
within a reasonable period of time after the Company receives the notice, or the Company fails
to correct the circumstances within a reasonable time after such notice (except that no such
opportunity to correct shall be applicable if the circumstances constituting Good Reason are
those described in clause (iii) below, relating to relocation); and (III) the Executive
resigns within a reasonable time after receiving the Company’s response, if such notice does
not indicate an intention to correct such circumstances, or within a reasonable time after the
Company fails to correct such circumstances; then the Executive shall be considered to have
been subject to a

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	 	 	Constructive Discharge by the Company. For purposes of this Agreement, “Good Reason” shall
mean, without the Executive’s express written consent (and except in consequence of a prior
termination of the Executive’s employment), the occurrence of any of the following
circumstances:

	 	(i)	 	The assignment to the Executive of any duties inconsistent with the Executive’s
position and status as President of Global Development of the Company.
	 
	 	(ii)	 	A reduction by the Company in the Executive’s Salary to an amount that is less
than required under subparagraph 3(a).
	 
	 	(iii)	 	The relocation of the Executive’s base office to an office that is more than
30 highway miles of the Executive’s base office on the Effective Date.
	 
	 	(iv)	 	The failure of the Company to obtain a satisfactory agreement from any
successor to assume and agree to perform this Agreement.
	 
	 	(v)	 	Any purported termination of the Executive’s employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of subparagraph 4(h)
below (and, if applicable, the requirements of subparagraph 4(b) above), and for
purposes of this Agreement, no such purported termination shall be effective.

	 	 	The Executive’s right to terminate his employment pursuant to this subparagraph 4(d) shall
not be affected by his incapacity due to physical or mental illness. The Executive’s
continued employment shall not constitute consent to, or a waiver of rights with respect to,
any circumstance constituting Good Reason hereunder.
	 
	(e)	 	Termination by Executive. The Executive may terminate his employment hereunder at
any time for any reason by giving the Company prior written Notice of Termination (as defined
in subparagraph 4(g)), which Notice of Termination shall be effective not less than 30 days
after it is given to the Company, provided that nothing in this Agreement shall require the
Executive to specify a reason for any such termination. However, to the extent that the
procedures specified in subparagraph 4(d) are required, the procedures of this subparagraph
4(e) may not be used in lieu of the procedures required under subparagraph 4(d).
	 
	(f)	 	Termination by Company. The Company may terminate the Executive’s employment
hereunder at any time for any reason, by giving the Executive prior written Notice of
Termination, which Notice of Termination shall be effective immediately, or such later time as
is specified in such notice. The Company shall not be required to specify a reason for the
termination under this subparagraph 4(f), provided that termination of the Executive’s
employment by the Company shall be deemed to have occurred under this subparagraph 4(f) only
if it is not for reasons described in subparagraph 4(b), 4(c), 4(d), or 4(e). Notwithstanding
the foregoing provisions of this subparagraph 4(f), if the Executive’s employment is
terminated by the Company in accordance with this subparagraph 4(f), and within a reasonable
time period thereafter, it is determined by the Board that circumstances existed which would
have constituted a basis for termination of

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	 	 	the Executive’s employment for Cause in accordance with subparagraph 4(c) disregarding
circumstances which could have been remedied if notice had been given in accordance with
subparagraph 4(c), the Executive’s employment will be deemed to have been terminated for
Cause in accordance with subparagraph 4(c).
	 
	(g)	 	Notice of Termination. Any termination of the Executive’s employment by the Company
or the Executive (other than a termination pursuant to subparagraph 4(a)) must be communicated
by a written Notice of Termination to the other party hereto. For purposes of this Agreement,
a “Notice of Termination” means a dated notice which indicates the Date of Termination (not
earlier than the date on which the notice is provided), and which indicates the specific
termination provision in this Agreement relied on and which sets forth in reasonable detail
the facts and circumstances, if any, claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated.
	 
	(h)	 	Date of Termination. “Date of Termination” means the last day the Executive is
employed by the Company and its affiliates, provided that the Executive’s employment is
terminated in accordance with the foregoing provisions of this paragraph 4.
	 
	(i)	 	Effect of Termination. If, on the Date of Termination, the Executive is a member of
the Board or the board of trustees or board of directors any of the Subsidiaries, or holds any
other position with the Company and the Subsidiaries (other than the position described in
subparagraph 2(a)), the Executive shall resign from all such positions as of the Date of
Termination.

     5. Rights Upon Termination. The Executive’s right to payment and benefits under this
Agreement for periods after his Date of Termination shall be determined in accordance with the
following provisions of this paragraph 5:

	(a)	 	If the Executive’s Date of Termination occurs during the Agreement Term for any reason, the
Company shall pay to the Executive:

	 	(i)	 	The Executive’s Salary (to the extent not previously paid) for the period
ending on the Date of Termination.
	 
	 	(ii)	 	Payment for unused vacation days, as determined in accordance with Company
policy as in effect from time to time.
	 
	 	(iii)	 	If the Date of Termination occurs after the end of a performance period and
prior to the payment of the Target Bonus (as described in subparagraph 3(b)) for the
period, the Executive shall be paid such bonus amount at the regularly scheduled time.
	 
	 	(iv)	 	Any other payments or benefits to be provided to the Executive by the Company
pursuant to any employee benefit plans or arrangements adopted by the Company, to the
extent such amounts are due from the Company.

	 	 	Except as may otherwise be expressly provided to the contrary in this Agreement, nothing in
this Agreement shall be construed as requiring the Executive to be treated as

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	 	 	employed by the Company for purposes of any employee benefit plan or arrangement following
the date of the Executive’s Date of Termination.
	 
	(b)	 	If the Executive’s Date of Termination occurs during the Agreement Term under circumstances
described in subparagraph 4(a) (relating to the Executive’s death), subparagraph 4(b)
(relating to the Executive’s being Permanently Disabled), subparagraph 4(c) (relating to the
Executive’s termination for Cause), subparagraph 4(e) (relating to the Executive’s
resignation), or if the Executive’s employment with the Company terminates after the end of
the Agreement Term then, except as otherwise expressly provided in this Agreement or otherwise
agreed in writing between the Executive and the Company, the Company shall have no obligation
to make payments under the Agreement for periods after the Executive’s Date of Termination;
provided, however that if the Date of Termination occurs as a result of death or on account of
the Executive being Permanently Disabled, equity-based awards granted to the Executive under
the LTIP (or a successor plan thereto), to the extent then outstanding, shall be fully vested
as of the Date of Termination.
	 
	(c)	 	If the Executive’s Date of Termination occurs during the Agreement Term under circumstances
described in subparagraph 4(d) (relating to Constructive Discharge) or subparagraph 4(f)
(relating to termination by the Company without Cause), then, in addition to the amounts
payable in accordance with subparagraph 5(a):

	 	(i)	 	The Executive shall receive from the Company for the period (the “Severance
Period”) from the Date of Termination continuing through the end of the Agreement Term,
or, if later, the six-month anniversary of the Date of Termination, the Salary amount
described in subparagraph 3(a), as in effect on his Date of Termination, in monthly or
more frequent installments as is required under that subparagraph. The Severance
Period, and the Company’s obligation to make payments under this clause (i) shall cease
with respect to periods after the earlier to occur of the date of the Executive’s
death, or a date, if any, of the breach by the Executive of the provisions of
paragraphs 8 or 9 of this Agreement. In no event, however, shall the Executive be
entitled to receive any amounts, rights, or benefits under this subparagraph 5(c)
unless he executes a release of claims against the Company in a form prepared by the
Company.
	 
	 	(ii)	 	Continuation of coverage under the employee benefit plans and arrangements of
the Company in which the Executive was participating at the time of his termination of
employment for the Severance Period; provided that in no event shall the benefits
provided (or made available) with respect to any plan or arrangement under this clause
(c)(ii) be materially less favorable to the Executive than the benefits most favorable
to the Executive that are provided (or were available) during the one-year period prior
to such termination of employment. In determining the amount of benefits to which the
Executive is entitled under this clause (c)(ii), it shall be assumed that the Executive
shall continue to be entitled to the salary that he was receiving immediately prior to
the termination, and the bonus for the year prior to the year in which the termination
occurs. If the Company reasonably determines that the Executive cannot participate in
any

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	 	 	 	benefit plan because he is not actively performing services for the Company, then,
in lieu of providing benefits under any such plan, the Company shall make payments
to the Executive equal to the reduction in funding cost resulting from the
Executive’s exclusion from such plan, which payments shall fully satisfy any
obligation of the Company to continue benefits under such plans; provided that the
Company shall not be permitted to provide substitute benefits under this clause
(c)(ii) with respect to medical insurance, life insurance or disability benefits.
	 
	 	(iii)	 	All of the RSUs granted to the Executive pursuant to section 3(c), all of the
Performance Shares granted to the Executive pursuant to section 3(d), and any other
equity-based awards granted to the Executive under the LTIP (or a successor plan
thereto), to the extent then outstanding, shall be fully vested as of the Date of
Termination.

	(d)	 	Except as may be otherwise specifically provided in an amendment of this subparagraph 5(d)
adopted in accordance with paragraph 16, the Executive’s rights under this paragraph 5 shall
be in lieu of any benefits that may be otherwise payable to or on behalf of the Executive
pursuant to the terms of any severance pay arrangement of the Company or any Subsidiary or any
other, similar arrangement of the Company or any Subsidiary providing benefits upon
involuntary termination of employment , other than the benefits provided by the Executive
Protection Agreement. Notwithstanding any other provision of this Agreement, in the event
that the Executive becomes entitled to benefits under the Executive Protection Agreement, the
Executive shall not be entitled to any benefits under this Agreement on account of his
termination of employment with the Company and its affiliates but rather all such benefits
shall be provided in accordance with the terms of the Executive Protection Agreement.

     6. Duties on Termination. Subject to the terms and conditions of this Agreement,
during the period beginning on the date of delivery of a Notice of Termination, and ending on the
Date of Termination, the Executive shall continue to perform his duties as set forth in this
Agreement, and shall also perform such services for the Company as are necessary and appropriate
for a smooth transition to the Executive’s successor, if any. Notwithstanding the foregoing
provisions of this paragraph 6, the Company may suspend the Executive from performing his duties
under this Agreement following the delivery of a Notice of Termination providing for the
Executive’s resignation, or delivery by the Company of a Notice of Termination providing for the
Executive’s termination of employment for any reason; provided, however, that during the period of
suspension (which shall end on the Date of Termination), the Executive shall continue to be treated
as employed by the Company for other purposes, and his rights to compensation or benefits shall not
be reduced by reason of the suspension.

     7. Mitigation and Set-Off. The Executive shall not be required to mitigate the amount
of any payment provided for in this Agreement by seeking other employment or otherwise. The
Company shall not be entitled to set off against the amounts payable to the Executive under this
Agreement any amounts owed to the Company by the Executive, any amounts earned by the Executive in
other employment after termination of his employment with the Company, or any

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amounts which might have been earned by the Executive in other employment had he sought such
other employment.

     8. Confidential Information. The Executive agrees that, during the Agreement Term,
and at all times thereafter:

	(a)	 	Except as may be required by the lawful order of a court or agency of competent jurisdiction,
except as necessary to carry out his duties to the Company and its Subsidiaries, or except to
the extent that the Executive has express authorization from the Company, the Executive agrees
to keep secret and confidential indefinitely, all Confidential Information, and not to
disclose the same, either directly or indirectly, to any other person, firm, or business
entity, or to use it in any way.
	 
	(b)	 	To the extent that any court or agency seeks to have the Executive disclose Confidential
Information, he shall promptly inform the Company, and he shall take such reasonable steps to
prevent disclosure of Confidential Information until the Company has been informed of such
requested disclosure, and the Company has an opportunity to respond to such court or agency.
To the extent that the Executive obtains information on behalf of the Company or any of the
Subsidiaries that may be subject to attorney-client privilege as to the Company’s attorneys,
the Executive shall take reasonable steps to maintain the confidentiality of such information
and to preserve such privilege.
	 
	(c)	 	Nothing in the foregoing provisions of this paragraph 8 shall be construed so as to prevent
the Executive from using, in connection with his employment for himself or an employer other
than the Company or any of the Subsidiaries, knowledge which was acquired by him during the
course of his employment with the Company and the Subsidiaries, and which is generally known
to persons of his experience in other companies in the same industry.
	 
	(d)	 	For purposes of this Agreement, the term “Confidential Information” shall include all
non-public information (including, without limitation, information regarding litigation and
pending litigation) concerning the Company and the Subsidiaries which was acquired by or
disclosed to the Executive during the course of his employment with the Company, or during the
course of his consultation with the Company following his Date of Termination (regardless of
whether consultation is pursuant to paragraph 10).
	 
	(e)	 	This paragraph 8 shall not be construed to unreasonably restrict the Executive’s ability to
disclose confidential information in an arbitration proceeding or a court proceeding in
connection with the assertion of, or defense against any claim of breach of this Agreement in
accordance with paragraph 23. If there is a dispute between the Company and the Executive as
to whether information may be disclosed in accordance with this subparagraph 8(e) the matter
shall be submitted to the arbitrators or the court (whichever is applicable) for decision.

     9. Noncompetition. During the Restricted Period (as defined below) the Executive will
not, without the Company’s prior written consent (which consent shall not be unreasonably

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withheld), directly or indirectly, for the Executive’s own account or for or on behalf of any
other person or entity, whether an officer, director, employee, partner, consultant, or otherwise:

	 	(a)	 	engage or participate in, directly or indirectly, alone or as principal, agent,
employee, employer, consultant, investor or partner of, or assist in the management of,
or provide advisory or other services to, or own any stock or any other ownership
interest in, or make any financial investment in, any business or entity which is
Competitive with the Company (as defined below) or purchase any property which could
reasonably be used to provide or develop a business that is Competitive with the
Company; or
	 
	 	(b)	 	solicit or attempt to hire or employ, in any fashion (whether as an employee,
independent contractor or otherwise), any employee or independent contractor of the
Company or the Subsidiaries, or solicit or induce, or attempt to solicit or induce, any
of the Company’s or the Subsidiaries’ employees, consultants, clients, customers,
vendors, suppliers or independent contractors to terminate their relationship with the
Company and/or the Subsidiaries; or

For purposes of this Agreement:

	 	(i)	 	With respect to subparagraph 9(a) above, the “Restricted Period” means the
period during which the Executive is employed by the Company and, if the Executive’s
Date of Termination occurs prior to December 31, 2007 other than on account of
termination by the Company for reasons other than Cause, the period following the
Executive’s Date of Termination and ending on December 31, 2007.
	 
	 	(ii)	 	With respect to subparagraph 9(b) above, the “Restricted Period” means the
period during which the Executive is employed by the Company and, if the Executive’s
Date of Termination occurs prior to December 31, 2008, the period following the
Executive’s Date of Termination and ending on December 31, 2008.
	 
	 	(iii)	 	A business or entity shall be considered “Competitive with the
Company” if it engages in any of the businesses in which the Company or any of its
affiliates engages, including the business of providing distribution facilities or
services, the acquisitions of properties for such purpose and the design of business
strategies for such purpose. For purposes of the portion of the Restricted Period
following the Executive’s Date of Termination, the businesses in which the Company or
any of its affiliates engages shall be determined as of the Executive’s Date of
Termination.
	 
	 	(iv)	 	For periods after the Executive’s Date of Termination, a business entity shall
not be considered “Competitive with the Company” (as defined in clause (iii)
above) for purposes of this Agreement if it builds anything other than industrial
warehouses or acquires property for purposes of developing anything other than
industrial warehouses and the Executive’s investment in such business or entity

11

 

	 	 	 	does not exceed $10,000,000 with respect to any one transaction or $20,000,000 in
the aggregate for all transactions for the portion of the Restricted Period
following his Date of Termination.

     10. Assistance with Claims. The Executive agrees that, for the period beginning on
the Effective Date, and continuing for a reasonable period after the Executive’s Date of
Termination, the Executive will assist the Company and the Subsidiaries in defense of any claims
that may be made against the Company and the Subsidiaries, and will assist the Company and the
Subsidiaries in the prosecution of any claims that may be made by the Company or the Subsidiaries,
to the extent that such claims may relate to services performed by the Executive for the Company
and the Subsidiaries. The Executive agrees to promptly inform the Company if he becomes aware of
any lawsuits involving such claims that may be filed against the Company or any Subsidiary. The
Company agrees to provide legal counsel to the Executive in connection with such assistance (to the
extent legally permitted), and to reimburse the Executive for all of the Executive’s reasonable
out-of-pocket expenses associated with such assistance, including travel expenses and reasonable
legal expenses. The Executive shall choose his legal counsel in his reasonable sole discretion.
For periods after the Executive’s employment with the Company terminates, the Company agrees to
provide reasonable compensation to the Executive for such assistance. The Executive also agrees to
promptly inform the Company if he is asked to assist in any investigation of the Company or the
Subsidiaries (or their actions) that may relate to services performed by the Executive for the
Company or the Subsidiaries, regardless of whether a lawsuit has then been filed against the
Company or the Subsidiaries with respect to such investigation.

     11. Directors and Officers Insurance. The Executive shall be named as an insured and
covered against the same claims and at the same level of insurance under the Directors and Officers
insurance purchased by the Company for other senior executives of the Company.

     12. Equitable Remedies. The Executive acknowledges that the Company would be
irreparably injured by a violation of paragraphs 8 or 9 and he agrees that the Company, in addition
to any other remedies available to it for such breach or threatened breach, shall be entitled to a
preliminary injunction, temporary restraining order, or other equivalent relief, restraining the
Executive from any actual or threatened breach of either paragraphs 8 or 9. If a bond is required
to be posted in order for the Company to secure an injunction or other equitable remedy, the
parties agree that said bond need not be more than a nominal sum.

     13. Nonalienation. The interests of the Executive under this Agreement are not
subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors of the Executive or the Executive’s beneficiary.

     14. Withholding. All payments and benefits under this Agreement are subject to
withholding of all applicable taxes.

     15. Indemnity. The Company indemnify the Executive against and shall pay and advance
all expenses, including, without limitation, attorneys’ fees, disbursements and retainers,
accounting and witness fees, travel and deposition costs, expenses of investigations, judicial or
administrative proceedings and appeals, amounts paid in settlement by the Executive or on behalf of
the Executive, actually incurred by the Executive in connection with any threatened,

12

 

pending or completed claim, action, suit or proceeding, formal or informal, whether brought in
the right of the Company or otherwise and whether of a civil, criminal, administrative or
investigative nature, by reason of the fact that the Executive as a director, officer, employee or
agent of the Company or its affiliates or as serving at the Company’s request as a director,
officer, employee, or agent of another corporation, limited liability company, partnership, joint
venture, trust, or other enterprise.

     16. Amendment. This Agreement may be amended or cancelled only by mutual agreement of
the parties in writing without the consent of any other person. So long as the Executive lives, no
person, other than the parties hereto, shall have any rights under or interest in this Agreement or
the subject matter hereof. Without limiting the generality of the foregoing, it is the intent of
the parties that all payments hereunder comply with the requirements of section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), and applicable guidance issued thereunder
and, to the extent applicable, this Agreement shall be amended as the parties deem necessary or
appropriate to comply with the requirements of section 409A and applicable guidance issued
thereunder in a manner that preserves to the extent possible the intended benefits of this
Agreement for the parties.

     17. Applicable Law. The provisions of this Agreement shall be construed in accordance
with the laws of the State of Colorado, without regard to the conflict of law provisions of any
state.

     18. Severability. The invalidity or unenforceability of any provision of this
Agreement will not affect the validity or enforceability of any other provision of this Agreement,
and this Agreement will be construed as if such invalid or unenforceable provision were omitted
(but only to the extent that such provision cannot be appropriately reformed or modified).

     19. Waiver of Breach. No waiver by any party hereto of a breach of any provision of
this Agreement by any other party, or of compliance with any condition or provision of this
Agreement to be performed by such other party, will operate or be construed as a waiver of any
subsequent breach by such other party of any similar or dissimilar provisions and conditions at the
same or any prior or subsequent time. The failure of any party hereto to take any action by reason
of such breach will not deprive such party of the right to take action at any time while such
breach continues.

     20. Successors. This Agreement shall be binding upon, and inure to the benefit of,
the Company and its successors and assigns and upon any person acquiring, whether by merger,
consolidation, purchase of assets or otherwise, all or substantially all of the Company’s assets
and business , and the successor shall be substituted for the Company under this Agreement.

     21. Notices. Notices and all other communications provided for in this Agreement
shall be in writing and shall be delivered personally or sent by registered or certified mail,
return receipt requested, postage prepaid (provided that international mail shall be sent via
overnight or two-day delivery), or sent by facsimile or prepaid overnight courier to the parties at
the addresses set forth below (or such other addresses as shall be specified by the parties by like
notice). Such notices, demands, claims and other communications shall be deemed given:

13

 

	(a)	 	in the case of delivery by overnight service with guaranteed next day delivery, the next day
or the day designated for delivery;
	 
	(b)	 	in the case of certified or registered U.S. mail, five days after deposit in the U.S. mail;
or
	 
	(c)	 	in the case of facsimile, the date upon which the transmitting party received confirmation of
receipt by facsimile, telephone or otherwise;

provided, however, that in no event shall any such communications be deemed to be given later than
the date they are actually received. Communications that are to be delivered by the U.S. mail or
by overnight service or two-day delivery service are to be delivered to the addresses set forth
below:

to the Company:

4545 Airport Way

Denver, CO 80239

Attn:   General Counsel

Fax:   (303) 567-5761

or to the Executive:

29029 Upper Bear Creek Road, #203

Evergreen, Colorado 80439

Fax:  (303) 980-3493

All notices to the Company shall be directed to the attention of the General Counsel of the
Company, with a copy to the Secretary of the Company. Each party, by written notice furnished to
the other party, may modify the applicable delivery address, except that notice of change of
address shall be effective only upon receipt.

     22. Arbitration of All Disputes. Any controversy or claim arising out of or relating
to this Agreement (or the breach thereof) shall be settled by final, binding and non-appealable
arbitration in Colorado by three arbitrators. Except as otherwise expressly provided in this
paragraph 22, the arbitration shall be conducted in accordance with the rules of the American
Arbitration Association (the “Association”) then in effect. One of the arbitrators shall be
appointed by the Company, one shall be appointed by the Executive, and the third shall be appointed
by the first two arbitrators. If the first two arbitrators cannot agree on the third arbitrator
within 30 days of the appointment of the second arbitrator, then the third arbitrator shall be
appointed by the Association.

     23. Legal and Enforcement Costs. The provisions of this paragraph 23 shall apply if
it becomes necessary or desirable for the Executive to retain legal counsel or incur other costs
and expenses in connection with either enforcing any and all of his rights under this Agreement or
defending against any allegations of breach of this Agreement by the Company:

	(a)	 	The Executive shall be entitled to recover from the Company reasonable attorneys’ fees, costs
and expenses incurred by him in connection with such enforcement or defense.

14

 

	(b)	 	Payments required under this paragraph 23 shall be made by the Company to the Executive (or
directly to the Executive’s attorney) promptly following submission to the Company of
appropriate documentation evidencing the incurrence of such attorneys’ fees, costs, and
expenses.
	 
	(c)	 	The Executive shall be entitled to select his legal counsel; provided, however, that such
right of selection shall not affect the requirement that any costs and expenses reimbursable
under this paragraph 23 be reasonable.
	 
	(d)	 	The Executive’s rights to payments under this paragraph 23 shall not be affected by the final
outcome of any dispute with the Company; provided, however, that to the extent that the
arbitrators shall determine that under the circumstances recovery by the Executive of all or a
part of any such fees and costs and expenses would be unjust or inappropriate, the Executive
shall not be entitled to such recovery; and to the extent that such amount have been recovered
by the Executive previously, the Executive shall repay such amounts to the Company.

     24. Survival of Agreement. Except as otherwise expressly provided in this Agreement,
the rights and obligations of the parties to this Agreement shall survive the termination of the
Executive’s employment with the Company.

     25. Entire Agreement. Except as otherwise noted herein or in any separation agreement
subsequently entered into by the Executive and the Company, this Agreement, including any
Exhibit(s) attached hereto, constitutes the entire agreement between the parties concerning the
subject matter hereof and supersedes all prior and contemporaneous agreements, if any, between the
parties relating to the subject matter hereof; including the Original Agreement; provided, however,
that nothing in this Agreement shall be construed to limit any policy or agreement that is
otherwise applicable relating to confidentiality, rights to inventions, copyrightable material,
business and/or technical information, trade secrets, solicitation of employees, interference with
relationships with other businesses, competition, and other similar policies or agreement for the
protection of the business and operations of the Company and the Subsidiaries. Notwithstanding the
foregoing, in consideration for the Company’s obligations under the Original Agreement, the
Executive waived all rights under that certain Memorandum of Understanding dated March 26, 2004, as
amended as of February 16, 2005 (the “MOU”), between the Executive and Catellus Development
Corporation (“Catellus”) and released Catellus and the Company from any and all obligations under
the MOU; provided, however, that the provisions of Paragraph 8 of the MOU (relating to
indemnification) continued and shall continue to apply, Appendix B of the MOU (relating to the Tax
Protection Policy) continued and shall continue to apply in all respects without limitation to any
payment, distribution or benefit which is determined to be subject to excise tax under section 4999
of the Code as a result of the Merger (as defined in the Original Agreement) and Paragraph 10.3(b)
of the MOU continued and will continue to apply with respect to awards referenced therein that are
outstanding immediately prior to the Merger.

15

 

     IN WITNESS THEREOF, the Executive has hereunto set his hand, and the Company has caused these
presents to be executed in its name and on its behalf, all as of the Effective Date.

	 	 	 	 	 
	 	 	 
	 	                                                   /s/ Ted R. Antenucci
 	 
	 	Ted R. Antenucci 	 
	 	 	 
	 

	 	 	 	 	 
	 	ProLogis

 	 
	 	By:  	                           /s/ Jeffrey H. Schwartz
 	 
	 	Its:  	          Chief Executive Officer 	 
	 	 	 	 

16exv10w2

 

 

 

 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.

1

 

     
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

2

 

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.

3

 

     
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

4

 

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.

5

 

     
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

6

 

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

7

 

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

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