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Maryland		6798		74-2604728
(State or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

Michael T. Blair		Vanessa L. Washington		Mark C. Easton
D. Michael Murray		Catellus Development		Christine M. Tam
Mayer, Brown, Rowe & Maw LLP		Corporation		O’Melveny & Myers LLP
71 South Wacker Drive		201 Mission Street		400 South Hope Street
Chicago, Illinois 60606-4637		San Francisco, California 94105		Los Angeles, California 90017
(312) 782-0600		(415) 974-4500		(213) 430-6000

Proposed

Proposed

Maximum

Maximum

Title of Each Class of

Amount to Be

Offering Price

Aggregate

Amount of

Securities to Be Registered

Registered

Per Unit

Offering Price

Registration Fee

Common Shares of Beneficial Interest, par value $0.01 per share

56,700,000(1)

N/A

$2,263,682,321.83(2)

$266,435.41

(1)	Represents the maximum number of ProLogis common shares estimated to be issuable pursuant to the merger agreement described in this document.
(2)	Estimated solely for purposes of calculating the amount of the registration fee pursuant to Rule 457(f) of the Securities Act of 1933, based on the product of $33.085 (the average of the high and low prices of Catellus common stock on July 7, 2005, on the New York Stock Exchange composite tape) and 106,352,798 (the number of shares of Catellus common stock outstanding, including unvested Catellus restricted stock, plus the number of shares of Catellus common stock subject to Catellus restricted stock units, stock options and other equity-based awards that will be cancelled pursuant to the terms of the merger agreement if not vested and/or exercised prior to the completion of the merger) less $1.255 billion (the aggregate cash consideration to be paid by ProLogis pursuant to the merger agreement).

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The information in this document is not complete and may be changed. A registration statement related to the ProLogis common shares of beneficial interest being registered pursuant to this document has been filed with the Securities and Exchange Commission. ProLogis may not distribute or issue these securities until the registration statement is effective. This document is not an offer to distribute these securities and ProLogis is not soliciting offers to receive these securities in any state where such offer or distribution is not permitted.

Jeffrey H. Schwartz Chief Executive Officer PROLOGIS		Nelson C. Rising Chairman of the Board and Chief Executive Officer CATELLUS DEVELOPMENT CORPORATION

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ProLogis 14100 East 35th Place Aurora, Colorado 80011 Attention: Investor Relations Telephone: (303) 576-2745		Catellus Development Corporation 201 Mission Street, 2nd Floor San Francisco, California 94105 Attention: Investor Relations Telephone: (415) 974-3781

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	(1) To consider and vote on the approval of the issuance of ProLogis common shares of beneficial interest contemplated by the Agreement and Plan of Merger, dated as of June 5, 2005, by and among ProLogis, Palmtree Acquisition Corporation and Catellus Development Corporation; and
	(2) To transact any other business as may properly come before the special meeting or any adjournments or postponements of the special meeting.

	•	MARK, SIGN, DATE AND PROMPTLY RETURN the enclosed proxy card in the postage-paid envelope (it requires no postage if mailed in the United States);
	•	USE THE TOLL-FREE TELEPHONE NUMBER shown on the enclosed proxy card (this call is free in the United States and Canada) and follow the recorded instructions; or
	•	VISIT THE INTERNET WEBSITE shown on the enclosed proxy card and follow the instructions provided to vote through the internet.

	By Order of the Board of Trustees,
	Edward S. Nekritz
	Secretary

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	(1) To consider and vote on the adoption of the Agreement and Plan of Merger, dated as of June 5, 2005, by and among ProLogis, Palmtree Acquisition Corporation and Catellus, pursuant to which Catellus will merge with and into Palmtree Acquisition Corporation; and
	(2) To transact any other business as may properly come before the special meeting or any adjournments or postponements of the special meeting.

	•	MARK, SIGN, DATE AND PROMPTLY RETURN the enclosed proxy card in the postage-paid envelope (it requires no postage if mailed in the United States);
	•	USE THE TOLL-FREE TELEPHONE NUMBER shown on the enclosed proxy card (this call is free in the United States and Canada) and follow the recorded instructions; or
	•	VISIT THE INTERNET WEBSITE shown on the enclosed proxy card and follow the instructions provided to vote through the internet.

	By Order of the Board of Directors,
	Vanessa L. Washington
	Secretary

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			Page
QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETINGS				Q-1
SUMMARY				1
	The Merger			1
	The Companies			1
	The Special Meetings			1
	Merger Consideration to Catellus Stockholders; Election, Reallocation and Proration of Merger Consideration			2
	Treatment of Catellus Restricted Stock, Restricted Stock Units and Stock Options			2
	Material U.S. Federal Income Tax Considerations			2
	Market Prices of ProLogis Common Shares and Catellus Common Stock on Important Dates			3
	Recommendation of ProLogis’ Board of Trustees and ProLogis’ Reasons for the Merger			3
	Recommendation of Catellus’ Board of Directors and Catellus’ Reasons for the Merger			3
	Interests of Catellus’ Executive Officers and Directors in the Merger			4
	Opinions of Financial Advisors			4
	The Merger Agreement			5
	Other Information			6
	Selected Historical Consolidated Financial Data of ProLogis			7
	Selected Historical Consolidated Financial Data of Catellus			8
	Comparative Per Share Data			9
	Selected Unaudited Pro Forma Condensed Consolidated Financial and Other Data			10
RISK FACTORS				11
	The operations of ProLogis and Catellus may not be integrated successfully, and the intended benefits of the merger may not be realized.			11
	If you receive ProLogis common shares in exchange for your shares of Catellus common stock, the market value of the merger consideration you receive will depend on the market price of ProLogis common shares at the effective time of the merger and may decrease if the market value of ProLogis common shares decreases.			11
	ProLogis and Catellus expect to incur significant costs and expenses in connection with the merger, which could result in the combined company not realizing some of the anticipated benefits of the merger.			11
	Catellus’ executive officers and directors have interests in the merger that may conflict with your interests.			12
	ProLogis and Catellus may incur substantial expenses and payments, and may suffer other business disruptions and adverse market reactions, if the merger does not occur.			12
	The termination fees may discourage other companies from trying to acquire Catellus.			13
	Catellus is subject to pending tax audits, which may result in payments in excess of the current liability related to these audits that is reflected in the unaudited pro forma condensed consolidated balance sheet included in this document.			13
	There are uncertainties relating to Catellus’ estimate of its “earnings and profits” attributable to C-corporation taxable years.			13
	Catellus and Palmtree Acquisition Corporation may fail to qualify as REITs.			14
	General economic conditions and other events or occurrences that affect areas in which ProLogis’ and Catellus’ properties are geographically concentrated, such as California, may impact financial results and the market price of ProLogis common shares.			14

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Difficulties associated with contributing properties to funds ProLogis manages or selling properties, including Catellus’ properties, could limit the combined company’s flexibility and adversely affect the anticipated benefits of the merger and the market price of ProLogis common shares.			14
ProLogis historically has not owned non-industrial assets, and the market price of ProLogis common shares may decline if ProLogis fails to successfully operate the non-industrial assets acquired in the merger.			15
Real property investments are subject to risks that could cause the market value of ProLogis common shares to decline.			15
ProLogis’ and Catellus’ investments are, and the combined company’s investments will be, concentrated in the industrial sector, which means that the combined company will be more adversely affected by an economic downturn in that sector than it would be if more of its investments were in other sectors.			15
ProLogis’ real estate development strategies may not be successful.			15
The combined company’s growth will depend on future acquisitions of distribution properties, which involves risks that could adversely affect the combined company’s operating results and the market price of ProLogis common shares.			16
The combined company’s operating results and distributable cash flow will depend on the continued generation of lease revenues from tenants.			16
The fact that real estate investments are not as liquid as other types of assets may reduce economic returns to investors.			16
ProLogis’ and Catellus’ insurance coverage does not, and the combined company’s insurance coverage will not, cover all potential losses.			17
ProLogis and Catellus are, and the combined company will be, exposed to various environmental risks that may result in unanticipated losses that could affect the combined company’s operating results and financial condition.			17
Rising interest rates will increase the combined company’s costs and could affect the market price of ProLogis common shares.			17
The depreciation in the value of the foreign currency in countries where ProLogis has a significant investment may adversely affect the combined company’s results of operations and financial position.			17
The combined company’s operating results and financial condition could be adversely affected if it does not continue to have access to capital on favorable terms.			18
ProLogis and Catellus are, and the combined company will be, dependent on key personnel.			18
ProLogis and Catellus are, and the combined company will be, subject to governmental regulations and actions that affect operating results and financial condition.			19
ProLogis’ failure to qualify as a REIT would require ProLogis to be taxed as a corporation, which would significantly lower funds available for shareholder distributions and adversely affect ProLogis shareholders.			19
The failure of Palmtree Acquisition Corporation, which will be the successor to Catellus as a result of the merger, to qualify as a REIT could also cause ProLogis to fail to qualify as a REIT.			19
Annual distribution requirements limit ProLogis’ ability to accumulate capital and may require that ProLogis borrow funds or sell properties on adverse terms in order to maintain its REIT status.			19
Prohibited transaction income could result from certain property transfers by ProLogis or Catellus.			20
Recent U.S. federal income tax developments could affect the desirability of investing in ProLogis for individual taxpayers.			20
U.S. federal income tax treatment of REITs and investments in REITs may change, which may cause ProLogis to lose the tax benefits of operating as a REIT.			20

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	There are potential deferred and contingent tax liabilities that could affect the combined company’s operating results or financial condition.			20
THE COMPANIES				21
	ProLogis			21
	Catellus Development Corporation			21
MARKET PRICES AND DIVIDEND INFORMATION				22
THE SPECIAL MEETINGS				23
THE MERGER				29
	Background of the Merger			29
	Recommendation of ProLogis’ Board of Trustees and ProLogis’ Reasons for the Merger			33
	Recommendation of Catellus’ Board of Directors and Catellus’ Reasons for the Merger			37
	Opinions of Financial Advisors			39
	Interests of Catellus’ Executive Officers and Directors in the Merger			56
	Other Catellus Employment Arrangements			62
	Appraisal Rights			63
	Regulatory Matters			67
	Delisting and Deregistration of Catellus Common Stock			67
	Accounting Treatment			67
	Restrictions on Resale of ProLogis Common Shares Issued Pursuant to the Merger			67
	Trustees and Executive Officers of the Combined Company			68
THE MERGER AGREEMENT				69
	Structure of the Merger			69
	When the Merger Becomes Effective			69
	Conversion of Catellus and Palmtree Acquisition Corporation Stock			69
	Treatment of Catellus Restricted Stock, Restricted Stock Units and Stock Options			70
	Catellus Stockholder Elections			71
	Reallocation and Proration of Catellus Stockholder Elections			71
	Exchange of Shares; Fractional Shares			73
	Conditions to Completing the Merger			74
	Representations and Warranties			75
	Material Adverse Effect on Catellus or ProLogis			76
	Covenants and Other Agreements			76
	Termination of the Merger Agreement			82
	Termination Fees and Expenses			83
	Other Fees and Expenses			84
	Amendment; Extension and Waiver			84
	Voting Agreement; Additional Agreements between Nelson C. Rising and ProLogis			85
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS				86
	Tax Consequences of the Merger			87
	REIT Qualification of Catellus			90
	Taxation of ProLogis as a REIT			90
DESCRIPTION OF PROLOGIS CAPITAL SHARES				101
	General			101
	Common Shares			101

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			Page
	Preferred Shares			101
	Restriction on Size of Holdings			102
	Shareholder Liability			102
	Transfer Agent			102
COMPARISON OF THE RIGHTS OF PROLOGIS SHAREHOLDERS AND CATELLUS STOCKHOLDERS				103
ADDITIONAL INFORMATION				108
	Deadline for Future Shareholder Proposals			108
	Legal Matters			108
	Experts			108
	Where You Can Find More Information			108
	Forward-Looking Statements			111
INDEX TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS				F-1
ANNEXES
Annex A: Agreement and Plan of Merger				A-1
Annex B: Opinion of Banc of America Securities LLC to ProLogis’ Board of Trustees				B-1
Annex C: Opinion of Morgan Stanley & Co. Incorporated to Catellus’ Board of Directors				C-1
Annex D: Section 262 of the General Corporation Law of the State of Delaware				D-1
Opinion of Mayer, Brown, Rowe & Maw LLP
Employment Agreement
Acknowledgement of KPMG LLP
Consent of KPMG LLP
Consent of PricewaterhouseCoopers LLP
Form of Proxy Card - Prologis
Form of Election Form
Voting Agreement
Consent of Banc Of America Securities LLC
Consent of Morgan Stanley & Co. Inc.
Consent of Nelson C. Rising
Consent of Christine Garvey

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Q:		Why am I receiving this document?
A:		ProLogis’ board of trustees and Catellus’ board of directors have approved a merger agreement pursuant to which Catellus will merge with and into a subsidiary of ProLogis. The merger cannot be completed without the approval of ProLogis shareholders and Catellus stockholders. ProLogis and Catellus will hold separate special meetings of their respective shareholders to obtain these approvals. This document is the proxy statement for ProLogis and Catellus to solicit proxies for their respective special meetings. It is also the prospectus of ProLogis regarding the ProLogis common shares to be issued as contemplated by the merger agreement. This document contains important information about the proposed merger and the special meetings of ProLogis and Catellus, and you should read it carefully.
Q:		Why are ProLogis and Catellus proposing the merger?
A:		The boards of both companies believe that the merger represents a strategic combination of two industrial real estate companies that will be in the best interests of their respective shareholders and will achieve key elements of ProLogis’ strategic business plan to strengthen its position in the North American logistics market. The combined company will offer the world’s largest network of industrial distribution facilities and services, with over 350 million square feet in over 2,250 facilities owned, managed and under development in 75 markets in North America, Europe and Asia.
		To review the companies’ reasons for the merger in greater detail, see the sections of this document entitled “The Merger — Recommendation of ProLogis’ Board of Trustees and ProLogis’ Reasons for the Merger” and “The Merger — Recommendation of Catellus’ Board of Directors and Catellus’ Reasons for the Merger.”
Q:		What will Catellus stockholders receive in the merger?
A:		Catellus stockholders have the right to elect to receive either 0.822 of a ProLogis common share or $33.81 in cash, without interest, for each share of Catellus common stock they own immediately prior to the effective time of the merger. Catellus stockholders may elect to receive their merger consideration in the form of ProLogis common shares, cash, or a combination of both. Catellus stockholder elections will be reallocated and prorated to fix the cash portion of the merger consideration at $1.255 billion, which means that the total consideration paid by ProLogis pursuant to the merger agreement will consist of about 65% ProLogis common shares and about 35% cash. Accordingly, a Catellus stockholder may actually receive a combination of ProLogis common shares and cash that is different from what that stockholder elects, depending on the elections made by other Catellus stockholders. See the sections of this document entitled “The Merger Agreement — Catellus Stockholder Elections” and “The Merger Agreement  — Reallocation and Proration of Catellus Stockholder Elections.”
Q:		What happens if the market price of ProLogis common shares or Catellus common stock changes before the closing of the merger?
A:		Both the 0.822 exchange ratio for the share portion of the merger consideration and the $33.81 per share in cash, without interest, for the cash portion of the merger consideration are fixed. This means that neither will change between now and the date on which the merger is completed, regardless of what happens to the market price of ProLogis common shares or Catellus common stock during that period. See the section of this document entitled “The Merger Agreement — Conversion of Catellus and Palmtree Acquisition Corporation Stock.”
Q:		How many ProLogis common shares will be owned after the merger by former Catellus stockholders and holders of Catellus restricted stock, restricted stock units and stock options?
A:		Based on the number of ProLogis common shares and shares of Catellus common stock outstanding as of                     , 2005, the record date for the special meetings, immediately after the effective time of the merger, former Catellus stockholders and holders of Catellus restricted stock, restricted stock units and

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		stock options will own approximately      % of the then-outstanding ProLogis common shares.
Q:		On what am I being asked to vote?
A:		ProLogis Shareholders. You are being asked to approve the issuance of ProLogis common shares contemplated by the merger agreement.
		ProLogis’ board of trustees has approved the merger agreement and the merger and declared that the merger agreement and the merger are advisable and in the best interests of ProLogis and its shareholders. ProLogis’ board of trustees unanimously recommends that ProLogis shareholders vote “FOR” approval of the issuance of ProLogis common shares contemplated by the merger agreement.
		Catellus Stockholders. You are being asked to adopt the merger agreement pursuant to which Catellus will merge with and into a subsidiary of ProLogis.
		Catellus’ board of directors has approved the merger agreement and the merger and declared that the merger agreement and the merger are advisable and fair to, and in the best interests of, Catellus and its stockholders. Catellus’ board of directors unanimously recommends that Catellus stockholders vote “FOR” the adoption of the merger agreement.
Q:		How soon after the special meetings will the merger occur?
A:		We are working to complete the merger as soon as possible. A number of conditions must be satisfied before we can do so, including approval of ProLogis’ shareholders and Catellus’ stockholders. Although we cannot be sure when all of the conditions to the merger will be satisfied, we hope to complete the merger as soon as practicable after the special meetings.
Q:		Who will manage ProLogis after the merger?
A:		ProLogis’ board of trustees will be increased to 14 members at the effective time of the merger and will include the 12 current ProLogis trustees, in addition to Nelson C. Rising, who is currently Catellus’ Chairman of the Board and Chief Executive Officer, and Christine Garvey, a current member of Catellus’ board of directors. ProLogis’ existing management team will continue to manage the operations of ProLogis after the merger, with the exception of John W. Seiple, Jr., who is currently ProLogis’ President and Chief Executive Officer of North America and will resign from that office effective as of the date on which the merger is completed. Ted R. Antenucci, who is currently the President of Catellus Commercial Development Corporation, will join ProLogis as President of Global Development and will assume the majority of Mr. Seiple’s responsibilities.
Q:		Will Catellus continue to pay regular quarterly dividends prior to the merger?
A:		Yes. Catellus expects to continue to declare and pay regular quarterly dividends of $0.27 per share beginning with the third quarter of 2005 until the merger is completed. The record date for the distribution of Catellus’ quarterly dividends will be the same as the record date for the distribution of the quarterly dividends for ProLogis common shares. See the section of this document entitled “The Merger Agreement — Covenants and Other Agreements — Dividends and Distributions on Capital Stock.”
Q:		Will Catellus pay any extraordinary dividends prior to the merger?
A:		If necessary to comply with REIT qualification and distribution requirements and not incur income and excise tax, Catellus will declare and pay a dividend to its stockholders, the record date for which will be the close of business on the last business day prior to the date on which the merger is completed, distributing cash in an amount equal to Catellus’ estimated “real estate investment trust taxable income” (as that term is used in Section 857(a) of the Internal Revenue Code), taking into account any dividends previously paid by Catellus during the tax year, plus any other amounts determined by Catellus, in consultation with ProLogis. If Catellus pays an extraordinary dividend, ProLogis will declare and pay a corresponding dividend to its shareholders at the same time in an aggregate amount equal to the dividend paid by Catellus divided by 0.822 (the exchange ratio for the share portion of the merger consideration).
Q:		What will my dividends be after the merger?
A:		After the merger, former Catellus stockholders who receive ProLogis common shares in the merger will receive dividends and distributions

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		declared on those ProLogis common shares with a record date after the date on which the merger is completed. Dividends on ProLogis common shares are payable at the discretion of ProLogis’ board of trustees. ProLogis’ current quarterly dividends on its common shares are $0.37 per share.
Q:		Do ProLogis shareholders and Catellus stockholders have appraisal rights in connection with the merger?
A:		ProLogis Shareholders. No. If you are a ProLogis shareholder, you do not have dissenters’ rights of appraisal in connection with the merger.
		Catellus Stockholders. Yes. If you are a Catellus stockholder, under Delaware law, you have the right to dissent from the adoption of the merger agreement and, in lieu of receiving the merger consideration, obtain payment in cash of the fair value of your shares of Catellus common stock as determined by the Delaware Chancery Court. To exercise appraisal rights, Catellus stockholders must strictly follow the procedures prescribed by Delaware law. These procedures are summarized in the section of this document entitled “The Merger — Appraisal Rights.” In addition, the text of the applicable provisions of Delaware law is included as Annex D to this document.
Q:		What will be the U.S. federal income tax consequences of the merger?
A:		ProLogis Shareholders, ProLogis and Catellus. For U.S. federal income tax purposes, ProLogis shareholders, ProLogis and Catellus will not recognize either gain or loss as a result of the merger.
		Catellus Stockholders. For U.S. federal income tax purposes, a Catellus stockholder who receives only ProLogis common shares in the merger will not recognize either gain or loss as a result of the exchange of the stockholder’s shares of Catellus common stock for ProLogis common shares, except to the extent of any cash received instead of a fractional share. A Catellus stockholder who receives only cash in the merger will recognize gain or loss in an amount equal to the difference between the cash received and the stockholder’s tax basis in the Catellus common stock surrendered. A Catellus stockholder who receives cash and ProLogis common shares in the merger will recognize gain, if any, but not loss, on the stockholder’s shares of Catellus common stock, although any recognized gain would not exceed the amount of cash received in the merger. For a more detailed description of the tax consequences of the merger, see the section of this document entitled “Material U.S. Federal Income Tax Considerations — Tax Consequences of the Merger.”
		The tax consequences of the merger to you will depend on your own situation, including your basis in your shares. You are urged to consult your tax advisor for a full understanding of the U.S. federal, state, local and foreign tax consequences of the merger to you.

Q:		Where and when are the special meetings?
A:		ProLogis Shareholders. The ProLogis special meeting will take place at                     , on                     , 2005, at       a.m., Mountain time.
		Catellus Stockholders. The Catellus special meeting will take place at                     , on                     , 2005, at       a.m., Pacific time.
Q:		Who is entitled to vote?
A:		Holders of record of ProLogis common shares or Catellus common stock at the close of business on                     , 2005, the record date for the ProLogis and Catellus special meetings, are entitled to vote at their respective special meetings. On that date, there were                     ProLogis common shares outstanding and entitled to vote and                      shares of Catellus common stock outstanding and entitled to vote.
Q:		How do I cast my vote?
A:		If you are a ProLogis shareholder or a Catellus stockholder of record, you may vote in person at your special meeting or submit a proxy for your special meeting. You can submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage-paid envelope. You may also instruct the proxy holders how to vote by telephone or through the internet by following the instructions on your proxy card.

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Q:		What vote is required?
A:		ProLogis Shareholders. The affirmative vote of the holders of at least a majority of the votes cast in person or by proxy at the ProLogis special meeting is required to approve the issuance of ProLogis common shares contemplated by the merger agreement, provided that the total votes cast represent at least a majority of the ProLogis common shares entitled to vote.
		Catellus Stockholders. The affirmative vote in person or by proxy of the holders of at least a majority of the outstanding shares of Catellus common stock is required to adopt the merger agreement.
Q:		Can I change my vote after I have granted my proxy?
A:		Yes. You may revoke your proxy and change your vote at any time before your proxy is voted at your special meeting by following the procedures set forth under the section of this document entitled “The Special Meetings — Voting Procedures — Revocation or Change of Proxy.”
Q:		What happens if I do not indicate how I want to vote, do not vote or abstain from voting on the merger?
A:		ProLogis Shareholders. If you are a ProLogis shareholder and you sign and send in your proxy but do not indicate how you want to vote on the issuance of ProLogis common shares contemplated by the merger agreement, your proxy will be voted in favor of the approval of the issuance of ProLogis common shares contemplated by the merger agreement. Assuming the votes cast represent over 50% of the then-outstanding ProLogis common shares, if you do not submit your proxy and do not vote on the approval of the issuance of ProLogis common shares contemplated by the merger agreement at your special meeting, or if you abstain, then your shares will not be counted and will not affect the vote.
		Catellus Stockholders. If you are a Catellus stockholder and you sign and send in your proxy but do not indicate how you want to vote on the merger, your proxy will be voted in favor of the proposal to adopt the merger agreement. If you do not submit your proxy and do not vote on the merger at your special meeting, or if you abstain, it will have the effect of a vote against the proposal.
Q:		If my shares are held in “street name” by my broker, will my broker vote my shares for me?
A:		No. Your broker will NOT vote your ProLogis common shares or Catellus common stock unless you tell the broker how to vote. To do so, you should follow the directions that your broker provides you.

Q:		How does a Catellus stockholder elect the type of merger consideration that the stockholder prefers to receive?
A:		Each Catellus stockholder is being sent an election form under separate cover concurrently with the mailing of this document. Each Catellus stockholder has the right to submit an election form indicating whether the stockholder prefers to receive the merger consideration in the form of ProLogis common shares, cash, or a combination of both, or whether the stockholder has no preference.
		Catellus stockholder elections will be reallocated and prorated after the deadline for submitting the election forms has passed in order to fix the cash portion of the merger consideration at $1.255 billion, which means that the total consideration paid by ProLogis pursuant to the merger agreement will consist of about 65% ProLogis common shares and about 35% cash. Accordingly, a Catellus stockholder may actually receive a combination of ProLogis common shares and cash that is different than what that stockholder elects, depending on the elections made by other Catellus stockholders.
		In order to make a timely election, your properly completed, signed election form must be received by ProLogis’ exchange agent by 5:00 p.m., Eastern time, on                     , 2005, which is one business day before the Catellus special meeting. See the sections of this document entitled “The Merger Agreement — Catellus Stockholder Elections” and “The Merger Agreement — Reallocation and Proration of Catellus Stockholder Elections.”

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Q:		Should I send in my Catellus stock certificates now?
A:		Yes. You must return your Catellus common stock certificates with your completed and signed election form to the exchange agent before 5:00 p.m., Eastern time, on                     , 2005, in accordance with the instructions in the election form (unless you hold your shares in book entry form) or your election will not be valid. A return envelope is enclosed with your election form for submitting the election form and Catellus stock certificates to the exchange agent. This is different from the envelope in which to return your completed proxy card that is enclosed with this document. Please do not include your Catellus stock certificates or election form in the envelope provided for your proxy card. If you do not send your Catellus stock certificates to the exchange agent with your election form, then following the completion of the merger, the exchange agent will send to you a transmittal letter containing written instructions for surrendering your stock certificates in order to receive the merger consideration. If the merger is not completed for any reason, any Catellus stock certificates that you send to the exchange agent will be returned to you.

Q:		Who can answer my questions?
A:		ProLogis Shareholders. ProLogis shareholders who have questions about the merger or want additional copies of this document or additional proxy cards should contact:
		Georgeson Shareholder Services 17 State Street — 10th Floor New York, New York 10005 (866) 729-6804
		Catellus Stockholders. Catellus stockholders who have questions about the merger or want additional copies of this document, additional proxy cards or an additional election form should contact:
		Georgeson Shareholder Services 17 State Street — 10th Floor New York, New York 10005 (866) 729-6804

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	The operations of ProLogis and Catellus may not be integrated successfully, and the intended benefits of the merger may not be realized.

	If you receive ProLogis common shares in exchange for your shares of Catellus common stock, the market value of the merger consideration you receive will depend on the market price of ProLogis common shares at the effective time of the merger and may decrease if the market value of ProLogis common shares decreases.

	ProLogis and Catellus expect to incur significant costs and expenses in connection with the merger, which could result in the combined company not realizing some of the anticipated benefits of the merger.

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	Catellus’ executive officers and directors have interests in the merger that may conflict with your interests.

	•	the merger agreement provides that Nelson C. Rising, the Chairman of the Board and Chief Executive Officer of Catellus, and Christine Garvey, a current member of Catellus’ board of directors, will be appointed to ProLogis’ board of trustees upon completion of the merger;
	•	the executive officers of Catellus are parties to employment agreements or memoranda of understanding with Catellus that entitle them to certain severance and other benefits if their employment terminates following a change in control, which if all of Catellus’ executive officers (excluding Ted R. Antenucci, President of Catellus Commercial Development Corporation) were terminated would result in aggregate payments to such Catellus executive officers of approximately $16.37 million (excluding the gross-up payment to be made to Mr. Hosler);
	•	the executive officers and directors of Catellus will receive payments consisting of ProLogis common shares and cash totalling approximately $65.0 million in the aggregate in connection with the cancellation of their Catellus restricted stock, restricted stock units and stock options in accordance with the terms of the merger agreement;
	•	Mr. Antenucci has entered into an employment agreement with ProLogis, which provides for his employment as ProLogis’ President of Global Development, that will become effective upon completion of the merger for a term ending on December 31, 2007;
	•	the merger agreement provides that Catellus may pay to all Catellus employees entitled to receive a bonus, including Catellus’ executive officers, up to a full-year bonus for 2005, which would result in payments to Catellus’ executive officers of up to approximately $3.7 million in the aggregate; and
	•	the merger agreement provides that ProLogis will indemnify Catellus’ directors and executive officers as described in the section of this document entitled “The Merger Agreement — Covenants and Other Agreements — Indemnification; Directors’ and Officers’ Insurance.”

	ProLogis and Catellus may incur substantial expenses and payments, and may suffer other business disruptions and adverse market reactions, if the merger does not occur.

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	The termination fees may discourage other companies from trying to acquire Catellus.

	Catellus is subject to pending tax audits, which may result in payments in excess of the current liability related to these audits that is reflected in the unaudited pro forma condensed consolidated balance sheet included in this document.

	There are uncertainties relating to Catellus’ estimate of its “earnings and profits” attributable to C-corporation taxable years.

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	Catellus and Palmtree Acquisition Corporation may fail to qualify as REITs.

	General economic conditions and other events or occurrences that affect areas in which ProLogis’ and Catellus’ properties are geographically concentrated, such as California, may impact financial results and the market price of ProLogis common shares.

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	•	changes in the general economic climate;
	•	increases in interest rates;
	•	local conditions, such as an oversupply of distribution space or a reduction in demand for distribution space in an area;
	•	the attractiveness of ProLogis’ properties to potential customers;
	•	competition from other available properties;
	•	ProLogis’ ability to provide adequate maintenance of, and insurance on, its properties;
	•	ProLogis’ ability to control variable operating costs;
	•	governmental regulations, including zoning, usage and tax laws and changes in these laws; and
	•	potential liability under, and changes in, environmental, zoning and other laws.

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	•	development opportunities may be abandoned and the related investments may be written off;
	•	construction costs of a property may exceed the original estimates or construction may not be concluded on schedule, which could make the project less profitable than originally estimated (specific risks include the possibility of contract default, the effects of local weather conditions, the possibility of local or national strikes and the possibility of shortages in materials, building supplies or energy and fuel for equipment); and
	•	occupancy levels and the rents that can be charged for a completed project may not make the project as profitable as originally estimated.

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			ProLogis Common Shares												Shares of Catellus Common Stock
											Dividends/												Dividends/
			High				Low				Distributions				High				Low				Distributions
2003
	First Quarter		$	26.60			$	23.63			$	0.36			$	21.70			$	18.85				—
	Second Quarter		$	28.60			$	25.60			$	0.36			$	23.35			$	20.92				—
	Third Quarter		$	30.39			$	26.97			$	0.36			$	24.75			$	22.00			$	0.30
	Fourth Quarter		$	32.62			$	28.34			$	0.36			$	26.61			$	21.75			$	4.10	(1)
2004
	First Quarter		$	36.00			$	30.80			$	0.365			$	27.35			$	23.95			$	0.27
	Second Quarter		$	36.39			$	27.62			$	0.365			$	26.43			$	20.46			$	0.27
	Third Quarter		$	36.95			$	32.74			$	0.365			$	27.87			$	24.26			$	0.27
	Fourth Quarter		$	43.33			$	35.30			$	0.365			$	32.20			$	26.65			$	0.72	(2)
2005
	First Quarter		$	43.50			$	36.68			$	0.37			$	30.78			$	26.29			$	0.27
	Second Quarter		$	42.34			$	36.50			$	0.37			$	34.20			$	26.25			$	0.27
	Third Quarter (through           , 2005)

(1)	Includes a regular cash dividend of $0.27 for the fourth quarter ended December 31, 2003 and a one-time special distribution of $3.83 of accumulated earnings and profits, or E&P, paid on December 18, 2003 to Catellus stockholders of record on November 4, 2003 in connection with Catellus’ conversion to a REIT. Because a REIT is not permitted to retain E&P accumulated during the years when it or its predecessor was taxed as a C-corporation, Catellus paid a one-time special distribution to distribute all of its accumulated E&P.
(2)	Includes a regular cash dividend of $0.27 for the fourth quarter ended December 31, 2004 and a special dividend of $0.45 in connection with the sale of certain non-core assets and other taxable REIT subsidiary activities, which were both paid on January 18, 2005 to Catellus stockholders of record on December 28, 2004.

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		ProLogis		Catellus
Time, Place and Date		, 2005           a.m., Mountain time [Address]		, 2005           a.m., Pacific time [Address]
		The special meeting may be adjourned or postponed to another date or place for proper purposes, including for the purpose of soliciting additional proxies. See the section of this document entitled “The Merger Agreement — Covenants and Other Agreements — Other Agreements Relating to the Period Before the Effective Time.”		The special meeting may be adjourned or postponed to another date or place for proper purposes, including for the purpose of soliciting additional proxies. See the section of this document entitled “The Merger Agreement — Covenants and Other Agreements — Other Agreements Relating to the Period Before the Effective Time.”
Purposes		• To consider and vote on the approval of the issuance of ProLogis common shares of beneficial interest contemplated by the Agreement and Plan of Merger, dated as of June 5, 2005, by and among ProLogis, Palmtree Acquisition Corporation and Catellus; and • To transact any other business as may properly come before the special meeting or any adjournments or postponements of the special meeting. At the present time, ProLogis knows of no other matters that will be presented for consideration at the special meeting.		• To consider and vote on the adoption of the Agreement and Plan of Merger, dated as of June 5, 2005, by and among ProLogis, Palmtree Acquisition Corporation and Catellus, pursuant to which Catellus will merge with and into Palmtree Acquisition Corporation; and • To transact any other business as may properly come before the special meeting or any adjournments or postponements of the special meeting. At the present time, Catellus knows of no other matters that will be presented for consideration at the special meeting.
Quorum		Presence, in person or by proxy, of a majority of the holders of the outstanding ProLogis common shares entitled to vote at the special meeting. Abstentions and broker non-votes represented at the meeting will be counted for determining whether a quorum is present.		Presence, in person or by proxy, of stockholders holding a majority of the shares of Catellus common stock entitled to vote at the special meeting. Abstentions and broker non-votes represented at the meeting will be counted for determining whether a quorum is present.
Record Date		Close of business on           , 2005.		Close of business on           , 2005.

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		ProLogis		Catellus
Shares Entitled to Vote		• You may vote at the ProLogis special meeting if you owned ProLogis common shares as of the record date. • You may cast one vote for each ProLogis common share that you owned on the record date.		• You may vote at the Catellus special meeting if you owned Catellus common stock as of the record date. • You may cast one vote for each share of Catellus common stock that you owned on the record date.
Recommendations of the Boards		ProLogis’ board of trustees has approved the merger agreement and the merger and declared that the merger agreement and the merger are advisable and in the best interests of ProLogis and its shareholders. One ProLogis trustee was not present at the board meeting at which the merger agreement was approved but has stated that he fully supports the other trustees’ actions in approving the merger agreement. ProLogis’ board of trustees unanimously recommends that ProLogis shareholders vote “FOR” approval of the issuance of ProLogis common shares contemplated by the merger agreement.		Catellus’ board of directors has approved the merger agreement and the merger and declared that the merger agreement and the merger are advisable and fair to, and in the best interests of, Catellus and its stockholders. Catellus’ board of directors unanimously recommends that Catellus stockholders vote “FOR” the adoption of the merger agreement.
Votes Required		Approval of the Issuance of ProLogis Common Shares • The affirmative vote of the holders of at least a majority of the votes cast in person or by proxy is required to approve the issuance of ProLogis common shares contemplated by the merger agreement, provided that the total votes cast represent at least a majority of the ProLogis common shares entitled to vote.		Adoption of the Merger Agreement • The affirmative vote in person or by proxy of the holders of at least a majority of the outstanding shares of Catellus common stock is required to adopt the merger agreement. • Abstentions will have the same effect as votes against the adoption of the merger agreement.

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		ProLogis		Catellus
Votes Required — (continued)		• Abstentions will not affect the outcome of the vote with respect to the issuance of ProLogis common shares contemplated by the merger agreement, unless the holders of less than a majority of the ProLogis common shares vote, in which case abstentions will have the effect of a vote against the proposal. • Assuming a quorum is present, the failure of a ProLogis shareholder to vote in person or by proxy will not affect the outcome of the ProLogis vote.		• The failure of a Catellus stockholder to vote in person or by proxy will also have the effect of a vote against the adoption of the merger agreement.
Shares Outstanding		As of the record date, there were           ProLogis common shares outstanding and entitled to vote.		As of the record date, there were           shares of Catellus common stock outstanding and entitled to vote.
		A proxy card will be sent to each ProLogis shareholder and
Voting Procedures		Catellus stockholder of record. If submitted your proxy, clearly indic revoked your proxy, your shares wil have timely and properly submitted indicated your vote, your shares wi to approve the issuance of ProLogis the merger agreement, in the case o “FOR” the proposal to adopt the m Catellus stockholders.		you have timely and properly ated your vote and have not l be voted as indicated. If you your proxy but have not clearly ll be voted “FOR” the proposal common shares contemplated by f ProLogis shareholders, and erger agreement, in the case of
		If any other matters are properly presented at the meeting for consideration, the persons named in your proxy will have the discretion to vote on these matters in accordance with their best judgment. Proxies voted against the proposals related to the merger will not be voted in favor of any adjournment or postponement of the meeting for the purpose of soliciting additional proxies.
		Voting by ProLogis Shareholders ProLogis shareholders may vote, or instruct the proxy holder how to vote, using any of the following methods: • phone the toll-free number listed on your proxy card and follow the recorded instructions;		Voting by Catellus Stockholders Catellus stockholders may vote, or instruct the proxy holder how to vote, using any of the following methods: • phone the toll-free number listed on your proxy card and follow the recorded instructions;

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		ProLogis		Catellus
Voting Procedures — (continued)		• go to the internet website listed on your proxy card and follow the instructions provided; • complete, sign and mail your proxy card in the postage-paid envelope; or • attend the special meeting and vote in person.		• go to the internet website listed on your proxy card and follow the instructions provided; • complete, sign and mail your proxy card in the postage-paid envelope; or • attend the special meeting and vote in person.
		Revocation or Change of Proxy ProLogis shareholders may revoke or change their proxy at any time prior to its exercise by: • giving written notice of revocation to the Secretary of ProLogis; • appearing and voting in person at the ProLogis special meeting; • phoning the toll-free number listed on your proxy card and following the recorded instructions (no later than 11:59 p.m., Eastern time, on           ); • going to the internet website listed on your proxy card and following the instructions provided (no later than 11:59 p.m., Eastern time, on           ); or • properly completing and executing a later dated proxy and delivering it to the Secretary of ProLogis at or before the ProLogis special meeting. Your presence, without voting at the meeting, will not automatically revoke your proxy, and any revocation during the meeting will not affect votes previously taken.		Revocation or Change of Proxy Catellus stockholders may revoke or change their proxy at any time prior to its exercise by: • giving written notice of revocation to the Secretary of Catellus; • appearing and voting in person at the Catellus special meeting; • phoning the toll-free number listed on your proxy card and following the recorded instructions (no later than 11:59 p.m., Eastern time, on           ); • going to the internet website listed on your proxy card and following the instructions provided (no later than 11:59 p.m., Eastern time, on           ); or • properly completing and executing a later dated proxy and delivering it to the Secretary of Catellus at or before the Catellus special meeting. Your presence, without voting at the meeting, will not automatically revoke your proxy, and any revocation during the meeting will not affect votes previously taken.

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		ProLogis		Catellus
Voting Procedures — (continued)		Validity The independent inspectors of election will determine all questions as to the validity, form, eligibility (including time of receipt) and acceptance of proxies. Their determination will be final and binding. ProLogis’ board of trustees has the right to waive any irregularities or conditions as to the manner of voting. ProLogis may accept your proxy by any form of communication permitted by Maryland law so long as ProLogis is reasonably assured that the communication is authorized by you.		Validity The independent inspectors of election will determine all questions as to the validity, form, eligibility (including time of receipt) and acceptance of proxies. Their determination will be final and binding. Catellus’ board of directors has the right to waive any irregularities or conditions as to the manner of voting. Catellus may accept your proxy by any form of communication permitted by Delaware law so long as Catellus is reasonably assured that the communication is authorized by you.
Solicitation of Proxies		The accompanying proxy is being solicited on behalf of ProLogis’ board of trustees. Each of ProLogis and Catellus will pay one-half of the expense of preparing, printing and mailing the proxy and materials used in the solicitation. Georgeson Shareholder Services has been retained by ProLogis and Catellus to aid in the solicitation of proxies from their respective shareholders for an aggregate fee of $25,000 and the reimbursement of out-of-pocket expenses. Proxies may also be solicited from ProLogis shareholders by personal interview, telephone and telegram by ProLogis trustees, officers and employees, who will not receive additional compensation for performing that service. Arrangements also will be made with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of proxy materials to the beneficial owners of ProLogis shares held by those persons, and ProLogis will reimburse them for any reasonable expenses that they incur.		The accompanying proxy is being solicited on behalf of Catellus’ board of directors. Each of ProLogis and Catellus will pay one-half of the expense of preparing, printing and mailing the proxy and materials used in the solicitation. Georgeson Shareholder Services has been retained by ProLogis and Catellus to aid in the solicitation of proxies from their respective shareholders for an aggregate fee of $25,000 and the reimbursement of out-of- pocket expenses. Proxies may also be solicited from Catellus stockholders by personal interview, telephone and telegram by Catellus directors, officers and employees, who will not receive additional compensation for performing that service. Arrangements also will be made with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of proxy materials to the beneficial owners of Catellus shares held by those persons, and Catellus will reimburse them for any reasonable expenses that they incur.

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		ProLogis		Catellus
Shares Held in Street Name		General If you hold your shares in the name of a bank, broker or other nominee, you should follow the instructions provided by your bank, broker or other nominee when voting your shares or when granting or revoking your proxy.
		Absent specific instructions from you, your broker is NOT empowered to vote your shares, also known as “broker non-votes.”
		Effect of Broker Non-Votes Broker non-votes will be counted as present and represented at the ProLogis special meeting and will not affect the outcome of the vote regarding the issuance of ProLogis common shares contemplated by the merger agreement, assuming that the holders of at least a majority of the ProLogis common shares vote.		Effect of Broker Non-Votes Broker non-votes will be counted as present and represented at the Catellus special meeting and will have the same effect as a vote against the adoption of the merger agreement.
Independent Registered Public Accounting Firm		KPMG LLP serves as ProLogis’ independent registered public accounting firm. Representatives of KPMG LLP plan to attend the ProLogis special meeting and will be available to answer appropriate questions. Its representatives will also have an opportunity to make a statement at the special meeting if they so desire, although it is not expected that any such statement will be made.		PricewaterhouseCoopers LLP serves as Catellus’ independent registered public accounting firm. Representatives of PricewaterhouseCoopers LLP plan to attend the Catellus special meeting and will be available to answer appropriate questions. Its representatives will also have an opportunity to make a statement at the special meeting if they so desire, although it is not expected that any such statement will be made.

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	Recommendation of ProLogis’ Board of Trustees and ProLogis’ Reasons for the Merger

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	•	Larger Size. The combined company will have an estimated total market capitalization of $18 billion and is expected to be the sixth largest REIT overall by enterprise value (not including residential mortgage REITs) and about three times the size of the next-largest industrial REIT (as measured by square footage). The combined company will have total assets owned and under management in excess of $21 billion, representing over 350 million square feet. As a result of the larger size:

	•	the combined company is expected to have greater operating and financial flexibility and better access to capital markets;
	•	the combined company should be better positioned for future growth through development, fund contributions, management fees and free cash flow; and
	•	the combined company should be able to consider future transactions that would not otherwise be possible.

	•	Enhanced North American Property Portfolio in Key Markets. Catellus’ property portfolio includes a significant number of high quality bulk distribution assets that will increase ProLogis’ presence in the top six distribution markets in the United States (Northern California, Southern California, Chicago, Northern New Jersey, Dallas and Atlanta). Approximately 82% of Catellus’ industrial properties are located in those six markets, as compared to approximately 39% of ProLogis’ North American portfolio. After the merger, approximately 45% of the combined company’s North American industrial portfolio square footage will be located in those six markets.
	•	Increased Development Property Base and Capabilities. Catellus owns a significant number of development properties, including land positions that would support approximately 29 million buildable square feet in the United States. ProLogis believes that many of these properties are, or will be, good candidates for future delivery to property funds managed by the combined company. ProLogis also believes that the Catellus employees who are expected to continue with the combined company, including Ted R. Antenucci (currently the President of Catellus Commercial Development Corporation), will deepen and enhance ProLogis’ development capabilities.
	•	Improved Overall Property Portfolio Age. As of December 31, 2004, the average age of Catellus’ industrial property portfolio was 7.2 years, with approximately 73% of its industrial properties having been built since 1995. ProLogis’ current wholly owned industrial property portfolio in North America has an average age of over 21 years. The disposition of $200 million to $400 million of ProLogis’ older, less strategic assets and the addition of Catellus’ newer industrial properties is consistent with ProLogis’ strategy to upgrade the quality of its property portfolio.
	•	Deeper Customer Relationships. ProLogis believes that the merger will deepen its relationships with large, repeat multi-national customers. There is a significant overlap between Catellus’ existing customer base and ProLogis’ existing customer base, including eight of Catellus’ top ten customers (based on revenue generated by Catellus in 2004). ProLogis expects that this will provide the combined company with additional development demand and leasing opportunities.
	•	Per Share Accretion. ProLogis expects that the merger will be accretive to its per share funds from operations (FFO) beginning in 2006. ProLogis believes that this accretion will primarily be due to general and administrative cost savings from the merger and the positive impact of integrating Catellus’ development operations into ProLogis’ property fund management business. ProLogis anticipates that significant cost savings will be realized from the merger, primarily from reductions of employee-related costs for asset management and corporate headcount. ProLogis estimates that cost savings achieved from the merger will be between $35 million and $39 million on a full-year basis following completion of the integration.

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	•	Exchange Ratio; Cash Consideration. ProLogis believes that the 0.822 exchange ratio for the portion of the merger consideration that will be paid in ProLogis common shares and the $33.81 per share in cash, without interest, for the cash portion of the merger consideration represent a fair valuation of Catellus from ProLogis’ perspective. ProLogis also believes it is beneficial that both the exchange ratio and the per share cash consideration are fixed and that neither will fluctuate as a result of changes in the price of ProLogis common shares or Catellus common stock.
	•	Opinion of Financial Advisor. ProLogis’ board of trustees also considered the financial presentation of Banc of America Securities, including its opinion, dated June 5, 2005, as to the fairness, from a financial point of view and as of the date of the opinion, to ProLogis of the merger consideration to be paid by ProLogis pursuant to the merger agreement, as more fully described elsewhere in this document.

	•	Integration Risks. The operations, technologies and personnel of the two companies may not be successfully integrated. The merger will include risks commonly associated with similar transactions, including unanticipated liabilities, unanticipated costs and diversion of management’s attention. The combined company may also experience operational interruptions or the loss of key employees or customers.
	•	Tax Considerations Related to Catellus’ Prior Years’ Returns. Catellus is subject to pending audits by the IRS and the California Franchise Tax Board of its 1999 through 2002 income tax returns, including certain of its subsidiaries and partnerships. The unaudited pro forma condensed consolidated balance sheet included in this document reflects a liability that is ProLogis’ management’s best estimate of the liabilities that may arise from these audits. Any tax liability will be assumed by ProLogis in the merger, and ProLogis may need to increase or decrease the amount of the pro forma tax liability after the completion of the merger due to changes in circumstances. The audits may result in an adjustment in which the actual liabilities or settlement costs, including interest and potential penalties, may prove to be more than the liability reflected in the unaudited pro forma condensed consolidated balance sheet. If the actual amount proves to be more than the reflected liability, then ProLogis will be required to make payments in an amount in excess of the reflected liability. ProLogis will also need to increase the pro forma liability by an accrual of interest after the completion of the merger. Any change in the liability after the merger (other than accrued interest) will be reflected in goodwill.
	•	Tax Considerations Related to Catellus’ Recent Conversion to a REIT. Palmtree Acquisition Corporation, as the surviving corporation of the merger, will be subject to a federal corporate level tax at the highest regular corporate rate (currently 35%) on any gain recognized within ten years of Catellus’ conversion to a REIT from a sale of any assets that Catellus held at the effective time of its election to be a REIT, but only to the extent of the built-in-gain based on the fair market value of those assets on the effective date of the REIT election (which was January 1, 2004). ProLogis does not currently expect to dispose of any of those assets during that ten-year period if such a disposition would result in the imposition of a material tax liability unless ProLogis can elect a tax-deferred exchange of the property. However, certain assets are subject to third party purchase options that may require ProLogis to sell such assets, and those assets may carry deferred tax liabilities that would be triggered on such sales. Further, ProLogis’ plans may change, and, if such plans do change or if a purchase option is exercised, ProLogis may not be successful in structuring a tax-deferred exchange.
	•	Uncertainty as to Accretion. The combined company may not realize the accretion to per share FFO that ProLogis expects from the merger. It is possible that the merger may be dilutive to per share FFO or one or more other measures of the combined company’s financial performance in the

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		future. Future events that could reduce or eliminate such accretion or cause such dilution include adverse changes in:

	•	the expected costs of the merger and the expected costs of integrating Catellus’ business with ProLogis’ business;
	•	the combined company’s ability to contribute, and the timing of contribution of, certain of Catellus’ development properties into property funds managed by the combined company and recognition of the gains related to those contributions;
	•	the combined company’s ability to achieve anticipated cost savings from the merger;
	•	the pending IRS and California Franchise Tax Board audits of Catellus’ prior years’ tax returns or the resolution or settlement of any issues that may arise from those audits;
	•	competitive conditions;
	•	environmental remediation costs and compliance expenses related to the combined company’s properties;
	•	costs to develop existing and future properties; and
	•	general economic conditions and their effect on the REIT industry, including the combined company.

	•	Expenses of the Merger. ProLogis and Catellus are expected to incur one-time, pre-tax closing costs of approximately $50.8 million in connection with the merger and one-time pre-tax expenses of approximately $39.2 million related to change in control provisions triggered by the merger and severance expenses related to headcount reductions after the merger is completed. ProLogis also expects to incur one-time, pre-tax cash and non-cash costs related to the integration of ProLogis and Catellus, which cannot be estimated at this time. The combined company may incur additional unanticipated costs and expenses in connection with the merger.
	•	Possible Repayment/ Refinancing of Catellus’ Existing Debt. Completion of the merger could trigger a mandatory prepayment (including a penalty in some cases) of approximately $542 million of Catellus’ existing debt unless appropriate lender consents or waivers are received. If those consents and waivers cannot be obtained prior to completion of the merger, Catellus’ existing debt might need to be repaid and/or refinanced. This may result in higher-than-anticipated transaction expenses to ProLogis.
	•	Fixed Merger Consideration. The exchange ratio and the per share cash consideration in the merger are fixed and will not fluctuate as a result of changes in the price of ProLogis common shares or Catellus common stock. While ProLogis believes that the merger consideration represents a fair valuation of Catellus from ProLogis’ perspective and that the fixed nature of the merger consideration is beneficial, it is possible that changes in the price of ProLogis common shares and/or Catellus common stock could cause the premium being paid by ProLogis to acquire Catellus to increase.
	•	Investors’ and Analysts’ View of the Merger. The merger might be viewed negatively by investors or analysts. This could adversely affect the market price of ProLogis common shares before the merger or the combined company’s share price after the merger.
	•	Non-Industrial Assets. Catellus owns and leases non-industrial assets, such as office, hotel, residential and retail properties, that ProLogis does not have significant experience owning and operating. If ProLogis fails to successfully operate these non-industrial assets, the market price of ProLogis common shares may decline. In addition, if ProLogis determines to sell these non-industrial assets over time, it may not be successful in doing so or may not do so at attractive prices, which could also adversely affect the market price of ProLogis common shares.

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	•	Closing Conditions May Not Be Satisfied. The merger might not be completed as a result of a failure to satisfy the conditions contained in the merger agreement or other reasons. Neither ProLogis nor Catellus is obligated to complete the merger unless the conditions in the merger agreement are satisfied or, in some cases, waived.
	•	Other Risks. ProLogis’ board of trustees also considered the other factors described in the section of this document entitled “Risk Factors.”

	•	the premium, which is approximately 16.1% based on the closing sales price per share of Catellus common stock on June 3, 2005 (the last full trading day before the proposed merger was announced), that Catellus stockholders would receive for their shares of Catellus common stock in the merger;
	•	the Catellus board of directors’ belief that the combination of Catellus and ProLogis allows Catellus stockholders to participate in a stronger combined company based on the anticipated greater operational and financial flexibility of the combined company;

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	•	the expected increase in dividends to Catellus stockholders who receive ProLogis common shares, which based on the current dividend rate of each company would be about 13% per share per year;
	•	the right of Catellus stockholders to elect merger consideration in the form of ProLogis common shares or cash, subject to the restriction that no more than $1.255 billion (or approximately 35%) of the Catellus common stock will be exchanged for cash;
	•	the Catellus board of directors’ belief that the combined company will have greater access to capital than Catellus currently has in view of:

	•	ProLogis’ demonstrated access to the public preferred and common equity capital markets, as well as global private capital markets through its property funds;
	•	ProLogis’ investment grade credit ratings (BBB+/ Baa1) and strong borrowing capacity; and
	•	the fact that ProLogis has a larger credit facility than Catellus;

	•	the geographic and tenant diversification and customer and other synergies that are expected by combining the two companies, as well as the additional revenue opportunities afforded by ProLogis’ fund model;
	•	the expectation that the combined company will offer the world’s largest networks of distribution facilities and services, resulting in the opportunity to deepen relationships with multinational customers;
	•	the Catellus board of directors’ familiarity with Catellus’ business and industry, and its belief, after consultation with its financial advisor, that it was unlikely that another party would have the ability to meet or exceed the economic and other terms being offered by ProLogis;
	•	the increased liquidity resulting from ProLogis having significantly larger trading volumes than Catellus and the larger, more diverse stockholder base of the combined company;
	•	other terms of the merger agreement, including:

	•	Catellus’ board of directors has the right to respond to, and engage in discussions or negotiations regarding, unsolicited third party proposals for competing transactions under specified circumstances if the Catellus board concludes in good faith that the proposal is reasonably likely to result in a superior competing transaction;
	•	as a condition to closing, the merger must qualify as a tax-free reorganization under the Internal Revenue Code with respect to holders of shares of Catellus common stock (see the section of this document entitled “Material U.S. Federal Income Tax Considerations”);
	•	the fact that the completion of the merger is not conditioned on ProLogis’ obtaining third party consents or financing; and
	•	the requirement for ProLogis to pay termination expenses to Catellus of $20 million if the merger agreement is terminated because of a breach by ProLogis or if the required ProLogis shareholder approval is not obtained;

	•	the fact that ProLogis agreed to appoint Nelson C. Rising and one other member of Catellus’ board of directors to ProLogis’ board of trustees;
	•	the opinion of Morgan Stanley that, as of the date of the opinion, and subject to and based on the assumptions made, procedures followed, matters considered and limitations of the review undertaken as set forth in its opinion, the consideration to be received by holders of Catellus common stock pursuant to the merger agreement was fair, from a financial point of view, to such holders;
	•	the results of the due diligence review of, among other things, ProLogis’ business and operations, financial condition and management practices and procedures, conducted on behalf of Catellus’

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		board of directors by Catellus’ financial, accounting and legal advisors, as well as senior management; and
	•	the compensation and severance arrangements proposed to be entered into in connection with the merger were viewed as reasonable and at the low end of the typical cost range by Mercer Human Resource Consulting.

	•	a significant portion of the consideration to be received by Catellus stockholders will be in the form of ProLogis common shares at a conversion rate that does not adjust to account for fluctuations in the market price of ProLogis common shares between signing and closing;
	•	the potential negative effect on Catellus’ ability to retain key employees as a result of the public announcement of the merger or, possibly, the termination of the merger agreement;
	•	the risk that the anticipated strategic and financial benefits of the merger may not be realized;
	•	the potential for significant loss of value by Catellus stockholders, as well as the potential negative impact upon the operations and prospects of an independent Catellus, in the event that the merger is not completed, resulting from, among other things:

	•	the significant costs and substantial management time and effort to effectuate the merger;
	•	the requirement for Catellus to pay a termination fee of $90 million to ProLogis under certain specified circumstances; and
	•	the requirement for Catellus to pay termination expenses to ProLogis of $8 million if, among other circumstances, the merger agreement is terminated because of a breach by Catellus or if the required Catellus stockholder approval is not obtained; and

	•	the potential benefits to some of Catellus’ directors and executive officers, including severance payments and acceleration of vesting of stock options, restricted stock and restricted stock units (see the section of this document entitled “The Merger — Interests of Catellus’ Executive Officers and Directors in the Merger”).

	Opinion of Banc of America Securities LLC — Financial Advisor to ProLogis

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	•	reviewed publicly available financial statements and other business and financial information of ProLogis and Catellus, respectively;
	•	reviewed internal financial statements and other financial and operating data concerning ProLogis and Catellus, respectively;
	•	reviewed financial forecasts relating to ProLogis and Catellus provided to or discussed with Banc of America Securities by the managements of ProLogis and Catellus, respectively;
	•	reviewed and discussed with ProLogis’ senior executives information relating to cost savings and strategic, financial and operational benefits anticipated by ProLogis’ management to result from the merger;
	•	discussed with ProLogis’ senior executives the past and current operations and financial condition of ProLogis and Catellus and their prospects, and discussed with Catellus’ senior executives the past and current operations, financial condition and prospects of Catellus;
	•	reviewed the potential pro forma financial impact of the merger on ProLogis’ funds from operations per share and financial ratios;
	•	reviewed the reported prices and trading activity for ProLogis common shares and Catellus common stock;
	•	compared the financial performance of ProLogis and Catellus and the prices and trading activity of ProLogis common shares and Catellus common stock with each other and with that of certain other publicly traded companies which Banc of America Securities deemed relevant;
	•	compared financial terms of the merger to financial terms, to the extent publicly available, of certain other business combination transactions which Banc of America Securities deemed relevant;
	•	participated in discussions and negotiations among representatives of ProLogis, Catellus and their respective advisors;

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	•	reviewed the merger agreement; and
	•	performed other analyses and considered other factors as Banc of America Securities deemed appropriate.

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	Catellus Analyses

Implied Per Share		Implied Blended Per Share
Equity Reference Range for Catellus		Value of Merger Consideration
$30.98 - $34.28		$33.91

	•	CenterPoint Properties Trust;
	•	AMB Property Corporation;
	•	EastGroup Properties, Inc.;
	•	Liberty Property Trust;
	•	Duke Realty Corporation;
	•	First Industrial Realty Trust, Inc.; and
	•	ProLogis.

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Implied Per Share Equity Reference Ranges
for Catellus Based on:
								Implied Blended Per Share
2005E FFO				2006E FFO				Value of Merger Consideration
	$27.81 - $29.47				$27.60 - $29.36			$33.91

Selected Non-Industrial REIT Transactions
Announcement Date		Acquiror		Target
10/4/04		Camden Property Trust			Summit Properties Inc.
8/20/04		General Growth Properties, Inc.			Rouse Co.
6/21/04		Simon Property Group, Inc.			Chelsea Property Group, Inc.

Selected Industrial/Office REIT Transactions
Announcement Date		Acquiror		Target
5/3/04		ProLogis			Keystone Property Trust
10/28/01		CalWest Industrial			Cabot Industrial
2/23/01		Equity Office Properties			Spieker Properties, Inc.
3/1/99		Duke Realty Investments Inc.			Weeks Corporation
11/17/98		ProLogis Trust			Meridian Industrial Trust, Inc.

Implied Per Share Equity Reference Range for		Implied Blended Per Share
Catellus Based on Latest 12 Months FFO		Value of Merger Consideration
$24.58 - $33.58		$33.91

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Implied Per Share		Implied Blended Per Share
Equity Reference Range for Catellus		Value of Merger Consideration
$28.85 - $36.39		$33.91

Premiums Implied in

Merger Based on

Median Premiums Paid in Selected

Implied Blended Per

Transactions

Share Value of

Merger

Specified Period:

All Cash

All Stock

Mixed Consideration

Consideration

One day

13.3%

10.1%

12.5%

15.5%

Two-week average

16.0%

9.2%

12.9%

16.1%

	ProLogis Analysis

	•	CenterPoint Properties Trust;
	•	AMB Property Corporation;
	•	EastGroup Properties, Inc.;
	•	Liberty Property Trust;

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	•	Duke Realty Corporation;
	•	First Industrial Realty Trust, Inc.; and
	•	Catellus.

Implied

Multiples for

Selected

Companies

Implied Multiples

Closing Share Price as Multiple of:

High

Low

for Prologis

2005E FFO

18.1x

11.2x

16.1x

2006E FFO

16.6x

10.7x

14.3x

	Historical Exchange Ratio Analysis

						Premium Implied by 0.822
Specified Period:		Exchange Ratio				Merger Exchange Ratio
June 2, 2005			0.711				15.7	%
Six-month average			0.714				15.1	%
One-year average			0.736				11.6	%
One-year high			0.798				3.0	%
One-year low			0.689				19.3	%

	Pro Forma Merger Accretion/ Dilution Analysis

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	Other Factors

	•	the annual general and administrative savings estimated by the managements of ProLogis and Catellus to be realized from the merger and the estimated per share value range attributable to such savings;
	•	historical FFO multiples of a composite of companies in the industrial REIT sector and a composite of large-cap REITs during the period from January 1, 2002 through June 2, 2005;
	•	historical trading prices and trading volumes of ProLogis common shares and Catellus common stock during the two-year period ended June 2, 2005, and historical trading volumes of ProLogis common shares and Catellus common stock at various price ranges during the 12-month period ended June 2, 2005;
	•	the relationship between movements in the indexed total return on ProLogis common shares, Catellus common stock, a composite of selected REITs and the Morgan Stanley REIT Index during the two-year period ended June 2, 2005;
	•	FFO payout and leverage ratios of each of ProLogis and Catellus on a stand-alone basis and of ProLogis pro forma for the merger; and
	•	publicly available research analysts’ reports for ProLogis and Catellus, including FFO estimates reflected in those reports.

	Miscellaneous

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	Opinion of Morgan Stanley & Co. Incorporated — Financial Advisor to Catellus

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	•	reviewed certain publicly available financial statements and other business and financial information of Catellus and ProLogis, respectively;
	•	reviewed certain internal financial statements and other financial and operating data concerning Catellus and ProLogis prepared by the managements of Catellus and ProLogis, respectively;
	•	reviewed certain internal financial projections prepared by the managements of Catellus and ProLogis, respectively;
	•	discussed the past and current operations and financial condition and the prospects of Catellus and ProLogis with senior executives of Catellus and ProLogis, respectively;
	•	reviewed the reported prices and trading activity for Catellus common stock and ProLogis common shares;
	•	compared the financial performance of Catellus and ProLogis and the prices and trading activity of Catellus common stock and ProLogis common shares with that of certain other publicly-traded companies comparable with Catellus and ProLogis, respectively, and their securities;
	•	reviewed the financial terms, to the extent publicly available, of certain comparable transactions;
	•	reviewed information relating to certain strategic, financial and operational benefits anticipated from the merger, prepared by the management of ProLogis;
	•	reviewed the pro forma impact of the merger on ProLogis’ funds from operations per share, consolidated capitalization, and financial ratios;
	•	participated in discussions and negotiations among representatives of Catellus, Catellus’ legal advisors, ProLogis, and ProLogis’ financial and legal advisors;
	•	reviewed the draft merger agreement dated June 5, 2005 and certain related documents; and
	•	considered such other factors and performed such other analyses as Morgan Stanley deemed appropriate.

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	Catellus Standalone Valuation

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																		“Same Way”
						Implied												Implied
						Merger								“Same Way”				Merger
For the Period Ending June 3, 2005		Catellus				Consideration				ProLogis				Implied Offer				Consideration
(Unless Otherwise Noted)		Share Price				Premium				Share Price				Price(1)				Premium
May 18, 2005		$	28.87				17.1	%		$	41.13			$	33.81				17.1	%
June 3, 2005		$	29.24				16.1	%		$	41.37			$	33.94				16.1	%
Unaffected price(2)		$	28.89				17.5	%		$	41.02			$	33.75				16.8	%
Prior six months average		$	28.43				19.4	%		$	39.77			$	33.08				16.4	%
Prior 12 months average		$	27.70				22.5	%		$	37.67			$	31.96				15.4	%
June 3, 2004		$	24.49				38.6	%		$	32.10			$	28.98				18.4	%
All-time high closing		$	32.04				5.9	%		$	43.33			$	34.98				9.2	%
All-time high closing adjusted for $0.45 special dividend(3)		$	31.59				7.4	%			—				—				—
Prior 12 months’ implied peer high(4)		$	28.02				21.1	%			—				—				—
Prior 12 months’ implied peer high adjusted for $0.45 special dividend		$	27.57				23.1	%			—				—				—
Wall street average NAV		$	26.27				29.2	%		$	32.99			$	29.46				12.1	%
Green Street NAV		$	26.00				30.5	%		$	32.00			$	28.93				11.3	%

(1)	Represents implied offer price using ProLogis share price for the period shown.
(2)	The unaffected price is the ten day average price as of May 26, 2005, which was five trading days prior to announcement.
(3)	Catellus paid a $0.45 per share special dividend to shareholders of record on December 28, 2004.
(4)	Represents prior 12 months’ implied high price assuming Catellus common stock had performed in line with the index of selected comparable companies.

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	•	AMB Property Corporation;
	•	Bedford Property Investors, Inc.;
	•	CenterPoint Properties Trust;
	•	Duke Realty Corporation;
	•	EastGroup Properties, Inc.;
	•	First Industrial Realty Trust, Inc.;
	•	Liberty Property Trust;
	•	ProLogis; and
	•	PS Business Parks.

	•	share prices (using closing share prices as of June 2, 2005) to consensus 2005 and 2006 funds from operations per share estimates from First Call Corporation;
	•	estimated price/2005 funds from operations multiples to total returns (the sum of existing indicated dividend yield and First Call 5-year growth estimates);
	•	current dividends to the share prices; and
	•	share prices to consensus net asset value per share estimates from a subscription database.

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						Premium to
		Premium to				52-week High				Premium to
		Unaffected Price				Closing Price				Green Street NAV
Mean			14.7	%			4.9	%			16.5	%
Median			12.2	%			3.0	%			12.4	%
Mean Excluding High-End Regional Malls			12.7	%			2.8	%			12.6	%
Median Excluding High-End Regional Malls			11.2	%			2.4	%			8.6	%

						Implied Value Per Share of
		Selected Range				Catellus Common Stock
Premium/ (Discount) to Unaffected Price			10.0% - 20.0%			$	31.78 - $34.67
Premium/ (Discount) to 52-Week High Closing Price			(7.5)% - 7.5%			$	29.64 - $34.44
Premium/ (Discount) to Green Street NAV			5.0% - 30.0%			$	27.30 - $33.80
Average			—			$	29.57 - $34.30

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	Combined Company Valuation

	•	the pro forma equity market capitalization for ProLogis would be approximately $10.4 billion, assuming a share price of $41.32 and assuming approximately 251.7 million ProLogis common shares outstanding after completion of the merger. The pro forma total market capitalization would be approximately $17.1 billion assuming $6.3 billion in debt and $0.4 million of preferred stock; and
	•	ProLogis’ total debt to total market capitalization ratio would increase upon completion of the merger from 36.8% before the merger to 41.2% after the assumption of Catellus’ outstanding debt plus incremental debt incurred for the cash portion of the merger consideration and for the payment of the transaction costs and before any reduction in debt resulting from any asset sales.

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	Representation on ProLogis’ Board of Trustees

	Catellus Employment Agreements

	Employment Agreement with Mr. Rising

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	Memoranda of Understanding with Messrs. Antenucci and Hosler and Ms. Washington

	Memorandum of Understanding with Mr. Wenzell

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	Memorandum of Understanding with Mr. Sham

	Payment of 2005 Bonuses

	Cash Severance Payments under Employment Agreements and Memoranda of Understanding

	Equity Compensation Awards

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		Unvested Restricted				Vested Stock				Unvested Stock				Vested Restricted				Unvested Restricted
		Stock				Options				Options				Stock Units(1)				Stock Units(1)
Executive Officers
Nelson C. Rising		$	—			$	10,434,437			$	—			$	5,582,369			$	11,496,178
Ted R. Antenucci			2,855,153				—				—				961,320				8,690,152
C. William Hosler			1,904,112				—				—				1,237,716				6,196,421
Vanessa L. Washington			476,045				—				—				662,980				3,594,325
Michael Wenzell			1,443,450				—				—				—				353,599
Edward Sham			139,162				13,871				41,497				—				—
Timothy J. Beaudin(2)			—				—				—				—				331,507
Directors (Excluding Mr. Rising)
Peter Barker			—				—				—				—				62,312
Stephen F. Bollenbach			—				536,224				81,333				778,509				130,642
Daryl J. Carter			—				323,484				107,860				929,775				134,057
Richard F. Farman			—				653,729				107,860				28,367				112,182
Christine Garvey			—				539,264				107,860				475,064				118,470
William M. Kahane			—				323,484				107,860				1,350,811				112,182
Leslie D. Michelson			—				53,187				107,860				554,383				129,898
Deanna W. Oppenheimer			—				207,817				81,333				167,055				134,057
Totals		$	6,817,922			$	13,085,497			$	743,463			$	12,728,349			$	31,595,982

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(1)	Where applicable, includes dividend equivalent accruals through the expected July 15, 2005 dividend payment for the second quarter of 2005 and assumes the maximum LTIP payment of 150% of target.
(2)	Mr. Beaudin’s employment with Catellus terminated on February 15, 2005 in accordance with his memorandum of understanding.

	Employment Agreement between Ted R. Antenucci and ProLogis

	•	receive an annual base salary of at least $525,000;
	•	be eligible for an annual target bonus of up to $787,500, with the actual amount of the bonus earned based on the satisfaction of applicable performance targets;
	•	participate in ProLogis’ employee benefit plans made available to similarly situated senior management employees; and
	•	receive monthly allowances for car, health club and country club benefits.

	•	As of the effective time of the merger, Mr. Antenucci will be granted a non-qualified share option with respect to 80,000 ProLogis common shares and, for each 12-consecutive-month period during the term of the employment agreement beginning on the first anniversary of the effective time of the merger, he will be eligible for grants of non-qualified share options with respect to up to an additional 80,000 ProLogis common shares. Generally, on each of the first through fourth anniversaries of the grant date, the non-qualified share options awarded to Mr. Antenucci pursuant to the employment agreement will vest and become exercisable with respect to 25% of the ProLogis common shares subject to such options if Mr. Antenucci remains employed on the applicable vesting date. The non-qualified share options, however, will vest and become immediately exercisable if Mr. Antenucci’s employment with ProLogis is terminated on account of death or permanent disability (each as defined in the employment agreement). In addition, if Mr. Antenucci’s employment terminates prior to December 31, 2007 as a result of termination by ProLogis for cause (as defined in the employment agreement and as discussed in greater detail below) or as a result of his voluntary termination, then on such termination date all of his then-outstanding non-qualified share options will be forfeited.
	•	As of the effective time of the merger, Mr. Antenucci will be granted a performance share award with respect to 16,000 ProLogis common shares. This award will vest on December 31, 2007 unless Mr. Antenucci’s employment with ProLogis is terminated prior to that date by ProLogis for cause or as a result of Mr. Antenucci’s voluntary termination, in which case the award will be forfeited.

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	•	For each year of the term of the agreement, Mr. Antenucci will be eligible for grants of performance share awards with respect to 16,000 ProLogis common shares. Any such awards that are made to Mr. Antenucci will become earned based on the satisfaction of performance targets specified at the time of grant, and any earned ProLogis common shares will become vested on the second annual anniversary of the date on which they are earned if he remains employed on the vesting date. If, however, Mr. Antenucci’s termination of employment occurs prior to December 31, 2007 as a result of termination by ProLogis for cause or as a result of Mr. Antenucci’s voluntary termination, all then-outstanding performance share awards will be forfeited.

	•	his salary for the period ending on the termination date;
	•	payment of any earned target bonuses; and
	•	payment for unused vacation days and other payments or benefits due under any ProLogis employee benefit plan or arrangement.

	•	payment of his base salary for the period from the termination date through the end of the then current term of the employment agreement or, if later, the six month anniversary of the termination date; and
	•	continued coverage under ProLogis’ employment benefit plans for the same period.

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	Indemnification; Directors’ and Officers’ Insurance

	Exemption from Section 16(b) of the Exchange Act

	Change of Control Severance Plans

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	Retention Bonus Plan

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	•	You must deliver to Catellus a written demand for appraisal of your shares of Catellus common stock before the vote on the merger agreement at the Catellus special meeting. This demand will be sufficient if it reasonably informs Catellus of your identity and that you intend by that writing to demand the appraisal of your shares of Catellus common stock. Voting against or abstaining from voting or failing to vote on the proposal to adopt the merger agreement will not constitute a written demand for appraisal within the meaning of Section 262 of the DGCL. The written demand for appraisal must be in addition to and separate from any proxy you deliver or vote you cast in person.
	•	You must not vote your shares of Catellus common stock in favor of the merger agreement. A proxy that does not contain voting instructions will, unless revoked, be voted in favor of the adoption of the merger agreement. Therefore, if you vote by proxy and wish to exercise appraisal rights, you must vote against the adoption of the merger agreement or mark your proxy card to indicate that you abstain from voting on the adoption of the merger agreement.
	•	You must continuously hold your shares of Catellus common stock from the date of making the demand through the completion of the merger. If you are the record holder of shares of Catellus common stock on the date the written demand for appraisal is made but you thereafter transfer those shares prior to the completion of the merger, you will lose any right to appraisal in respect of those shares.

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	Catellus Development Corporation
	Attention: Secretary
	201 Mission Street
	San Francisco, California 94105

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	•	any attempt to withdraw made more than 60 days after the effective date of the merger will require the written approval of ProLogis; and
	•	an appraisal proceeding in the Delaware Court cannot be dismissed unless the Delaware Court approves, and such approval may be conditioned upon any terms the Delaware Court deems just.

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	Board of Trustees

	Executive Officers

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	•	each share of Palmtree Acquisition Corporation stock that is issued and outstanding immediately prior to the effective time of the merger will remain issued and outstanding and will be unchanged by the merger;
	•	each share of Catellus common stock that is issued and outstanding immediately prior to the effective time of the merger (other than (1) shares owned by Catellus, ProLogis or any of their respective wholly owned subsidiaries, (2) shares with respect to which a valid and timely demand for appraisal rights under Delaware law has been made and not revoked and (3) shares that constitute Catellus restricted stock or restricted stock units) will be converted into the right to

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		receive, at the option of the holder but subject to reallocation as described under the sections entitled “—  Catellus Stockholder Elections” and “—  Reallocation of Catellus Stockholder Elections”, either:

	•	0.822 of a ProLogis common share; or
	•	$33.81 in cash, without interest;

	•	each share of Catellus common stock that is owned by Catellus, ProLogis or any of their respective wholly owned subsidiaries immediately prior to the effective time of the merger will be canceled and retired without any payment and will cease to exist;
	•	each share of Catellus common stock with respect to which a valid and timely demand for appraisal rights under Delaware law has been made and not revoked will be treated as described in the section of this document entitled “The Merger — Appraisal Rights”; and
	•	each share of Catellus common stock that constitutes restricted stock or a restricted stock unit immediately prior to the effective time of the merger, and each option to acquire Catellus common stock that is outstanding immediately prior to the effective time of the merger, will be treated as described under “— Treatment of Catellus Restricted Stock, Restricted Stock Units and Stock Options.”

	•	the product of (1) the number of shares of Catellus common stock that were subject to such restricted stock or restricted stock units and (2) $33.81, less
	•	the aggregate amount that is required to be withheld under any provision of federal, state, local or foreign tax law with respect to the amount described in the preceding bullet point.

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	•	the product of (1) the number of shares of Catellus common stock that were subject to such canceled stock option and (2) the excess, if any, of $33.81 over the exercise price per share of such canceled stock option, less
	•	the aggregate amount that is required to be withheld under any provision of federal, state, local or foreign tax law with respect to the amount described in the preceding bullet point.

	•	a “cash election share”, which means a share of Catellus common stock for which a valid election has been made to receive merger consideration in the form of $33.81 in cash, without interest;

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	•	a “share election share”, which means a share of Catellus common stock for which a valid election has been made to receive merger consideration in the form of 0.822 of a ProLogis common share; or
	•	a “non-election share”, which means a share of Catellus common stock for which either a valid election has not been made or a valid election has been made that indicates the holder has no preference as to what form of merger consideration the holder receives.

	•	each cash election share will be converted into the right to receive $33.81 in cash, without interest;
	•	each non-election share will be converted into the right to receive $33.81 in cash, without interest, to the extent necessary to have the total number of cash election shares multiplied by $33.81 equal the aggregate cash consideration (if less than all of the non-election shares need to be treated as cash election shares, then the exchange agent will select on a pro rata basis which non-election shares will be treated as cash election shares, and all of the remaining non-election shares will be treated as share election shares and will be converted into the right to receive 0.822 of a ProLogis common share);
	•	if the total number of cash election shares (including the non-election shares treated as cash election shares as described in the preceding bullet point) multiplied by $33.81 remains less than the aggregate cash consideration, then the exchange agent will select on a pro rata basis a sufficient number of share election shares that will be treated as cash election shares such that the total number of cash election shares (including the non-election shares treated as cash election shares as described in the preceding bullet point and the reallocated share election shares selected by the exchange agent) multiplied by $33.81 equals the aggregate cash consideration, and the reallocated share election shares selected by the exchange agent will be converted into the right to receive $33.81 in cash, without interest; and
	•	all share election shares other than those reallocated as described in the preceding bullet point will be converted into the right to receive 0.822 of a ProLogis common share.

	•	each share election share will be converted into the right to receive 0.822 of a ProLogis common share;
	•	each non-election share will be converted into the right to receive 0.822 of a ProLogis common share;
	•	the exchange agent will select on a pro rata basis a sufficient number of cash election shares that will be treated as share election shares such that the total number of cash election shares remaining after such reallocation multiplied by $33.81 equals the aggregate cash consideration, and the reallocated cash election shares selected by the exchange agent will be converted into the right to receive 0.822 of a ProLogis common share; and
	•	each cash election share other than those reallocated as described in the preceding bullet point will be converted into the right to receive $33.81 in cash, without interest.

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	•	the aggregate number of ProLogis common shares that constitute the portion of the merger consideration payable in ProLogis common shares;
	•	cash in an amount equal to the aggregate cash consideration; and
	•	cash in the amount required to make payment to Catellus stockholders in lieu of the issuance of fractional ProLogis common shares.

	•	the number of whole ProLogis common shares, if any, into which the shares of Catellus common stock previously represented by such Catellus stock certificates have been converted;
	•	cash representing any fractional ProLogis common shares to which such person would have otherwise been entitled to receive;
	•	the aggregate amount of cash, if any, into which the shares of Catellus common stock previously represented by such Catellus stock certificates have been converted;
	•	the aggregate amount of any distributions declared but unpaid as of the effective time of the merger with respect to the shares of Catellus common stock previously represented by such Catellus stock certificates; and
	•	the aggregate amount of any distributions declared and paid after the effective time of the merger with respect to any whole ProLogis common shares into which the Catellus common stock previously represented by such Catellus stock certificates were converted.

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	•	the fraction of a ProLogis common share that the Catellus stockholder would otherwise be entitled to receive, and
	•	the average closing price of a ProLogis common share on the New York Stock Exchange for the ten trading days immediately preceding the effective time of the merger (as reported in The Wall Street Journal or, if not reported therein, in another authoritative source).

	•	the approval by Catellus stockholders of the merger agreement;
	•	the approval by ProLogis shareholders of the issuance of ProLogis common shares contemplated by the merger agreement;
	•	the approval for listing on the New York Stock Exchange of the ProLogis common shares to be issued as contemplated by the merger agreement, subject to official notice of issuance;
	•	the absence of any temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the completion of the merger; and
	•	the declaration of effectiveness of the registration statement of which this document is a part by the Securities and Exchange Commission and the absence of any stop order or proceedings seeking a stop order.

	•	the accuracy, to the extent specified in the merger agreement, of the representations and warranties made by Catellus in the merger agreement;
	•	the performance by Catellus in all material respects of all obligations and covenants required to be performed by it under the merger agreement at or prior to the effective time of the merger;
	•	the absence of any change, event or circumstance that, individually or in the aggregate, constitutes a material adverse effect on Catellus, as defined in the merger agreement;
	•	the receipt of an opinion dated as of the date on which the merger is completed from O’Melveny & Myers LLP or another nationally recognized law firm as to Catellus’ qualification as a REIT under the Internal Revenue Code; and

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	•	the receipt of an opinion dated as of the date on which the merger is completed from Mayer, Brown, Rowe & Maw LLP to the effect that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code.

	•	the accuracy, to the extent specified in the merger agreement, of the representations and warranties made by ProLogis in the merger agreement;
	•	the performance by ProLogis in all material respects of all obligations and covenants required to be performed by it under the merger agreement at or prior to the effective time of the merger;
	•	the absence of any change, event or circumstance that, individually or in the aggregate, constitutes a material adverse effect on ProLogis, as defined in the merger agreement;
	•	the receipt of an opinion dated as of the date on which the merger is completed from Mayer, Brown, Rowe & Maw LLP as to ProLogis’ and Palmtree Acquisition Corporation’s qualification as REITs under the Internal Revenue Code; and
	•	the receipt of an opinion dated as of the date on which the merger is completed from O’Melveny & Myers, LLP to the effect that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code.

	•	due organization, good standing and authority;
	•	subsidiaries and joint ventures;
	•	capital structure;
	•	authorization to enter into the merger agreement and to complete the merger;
	•	the enforceability of the merger agreement;
	•	required consents, approvals or authorizations of governmental authorities to complete the merger;
	•	the absence of conflicts, violations and defaults as a result of entering into the merger agreement and completing the merger;
	•	compliance with the rules and regulations of the Securities and Exchange Commission and its reporting requirements;
	•	the accuracy of financial statements and reports filed with the Securities and Exchange Commission;
	•	the absence of certain changes since December 31, 2004;
	•	the absence of litigation and undisclosed liabilities;
	•	compliance with applicable laws and permits;

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	•	tax matters, including REIT qualification matters;
	•	appropriate funding of pension and employee benefit plans and compliance with applicable regulations;
	•	labor and employment matters;
	•	the absence of violations or liabilities under environmental laws;
	•	intangible property;
	•	title to properties and encumbrances;
	•	insurance;
	•	receipt of financial advisor opinions in connection with the merger;
	•	broker’s and finder’s fees;
	•	required board and stockholder approvals;
	•	material contracts;
	•	the inapplicability of state anti-takeover statutes;
	•	with respect to Catellus only, related party transactions and beneficial ownership of Catellus common stock by Catellus and its subsidiaries;
	•	with respect to ProLogis only, the operations of Palmtree Acquisition Corporation; and
	•	with respect to ProLogis only, the ability to pay the cash consideration payable pursuant to the terms of the merger agreement, the net restricted stock payments and the net option payments and all fees and expenses in connection with the merger.

	•	any change in general national or international economic, financial or political conditions or events, including the effects of terrorist acts that do not result in the destruction or material physical damage of a material portion of its real properties;
	•	the announcement, pendency or completion of the merger and the merger agreement; or
	•	any change in conditions generally affecting the securities markets or the industry in which it and its subsidiaries operate that does not affect it and its subsidiaries to a materially greater extent than such change affects other persons in that industry.

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	•	carry on their respective businesses in the usual, regular and ordinary course in substantially the same manner as conducted prior to the date of the merger agreement and in compliance in all material respects with applicable law; and
	•	preserve intact in all material respects their respective current business organization, goodwill, ongoing businesses and status as REITs within the meaning of the Internal Revenue Code.

	•	declare, set aside or pay any dividends or make other distributions, except for Catellus’ regular quarterly cash dividend (at a rate not to exceed $0.27 per share of Catellus common stock, unless a larger distribution is necessary to maintain Catellus’ REIT status or avoid certain adverse tax consequences specified in the merger agreement) and in respect of equity of a wholly owned Catellus subsidiary;
	•	split, combine or reclassify any equity interests or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution of these equity interests;
	•	purchase, redeem or otherwise acquire any equity interests in any Catellus subsidiary or joint venture or any options, warrants or rights to acquire, or securities convertible into, equity interests in any Catellus subsidiary, except to repurchase shares of Catellus common stock issued under any Catellus stock option plan or in connection with the cashless exercise of a Catellus stock option;
	•	issue, deliver, sell or grant any option or right to acquire any shares, capital stock, voting or redeemable securities or any securities convertible into the same, except to a wholly owned Catellus subsidiary and in connection with the exercise of a Catellus stock option and the conversion of any Catellus convertible securities outstanding as of the date of the merger agreement;
	•	change, or consent to a change in, the ownership of any Catellus subsidiary;
	•	amend Catellus’ certificate of incorporation or bylaws or other organizational documents of any Catellus subsidiary or joint venture, except as required by the merger agreement;
	•	merge, consolidate or enter into any similar transaction;
	•	commit to make any capital expenditures, except for certain capital expenditures to which ProLogis agreed at the time it signed the merger agreement and capital expenditures in the ordinary course of business consistent with past practice and not exceeding $3 million individually or $6 million in the aggregate;
	•	acquire, or enter into or exercise an option to acquire, real property with a purchase price in excess of $10 million unless the acquisition is necessary to effect a like-kind exchange under Section 1031 of the Internal Revenue Code;
	•	commence construction of, or enter into any commitment to, develop or construct real estate projects in excess of $10 million individually or $25 million in the aggregate;
	•	incur additional indebtedness except under Catellus’ revolving line of credit;
	•	make any loans, advances, capital contributions or investments in another entity in excess of $1 million individually and $5 million in the aggregate;
	•	sell, mortgage, lease, subject to lien or otherwise dispose any real, personal or intangible property or pledge or otherwise encumber any equity interests or securities of Catellus or its subsidiaries and

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		joint ventures, except for transactions made in the ordinary course of business that are not material individually or in the aggregate;
	•	enter into any “keep well” or agreement to maintain any financial statement condition of another entity or any agreement having the same economic effect;
	•	prepay, refinance or amend any existing indebtedness;
	•	pay, discharge or satisfy any claims, liabilities or obligations, except in the ordinary course of business consistent with past practice;
	•	make or rescind any material tax election;
	•	adversely change in any material respect any accounting methods, principles or practices;
	•	settle or compromise any tax claim, action, suit, litigation proceeding, arbitration, investigation, audit or controversy, except in the case of tax settlements or compromises less than or equal to $500,000 individually or $2,000,000 in the aggregate, or change any of its methods of reporting income or deductions for federal income tax purposes;
	•	adopt or amend any compensation or employee benefit plan or enter into or amend any employment, consulting, severance or similar agreement, except in the ordinary course of business consistent with past practice;
	•	enter into or amend any material agreement with its affiliates or its present officers and directors;
	•	authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation or dissolution;
	•	settle or compromise any material litigation, except for settlements or compromises that do not require payments in excess of $500,000 individually or $2,000,000 in the aggregate;
	•	enter into, amend or terminate, or waive compliance with the terms of, or breaches under, any material contract (as defined in the merger agreement);
	•	enter into a “tax protection agreement,” as defined in the merger agreement;
	•	sell, securitize, factor or transfer accounts receivable; or
	•	accept a promissory note in payment of the exercise price under a Catellus stock option.

	•	declare, set aside or pay any dividends or make other distributions, except for ProLogis’ regular quarterly cash dividend (at a rate not to exceed $0.37 per ProLogis common share for the quarter ending September 30, 2005 and subsequent quarters, unless a larger distribution is necessary to maintain ProLogis’ REIT status or avoid certain adverse tax consequences specified in the merger agreement) and distributions with respect to ProLogis preferred shares at their respective stated rate;
	•	split, combine or reclassify any ProLogis shares or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution of those shares;
	•	purchase, redeem or otherwise acquire any ProLogis shares or any options, warrants or rights to acquire, or securities convertible into, ProLogis shares, except in the circumstances set forth in the merger agreement;
	•	issue, deliver, sell or grant any option or right in respect of ProLogis common shares or any securities convertible into, or any rights, warrants or options to acquire, any ProLogis common shares, except in the circumstances set forth in the merger agreement;

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	•	amend ProLogis’ declaration of trust or bylaws, except as required by the merger agreement or to increase the number of authorized ProLogis shares of beneficial interest to 375,000,000;
	•	merge, consolidate or enter into any similar transaction;
	•	make or rescind any material tax election;
	•	adversely change in any material respect any accounting methods, principles or practices; or
	•	authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation or dissolution of ProLogis or Palmtree Acquisition Corporation.

	•	initiate, solicit, encourage or facilitate (including by way of furnishing non-public information or assistance) any inquiries or the making of any proposal or action that constitutes, or may be reasonably expected to lead to, any “competing transaction”; or
	•	enter into or participate in discussions or negotiate with any person or entity regarding a competing transaction.

	•	any merger, consolidation, share exchange, business combination or similar transaction involving Catellus or one of its material subsidiaries;
	•	any sale, lease, exchange, mortgage, pledge, transfer or disposition of 15% or more of the assets of Catellus and its subsidiaries, taken as a whole, in a single or a series of related transactions; or
	•	any tender offer or exchange offer for 15% or more of the voting power in the election of directors exercisable by the holders of the outstanding equity securities of Catellus or one of its material subsidiaries.

	•	furnish non-public information with respect to it and its subsidiaries to the person or entity who made the proposal if (a) Catellus has previously or concurrently furnished this information to ProLogis and (b) the information is furnished pursuant to a confidentiality agreement that is at least as favorable to Catellus as the confidentiality agreement entered into between Catellus and ProLogis;
	•	contact the third party and its advisors solely for the purpose of clarifying the proposal, any material contingencies and the capability of the consummation of the proposed transaction in order to determine whether the proposal is reasonably likely to lead to a “superior competing transaction”; and

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	•	continue to furnish non-public information and participate in negotiations regarding the proposal if Catellus’ board of directors determines in good faith, after consultation with its outside counsel and financial advisors having a nationally recognized reputation, that the proposal is reasonably likely to lead to a superior competing transaction.

	•	has terms that a majority of Catellus’ board of directors determines in good faith, after consultation with its outside counsel and financial advisors having a nationally recognized reputation, are superior to Catellus stockholders to those provided for in the merger and the other transactions contemplated by the merger agreement (taking into account all financial and strategic considerations and other factors deemed relevant by Catellus’ board of directors); and
	•	was not solicited, encouraged or facilitated by Catellus or its affiliates or any of their respective advisors in breach of the no solicitation covenant contained in the merger agreement.

	•	Catellus’ board of directors determines in good faith, after consulting with its outside legal counsel and financial advisors of nationally recognized reputation, that such action is consistent with its fiduciary duties under applicable law;
	•	Catellus complies fully with the no solicitation covenant contained in the merger agreement;
	•	Catellus provides ProLogis with at least three business days’ prior written notice of its intent to withdraw, modify, amend or qualify its recommendation of the merger and the merger agreement;
	•	in the event ProLogis makes a counter proposal within the three-day period referred to in the preceding bullet point, Catellus’ board of directors determines in good faith, after consultation with its outside counsel and financial advisors having a nationally recognized reputation, that ProLogis’ counter proposal is not at least as favorable to Catellus stockholders as the superior competing transaction (taking into account all financial and strategic considerations and other factors deemed relevant by Catellus’ board of directors); and
	•	Catellus terminates the merger agreement in accordance with its terms and pays ProLogis a $90 million termination fee and $8 million of break-up expenses.

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	•	pursuant to an effective registration statement under the Securities Act of 1933;
	•	in conformity with the volume and other limitations of Rule 145 under the Securities Act of 1933; or
	•	in reliance upon an exemption from registration that is available under the Securities Act of 1933.

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	•	the preparation of this document;
	•	calling and holding the special meetings of ProLogis shareholders and Catellus stockholders and proxy solicitation;
	•	the adjournment of the special meetings and the use by each party of its commercial reasonable efforts to solicit proxies from ProLogis shareholders or Catellus stockholders, as the case may be;
	•	access to and confidential treatment of information regarding the other party;
	•	using commercially reasonable efforts to satisfy the conditions to closing;
	•	using best efforts to cause the merger to be treated as a tax-free reorganization under the Internal Revenue Code;
	•	public announcements;
	•	indemnification of directors and officers of Catellus and its subsidiaries and directors’ and officers’ insurance;
	•	the cooperation of Catellus and its subsidiaries and representatives in connection with any financing efforts by ProLogis or its affiliates;
	•	Catellus using commercially reasonable efforts, upon the written request of ProLogis, to obtain resignations from, or cause the removal of, all of the officers and directors of each Catellus subsidiary;
	•	compliance with the Sarbanes-Oxley Act of 2002; and
	•	the listing on the New York Stock Exchange of the ProLogis common shares to be issued pursuant to the merger agreement.

	•	by mutual written consent duly authorized by ProLogis’ board of trustees and Catellus’ board of directors;
	•	by ProLogis, if Catellus breaches any of its representations, warranties or covenants in the merger agreement, or if any of Catellus’ representations or warranties become untrue, in either case such that a condition of the merger cannot be satisfied by December 31, 2005;
	•	by Catellus, if ProLogis breaches any of its representations, warranties or covenants in the merger agreement, or if any of ProLogis’ representations or warranties become untrue, in either case such that a condition of the merger cannot be satisfied by December 31, 2005;

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	•	by either ProLogis or Catellus, if:

	(1) the merger is not completed by December 31, 2005, so long as the party seeking to terminate has not materially breached any of its representations, warranties or covenants in the merger agreement; or
	(2) there is a legal prohibition to the merger that has become final and non-appealable;

	•	by ProLogis, if Catellus stockholders fail to adopt the merger agreement at Catellus’ special meeting;
	•	by Catellus, if ProLogis shareholders fail to approve the issuance of ProLogis common shares contemplated by the merger agreement at ProLogis’ special meeting;
	•	by ProLogis, if (1) prior to Catellus’ special meeting, Catellus’ board of directors or any committee thereof shall have withdrawn, amended or modified in any manner adverse to ProLogis its approval or recommendation of the merger or the merger agreement in connection with, or approved or recommended, any superior competing transaction, (2) Catellus shall have entered into any agreement with respect to any superior competing transaction or (3) Catellus’ board of directors or any committee thereof shall have resolved to do any of the foregoing; or
	•	by Catellus, if (1) Catellus has complied with its non-solicitation obligations under the merger agreement and the other conditions precedent to Catellus’ board of directors’ right to withdraw or modify its recommendation of the merger and to enter into a superior competing transaction (as described under the section entitled “— Withdrawal or Modification of Recommendation to Catellus Stockholders”) and (2) Catellus’ board of directors has approved or recommended a superior competing transaction or resolved to enter into an agreement with respect to such superior competing transaction.

	•	Catellus terminates the merger agreement to accept a superior competing transaction;
	•	ProLogis terminates the merger agreement because:

	(1) prior to Catellus’ special meeting, Catellus’ board of directors or any committee thereof shall have withdrawn, amended or modified in any manner adverse to ProLogis its approval or recommendation of the merger or the merger agreement in connection with, or approved or recommended, any superior competing transaction,
	(2) Catellus shall have entered into any agreement with respect to any superior competing transaction, or
	(3) Catellus’ board of directors or any committee thereof shall have resolved to do any of the foregoing;

	•	ProLogis terminates the merger agreement because Catellus’ stockholders fail to approve it at Catellus’ special meeting and either:

	(1) Catellus’ board of directors or any committee thereof shall have withdrawn, modified, amended or qualified in any manner adverse to ProLogis its approval or recommendation of the merger agreement or the merger, or
	(2) (a) after June 5, 2005 and prior to such termination, any person has made an inquiry or proposal relating to a competing transaction and (b) within one year after such termination, Catellus shall complete a competing transaction with that person; or

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	•	ProLogis terminates the merger agreement because Catellus breaches any of its representations, warranties or covenants in the merger agreement, or if any of Catellus’ representations or warranties become untrue, in either case such that a condition of the merger cannot be satisfied by December 31, 2005 and (1) after June 5, 2005 and prior to such termination, any person has made an inquiry or proposal relating to a competing transaction and (2) within one year after such termination, Catellus shall complete a competing transaction with that person.

	•	alters the amount or changes the form of the consideration to be paid to Catellus stockholders in the merger; or
	•	alters or changes any of the terms or conditions of the merger agreement if the alteration or change would adversely affect either Catellus stockholders or ProLogis shareholders.

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	•	Nelson C. Rising, Chairman of the Board and Chief Executive Officer of Catellus;
	•	Ted R. Antenucci, President of Catellus Commercial Development Corporation;
	•	C. William Hosler, Senior Vice President and Chief Financial Officer of Catellus; and
	•	Vanessa L. Washington, Senior Vice President and General Counsel of Catellus.

	•	Mr. Rising must elect to receive ProLogis common shares with respect to not less than 65% of the Catellus common stock that he owns;
	•	Mr. Rising must maintain ownership of at least 125,000 ProLogis common shares until the earlier of two years following completion of the transaction or such time as he no longer serves on ProLogis’ board of trustees; and
	•	ProLogis shall retain (and not pay to Mr. Rising) a portion of the cash to which Mr. Rising would otherwise be entitled to receive in connection with the merger in an amount equal to, and in full satisfaction of, Mr. Rising’s obligations to Catellus with respect to a $1 million unsecured loan that Catellus made to Mr. Rising in 2000.

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	•	a citizen or resident alien individual, as defined in Section 7701(b) of the Internal Revenue Code of 1986, as amended, of the United States, or the Code;
	•	a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the U.S. or any state or the District of Columbia;
	•	an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
	•	in general, a trust subject to the primary supervision of a U.S. court and the control of one or more U.S. persons or the trust was in existence on August 20, 1996, and has made a valid election to be treated as a U.S. person.

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	General

	Tax Treatment of the Merger

	•	the accuracy of the statements and facts concerning the merger set forth in the merger agreement and in this document;
	•	that the merger is consummated in the manner contemplated by, and in accordance with, the terms of the merger agreement this document; and
	•	the accuracy of certain customary factual representations made by Catellus and ProLogis set forth in certificates delivered to counsel.

	Tax Treatment of Catellus, ProLogis and Holders of ProLogis Common Shares

	Tax Treatment of U.S. Holders of Shares of Catellus Common Stock

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	•	the cost or other basis of the stock or securities transferred in the exchange; and
	•	the amount of stock, securities or other property received in the exchange.

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	Tax Treatment of Non-U.S. Holders of Shares of Catellus Common Stock

	Backup Withholding and Information Reporting

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	Taxation of ProLogis

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	•	85% of its REIT ordinary income for such year;
	•	95% of its REIT capital gain net income for such year, other than capital gains ProLogis elects to retain and pay tax on as described below; and
	•	any undistributed taxable income from prior years,

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	•	rents from real property, except as modified below;
	•	interest on obligations secured by mortgages on, or interests in, real property;
	•	gains from the sale or other disposition of “non-dealer property,” which means interests in real property and real estate mortgages, other than gain from property held primarily for sale to customers in the ordinary course of ProLogis’ trade or business;

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	•	dividends or other distributions on shares in other REITs, as well as gain from the sale of such shares;
	•	abatements and refunds of real property taxes;
	•	income from the operation, and gain from the sale, of “foreclosure property,” which means property acquired at or in lieu of a foreclosure of the mortgage secured by such property;
	•	commitment fees received for agreeing to make loans secured by mortgages on real property, or to purchase or lease real property; and
	•	certain qualified temporary investment income attributable to the investment of new capital received by ProLogis in exchange for its shares during the one-year period following the receipt of such capital.

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	•	following ProLogis’ identification of the failure, it files a schedule with a description of each item of gross income that caused the failure in accordance with regulations prescribed by the Treasury; and
	•	ProLogis’ failure to comply was due to reasonable cause and not due to willful neglect.

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	Affiliated REIT

	Taxation of ProLogis Shareholders

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	•	a shareholder’s long-term capital gains, if any, recognized on the disposition of ProLogis shares;
	•	ProLogis’ distributions designated as long-term capital gain dividends (except to the extent attributable to real estate depreciation, in which case such distributions continue to be subject to a 25% tax rate);
	•	ProLogis’ distributions attributable to dividends received by ProLogis from non-REIT corporations, such as taxable REIT subsidiaries; and
	•	ProLogis’ distributions to the extent attributable to income upon which ProLogis has paid corporate income tax (e.g., to the extent that ProLogis distributes less than 100% of its taxable income).

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	Other Tax Considerations

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Authorized Capital Stock
ProLogis		Catellus
The authorized capital of ProLogis consists of 375,000,000 shares of beneficial interest, par value $0.01 per share, of which 362,580,000 are common shares of beneficial interest, par value $0.01 per share; 2,300,000 are Series C cumulative redeemable preferred shares of beneficial interest, par value $0.01 per share; 5,060,000 are Series F cumulative redeemable preferred shares of beneficial interest, par value $0.01 per share; and 5,060,000 are Series G cumulative redeemable preferred shares of beneficial interest, par value $0.01 per share. The board of trustees may amend the declaration of trust, without shareholder approval, to increase or decrease the aggregate number of shares of beneficial interest or the number of shares of any class or series, change the par value of any class or series of beneficial interest or change the aggregate par value of the shares of beneficial interest.		The authorized capital of Catellus consists of 150,000,000 shares of common stock, par value $0.01 per share; 50,000,000 shares of preferred stock, par value $0.01 per share; and 50,000,000 shares of excess stock, par value $0.01 per share.

Size of Board of Trustees/ Directors
ProLogis		Catellus
The ProLogis board of trustees currently consists of 12 members. It will be increased to 14 members at the effective time of the merger. ProLogis’ declaration of trust provides that the board of trustees will be comprised of not less than three nor more than 15 trustees, and that the actual number of trustees may be changed from time to time by resolution of the board of trustees.		Catellus’ board of directors currently has nine members. Catellus’ bylaws provide that the board of directors consist of nine directors, although the number of directors may be changed by resolution of a majority of the entire board of directors.

Cumulative Voting
ProLogis		Catellus
ProLogis’ declaration of trust expressly provides that ProLogis shareholders do not have cumulative voting rights.		Under Delaware law, stockholders of a Delaware corporation do not have the right to accumulate their votes in the election of directors, unless that right is expressly granted in the certificate of incorporation of the corporation. Catellus’ certificate of incorporation does not expressly grant cumulative voting rights to Catellus stockholders.

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Classes of Trustees/ Directors
ProLogis		Catellus
ProLogis eliminated the separate classes of its board of trustees on May 18, 2005. Beginning at the 2006 annual meeting, all members of ProLogis’ board will be elected to serve one-year terms.		Catellus does not have separate classes for members of its board of directors.

Removal of Trustees/ Directors
ProLogis		Catellus
ProLogis’ declaration of trust provides that a trustee may be removed only for cause by the affirmative vote of two-thirds of all of the shares entitled to vote in an election of trustees or by the trustees then in office by a two-thirds vote only at a meeting.		Catellus’ bylaws provide that a director may be removed at any time, either with or without cause, by vote of the stockholders.

Vacancies on the Board of Trustees/ Directors
ProLogis		Catellus
ProLogis’ declaration of trust provides that a vacancy or vacancies among the trustees, including vacancies resulting from an increase in the number of trustees, will be filled at a special meeting of shareholders called for that purpose, by the trustee or trustees then in office or at the next annual meeting of shareholders.		Catellus’ bylaws provide that any vacancy on the board of directors, including one resulting from an increase in the number of directors, may be filled by a majority of the remaining directors, even if those remaining directors would not constitute a quorum.

Shareholder Action by Written Consent
ProLogis		Catellus
ProLogis’ bylaws provide that any action required or permitted to be taken at a meeting of shareholders may be taken without a meeting if there is filed with the records of shareholders’ meetings a unanimous written consent that sets forth the action and is signed by each shareholder entitled to vote on the matter and a written waiver of any rights to dissent signed by each shareholder entitled to notice of the meeting but not entitled to vote at that meeting.		Catellus’ bylaws provide that any action required or permitted to be taken by stockholders may be taken without a meeting, and without a vote, if a consent in writing setting forth the action to be taken is signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take that action at a meeting at which all shares entitled to vote were present and voting.

Amendments to Charter
ProLogis		Catellus
As required by Maryland law, an amendment to ProLogis’ declaration of trust requires the board of trustees to adopt a resolution setting forth the proposed amendment, declare that the proposed amendment is advisable and direct that it be submitted for consideration at an annual or special meeting of shareholders entitled to vote to approve the amendment and requires the affirmative vote or written consent of at least a majority of the shares outstanding and entitled to vote. The ProLogis board of trustees may amend the declaration of trust without shareholder as described above under “— Authorized Capital Stock.” As permitted by Maryland law, ProLogis’ declaration of trust provides that the trustees, by a majority vote and without any action by the shareholders, may amend the declaration of trust from time to time to enable the trust to qualify as a real estate investment trust under the Internal Revenue Code or Maryland law. Maryland law also permits the trustees, without any action by ProLogis shareholders, to elect to be subject to any or all of the provisions of the Maryland Unsolicited Takeover Act and amend the declaration of trust to effect those provisions. See “— State Anti-Takeover Statutes.”		Catellus’ charter provides that it may be amended in the manner provided by Delaware law, except that the affirmative vote of a majority of the votes entitled to be cast by “unaffiliated stockholders” is required to amend provisions relating to the voting requirements for certain interested party transactions. Under Catellus’ charter, a stockholder of Catellus is “unaffiliated” if the stockholder has failed to announce or publicly disclose a plan or intention to acquire 10% or more of the then- outstanding shares of Catellus voting stock. In addition, the affirmative vote of two-thirds of the votes entitled to be cast is required to amend provisions relating to the ownership and look- through ownership limits in Catellus’ charter. Catellus’ board of directors may recommend, however, that the stockholders approve such an amendment, in which case only an affirmative vote of the majority of outstanding shares entitled to vote on such an amendment shall be required.
ProLogis’ declaration of trust provides that ProLogis’ bylaws may be altered, amended or repealed, and new bylaws adopted, at any meeting of the board of trustees by a vote of a majority of the trustees, subject to repeal or change by action of the shareholders entitled to vote on the matter.		Catellus’ charter and bylaws provide that Catellus’ bylaws may be amended, repealed or adopted by a majority of the entire board of directors or a majority of the shares outstanding and entitled to vote.

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Special Meetings of Shareholders
ProLogis		Catellus
ProLogis’ declaration of trust provides that special meetings of shareholders may be called by a majority of the trustees or by the chairman (or any co-chairman) of ProLogis and shall be called upon the written request of shareholders holding in the aggregate not less than a majority of the outstanding shares of ProLogis entitled to vote on the matter to be considered at the special meeting. ProLogis’ bylaws provide that any written requests of shareholders for special meetings must state the purpose of the special meeting and the matters proposed to be acted on at the special meeting.		Catellus’ bylaws provide that special meetings of stockholders may be called only by resolution of the board of directors or by the chairman of the board of directors, the chief executive officer or the president. Catellus stockholders do not have the ability to call a special meeting of the stockholders.

Vote on Extraordinary Corporate Transactions
ProLogis		Catellus
Under Maryland law, a merger involving a Maryland real estate trust generally requires approval by the affirmative vote of not less than two-thirds of all votes entitled to be cast on the matter, unless the declaration of trust specifies a greater or lesser percentage, provided that the percentage specified cannot be less than a majority of all votes entitled to be cast. ProLogis’ declaration of trust provides that ProLogis may merge with or into another entity, consolidate with one or more entities into a new entity, or sell, lease, exchange or otherwise transfer all or substantially all ProLogis’ property, provided that the action is approved by the board of trustees and by the shareholders, at a meeting called for that purpose, by the affirmative vote of the holders of not less than a majority of the votes entitled to be cast on the matter.		Under Delaware law, a sale or other disposition of all or substantially all of a corporation’s assets, a merger or consolidation of a corporation with another corporation or a dissolution of a corporation requires the affirmative vote of the corporation’s board of directors (except in limited circumstances) plus, with limited exceptions, the affirmative vote of a majority of the outstanding shares entitled to vote on the transaction.

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Inspection of Documents
ProLogis		Catellus
Maryland law allows any shareholder to inspect and copy during usual business hours the bylaws, minutes of the meetings of shareholders, annual statements of affairs and voting trust agreements on file at the trust’s principal office.		Delaware law allows any stockholder to inspect for any proper purpose a corporation’s stock ledger, a list of its stockholders and its other books and records and to make copies or extracts from those documents. A proper purpose means a purpose reasonably related to the person’s interest as a stockholder.

State Anti-Takeover Statutes
ProLogis			Catellus
ProLogis’ bylaws provide that the Maryland Control Share Acquisition Act, or any successor statute, shall not apply to any acquisition by any person of ProLogis shares, but also provides that this bylaw provision may be repealed, in whole or in part, at any time, whether before or after an acquisition of control shares. Upon that repeal, the Maryland Control Share Acquisition Act may apply to any prior or subsequent control share acquisition to the extent provided by any successor bylaw. The Maryland Business Combination Act provides that unless exempted, ProLogis may not engage in business combinations, including mergers, dispositions of 10% or more of its assets, share issuances and other specified transactions with an “interested stockholder” or an affiliate of an interested stockholder for five years after the most recent date on which the interested stockholder became an interested stockholder and thereafter unless specified criteria are met. An interested stockholder is generally a person owning or controlling, directly or indirectly, 10% or more of the voting power of the outstanding voting capital of a Maryland corporation. ProLogis’ board of trustees has adopted a resolution exempting Catellus from application of this statute. Maryland law permits a Maryland real estate investment trust with a class of equity securities registered under the Securities and Exchange Act of 1934, as amended, and at least three independent trustees to elect to be subject, by provision in its declaration of trust or bylaws or a resolution of its board of trustees, notwithstanding any contrary provision in the charter or bylaws, to any or all of the following provisions:			In Catellus’ charter, Catellus has elected not to be governed by the Delaware anti-takeover statute.
	• a classified board of trustees;
	• a two-thirds vote requirement for removing a trustee;
	• a requirement that the number of trustees be fixed only by vote of the directors;

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State Anti-Takeover Statutes
ProLogis		Catellus
• a requirement that a vacancy on the board of trustees be filled only by the remaining trustees and for the remainder of the full term of the class of directors in which the vacancy occurred; or
• a majority requirement for the calling of a special meeting of shareholders.

Notice of Shareholder Proposals and Trustee/ Director Nominations
ProLogis		Catellus
ProLogis’ bylaws require advance written notice for shareholders to nominate a trustee or bring other business before an annual meeting of shareholders. To be timely, a shareholder must deliver written notice to the Secretary at ProLogis’ principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting. However, if the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary of the preceding year’s annual meeting, notice by the shareholder must be delivered not more than 120 days nor less than 90 days prior to the annual meeting or not later than the close of business on the tenth day following the day on which public announcement of the date of the annual meeting is first made by ProLogis. ProLogis’ bylaws contain detailed requirements for the contents of shareholder notices of trustee nominations and new business.		Catellus’ bylaws establish an advance notice procedure for stockholders to make nominations of candidates for director or bring other business before an annual meeting of stockholders. Notice of director nominations and proposed business to be conducted at an annual meeting of stockholders must be delivered to or mailed at Catellus’ principal executive offices not less than 120 nor more than 150 days before the anniversary of the date on which the proxy statement was released to stockholders in connection with the previous year’s annual meeting of stockholders. Catellus’ bylaws contain detailed requirements for the contents of stockholder notices of director nominations and new business.

Shareholder Rights Plans
ProLogis		Catellus
ProLogis does not have a shareholder rights plan.		Catellus does not have a stockholder rights plan.

Restrictions on Ownership
ProLogis		Catellus
Subject to certain exceptions, ProLogis’ declaration of trust restricts beneficial ownership by a single person or group to 9.8% of its outstanding shares of beneficial interest. See the section of this document entitled “Description of ProLogis Capital Shares — Restriction on Size of Holdings.”		Catellus’ charter contains provisions restricting the ownership and acquisition of shares of Catellus capital stock. These provisions provide, subject to certain exceptions, that no individual or entity may beneficially own more than 9.8% of the aggregate number of outstanding shares of any class or series of Catellus capital stock.

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ProLogis’ Filings (File No. 001-12846)		Period
Annual Report on Form 10-K		Year ended December 31, 2004, as amended by Amendment No. 1 thereto filed on Form 10-K/ A on March 17, 2005
Quarterly Report on Form 10-Q		Quarter ended March 31, 2005
Current Reports on Form 8-K			Filed on: • July 13, 2005 • June 8, 2005 • June 6, 2005 • May 20, 2005 • May 2, 2005 • March 21, 2005 • February 15, 2005 • February 2, 2005 • January 3, 2005

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	The description of ProLogis shares of beneficial interest set forth in the registration statement on Form 8-A filed by ProLogis with the Securities and Exchange Commission on February 23, 1994, including any amendment or report filed with the Securities and Exchange Commission for the purpose of updating that description.

Catellus’ Filings (File No. 001-31908)		Period
Annual Report on Form 10-K		Year ended December 31, 2004
Quarterly Report on Form 10-Q		Quarter ended March 31, 2005
Current Reports on Form 8-K			Filed on: • July 13, 2005 • June 8, 2005 • June 6, 2005 • February 22, 2005

	The description of Catellus capital stock set forth in the registration statement on Form 8-A/ A filed by Catellus with the Securities and Exchange Commission on November 26, 2003, including any amendment or report filed with the Securities and Exchange Commission for the purpose of updating that description.

ProLogis Attention: Investor Relations 14100 East 35th Place Aurora, Colorado 80011 Telephone: (303) 576-2745		Catellus Development Corporation Attention: Investor Relations 201 Mission Street, 2nd Floor San Francisco, California 94105 Telephone: (415) 974-3781

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	•	statements relating to the cost savings that ProLogis anticipates will result from the merger;
	•	statement relating to the accretion to FFO per share that ProLogis expects from the merger;
	•	statements regarding other perceived benefits expected to result from the merger;
	•	statements with respect to various actions to be taken or requirements to be met in connection with completing the merger or integrating ProLogis and Catellus; and
	•	statements relating to revenue, income and operations of the combined company after the merger is completed.

	•	cost savings expected from the merger may not be fully realized;
	•	revenue of the combined company following the merger may be lower than expected;
	•	costs or difficulties related to the integration of the businesses of ProLogis and Catellus following the merger may be greater than expected;
	•	the combined company may not be able to contribute, or time the contribution of, certain of Catellus’ development properties into property funds managed by the combined company on terms favorable to the combined company, or at all;
	•	the pending IRS and California Franchise Tax Board audits of Catellus’ prior years’ tax returns or the resolution or settlement of any issues that may arise from those audits may adversely affect Catellus or the combined company;
	•	general economic conditions, either internationally or nationally or in the jurisdictions in which ProLogis or Catellus is doing business, may be less favorable than expected;
	•	legislative or regulatory changes, including changes in environmental regulation, may adversely affect the businesses in which ProLogis and Catellus are engaged;
	•	there may be environmental risks and liability under federal, state and foreign environmental laws and regulations;
	•	costs to develop existing and future properties may be higher than expected; and
	•	changes may occur in the securities or capital markets.

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Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2005 (unaudited)			F–3
Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2004 (unaudited)			F–4
Pro Forma Condensed Consolidated Statement of Operations for the three months ended March 31, 2005 (unaudited)			F–6
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements			F–7

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F-2

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																Reclassified
				ProLogis				Catellus				Reclassifica-				Catellus				Pro Forma				ProLogis
				Historical				Historical				tions(B)				Historical(B)				Adjustments (C)				Pro Forma
ASSETS
Real estate				$	6,610,537			$	2,370,210			$	(16,584	)		$	2,353,626			$	2,219,913			$	11,184,076
	Less accumulated depreciation				(1,024,735	)			(507,639	)			15,292				(492,347	)			492,347				(1,024,735	)
					5,585,802				1,862,571				(1,292	)			1,861,279				2,712,260				10,159,341
Investments in and advances to unconsolidated entities					953,326				—				(1,061	)			(1,061	)			168,324				1,120,589
Restricted cash					—				12,867				—				12,867				—				12,867
Cash and cash equivalents					347,440				54,138				—				54,138				(31,623	)			369,955
Notes receivable					—				296,150				—				296,150				—				296,150
Accounts receivable					32,024				30,720				—				30,720				—				62,744
Other assets					339,483	(A)			215,727				2,353				218,080				80,494				638,057
Goodwill					78,570	(A)			—				—				—				153,241				231,811
Discontinued operations					102,744				—				—				—				—				102,744
		Total assets		$	7,439,389			$	2,472,173			$	—			$	2,472,173			$	3,082,696			$	12,994,258
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
	Lines of credit and short-term borrowings			$	1,322,225			$	—			$	—			$	—			$	570,377			$	1,892,602
	Senior notes				1,944,217				—				—				—				800,000				2,744,217
	Secured debt and assessment bonds				495,449				1,255,104				—				1,255,104				80,090				1,830,643
	Accounts payable and accrued expenses				170,571				125,392				(49,066	)			76,326				(39,395	)			207,502
	Construction costs payable				71,359				—				34,842				34,842				—				106,201
	Other liabilities				214,083				299,431				52,120				351,551				136,084				701,718
	Deferred income taxes				—				37,896				(37,896	)			—				—				—
	Discontinued operations				62,849				—				—				—				—				62,849
		Total liabilities			4,280,753				1,717,823				—				1,717,823				1,547,156				7,545,732
Minority interest					66,550				—				—				—				—				66,550
Shareholders’ equity:
	Preferred shares				350,000				—				—				—				—				350,000
	Common shares				1,864				1,050				—				1,050				(490	)			2,424
	Additional paid in capital				3,267,778				515,787				—				515,787				1,773,543				5,557,108
	Unvested awards				—				(24,018	)			—				(24,018	)			24,018				—
	Accumulated other comprehensive income				179,649				—				—				—				—				179,649
	(Distributions in excess of retained earnings) retained earnings				(707,205	)			261,531				—				261,531				(261,531	)			(707,205	)
		Total shareholders’ equity			3,092,086				754,350				—				754,350				1,535,540				5,381,976
		Total liabilities and shareholders’ equity		$	7,439,389			$	2,472,173			$	—			$	2,472,173			$	3,082,696			$	12,994,258

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			ProLogis				Catellus				Reclassifica-				Reclassified				Pro Forma				ProLogis
			Historical				Historical				tions(B)				Catellus(B)				Adjustments(C)				Pro Forma
Revenues:
	Rental income		$	543,559			$	304,721			$	1,217			$	305,938			$	(2,562	)(D)		$	846,935
	Property management and other property fund fees			50,778				—				—				—				—				50,778
	Sales revenues			—				504,458				(504,458	)			—				—				—
	Development management fees and other CDFS income			2,698				5,706				—				5,706				—				8,404
				597,035				814,885				(503,241	)			311,644				(2,562	)			906,117
Expenses:
	Rental expenses			141,796				84,622				—				84,622				4,000	(D)			230,418
	General and administrative			82,147				54,437				—				54,437				—				136,584
	Depreciation and amortization			171,738				74,251				—				74,251				57,789	(E)			303,778
	Relocation expenses			6,794				—				—				—				—				6,794
	Other expenses			5,519				—				5,173				5,173				—				10,692
	Cost of sales			—				401,942				(401,942	)			—				—				—
				407,994				615,252				(396,769	)			218,483				61,789	(F)			688,266
Gains on certain dispositions of CDFS business assets:
	Net proceeds			1,288,665				—				504,458				504,458				(36,904	)			1,756,219
	Costs of assets disposed of			1,111,698				—				401,942				401,942				50,990				1,564,630
				176,967				—				102,516				102,516				(87,894	)(G)			191,589
Operating income				366,008				199,633				(3,956	)			195,677				(152,245	)			409,440
Other income:
Income from operating joint ventures				—				6,132				(6,132	)			—				—				—
Income from development joint ventures				—				15,444				(15,444	)			—				—				—
Gain on non-strategic asset sales				—				17,008				(17,008	)			—				—				—
Interest income				—				16,850				(16,850	)			—				—				—
Other				—				3,753				(3,753	)			—				—				—
				—				59,187				(59,187	)			—				—				—
Other expenses:
Interest				—				(65,535	)			65,535				—				—				—
REIT transition costs				—				(420	)			420				—				—				—
Other				—				(10,536	)			10,536				—				—				—
				—				(76,491	)			76,491				—				—				—
Income from property funds				42,899				—				—				—				—				42,899
Income from unconsolidated CDFS joint ventures				—				—				15,444				15,444				(6,937	)(H)			8,507
Loss from other unconsolidated investees				(801	)			—				6,132				6,132				(3,030	)(H)			2,301
Interest expense				(153,334	)			—				(65,535	)			(65,535	)			(47,710	)(I)			(266,579	)
REIT transition costs				—				—				(420	)			(420	)			—				(420	)
Interest and other income				3,007				—				19,386				19,386				(1,027	)(J)			21,366
Other expense				—				—				(5,363	)			(5,363	)			2,905	(K)			(2,458	)
Earnings before minority interest				257,779				182,329				(17,008	)			165,321				(208,044	)			215,056
	Minority interest			4,875				—				—				—				—				4,875

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		ProLogis				Catellus				Reclassifica-				Reclassified				Pro Forma				ProLogis
		Historical				Historical				tions(B)				Catellus(B)				Adjustments(C)				Pro Forma
Earnings before certain net gains and net foreign currency exchange gains			252,904				182,329				(17,008	)			165,321				(208,044	)			210,181
Gains recognized on dispositions of certain non-CDFS business assets, net			6,072				—				17,008				17,008				(17,008	)(G)			6,072
Gains on partial dispositions of investments in property funds			3,328				—				—				—				—				3,328
Foreign currency gains, net			14,686				—				—				—				—				14,686
Earnings before income taxes			276,990				182,329				—				182,329				(225,052	)			234,267
Income taxes			—				35,845				(35,845	)			—				—				—
Current income tax			24,870				—				57,363				57,363				—				82,233
Deferred income tax			18,692				—				(21,518	)			(21,518	)			(34,620	)(L)			(37,446	)
			43,562				35,845				—				35,845				(34,620	)			44,787
Earnings from continuing operations			233,428				146,484				—				146,484				(190,432	)			189,480
Less preferred share dividends			25,746				—				—				—				—				25,746
Less excess of redemption values over carrying values of preferred shares redeemed			4,236				—				—				—				—				4,236
Earnings from continuing operations attributable to common shares		$	203,446			$	146,484			$	—			$	146,484			$	(190,432	)		$	159,498
Basic earnings from continuing operations per share (M)		$	1.12											$	1.42							$	0.67
Diluted earnings from continuing operations per share (M)		$	1.09											$	1.40							$	0.67
Weighted average common shares outstanding-basic (M)			182,226												103,064				55,064	(N)			237,290
Weighted average common shares outstanding-diluted (M)			191,801												104,520				55,064	(N)			246,865

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											Reclassifi-
			ProLogis				Catellus				cations				Reclassified				Pro Forma				ProLogis
			Historical				Historical				(B)				Catellus(B)				Adjustments(C)				Pro Forma
Revenues:
	Rental income		$	136,697			$	78,357			$	7			$	78,364			$	(205	)(D)		$	214,856
	Property management and other property fund fees			16,527				—				—				—				—				16,527
	Sales revenues			—				33,144				(33,144	)			—				—				—
	Development management fees and other CDFS income			131				7,544				—				7,544				—				7,675
				153,355				119,045				(33,137	)			85,908				(205	)			239,058
Expenses:
	Rental expenses			39,150				22,256				—				22,256				1,000	(D)			62,406
	General and administrative			24,161				12,290				—				12,290				—				36,451
	Depreciation and amortization			43,253				18,691				—				18,691				14,422	(E)			76,366
	Relocation expenses			2,751				—				—				—				—				2,751
	Other expenses			1,913				—				670				670				—				2,583
	Cost of sales			—				22,898				(22,898	)			—				—				—
				111,228				76,135				(22,228	)			53,907				15,422	(F)			180,557
Gains on certain dispositions of CDFS business assets:
	Net proceeds			282,591				—				33,144				33,144				(2,028	)			313,707
	Costs of assets disposed of			227,250				—				22,898				22,898				4,114				254,262
				55,341				—				10,246				10,246				(6,142	)(G)			59,445
Operating income				97,468				42,910				(663	)			42,247				(21,769	)			117,946
Other income:
Income from operating joint ventures				—				2,833				(2,833	)			—				—				—
Income from development joint ventures				—				5,086				(5,086	)			—				—				—
Gain on non-strategic asset sales				—				20				(20	)			—				—				—
Interest income				—				8,895				(8,895	)			—				—				—
Other				—				89				(89	)			—				—				—
				—				16,923				(16,923	)			—				—				—
Other expenses:
Interest				—				(17,573	)			17,573				—				—				—
Other				—				(1,498	)			1,498				—				—				—
				—				(19,071	)			19,071				—				—				—
Income from property funds				11,771				—				—				—				—				11,771
Income from unconsolidated CDFS joint ventures				457				—				5,086				5,086				(1,930	)(H)			3,613
Income from other unconsolidated investees				41				—				2,833				2,833				(752	)(H)			2,122
Interest expense				(36,608	)			—				(17,573	)			(17,573	)			(12,000	)(I)			(66,181	)
Interest and other income				1,374				—				8,977				8,977				(575	)(J)			9,776
Other expense				—				—				(828	)			(828	)			—				(828	)
Earnings before minority interest				74,503				40,762				(20	)			40,742				(37,026	)			78,219
	Minority interest			1,341				—				—				—				—				1,341
Earnings before certain net gains and net foreign currency exchange expenses/losses				73,162				40,762				(20	)			40,742				(37,026	)			76,878
	Gains recognized on dispositions of certain non-CDFS business assets, net			—				—				20				20				(20	)(G)			—
	Foreign currency expenses/losses, net			(114	)			—				—				—				—				(114	)
Earnings before income taxes				73,048				40,762				—				40,762				(37,046	)			76,764
	Income taxes			—				8,148				(8,148	)			—
	Current income tax			1,173				—				6,370				6,370				—				7,543
	Deferred income tax			839				—				1,778				1,778				(1,884	)(L)			733
				2,012				8,148				—				8,148				(1,884	)			8,276
Earnings from continuing operations				71,036				32,614				—				32,614				(35,162	)			68,488
	Less preferred shares dividends			6,354				—				—				—				—				6,354
Earnings from continuing operations attributable to common shares			$	64,682			$	32,614			$	—			$	32,614			$	(35,162	)		$	62,134
Basic earnings from continuing operations per share (M)			$	0.35											$	0.31							$	0.26
Diluted earnings from continuing operations per share (M)			$	0.34											$	0.31							$	0.25
Weighted average common shares outstanding-basic (M)				186,154												103,750				55,598	(N)			241,752
Weighted average common shares outstanding-diluted (M)				196,180												105,301				55,598	(N)			251,778

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	•	Investments in operating and development joint ventures that are accounted for under the equity method were classified as a component of “Properties” by Catellus. These balances have been reclassified to “Investments in and advances to unconsolidated investees” to conform to ProLogis’ reporting presentation.
	•	Furniture, fixtures and equipment and associated accumulated depreciation balances were classified as a component of “Properties” by Catellus. These balances have been reclassified to “Other assets” to conform to ProLogis’ reporting presentation.
	•	Construction costs payable were classified as a component of “Accounts payable and accrued expenses” by Catellus. This balance has been reclassified to a separate line item to conform to ProLogis’ reporting presentation.
	•	Deferred income taxes were classified as a separate line item by Catellus. This balance has been reclassified to “Other liabilities” to conform to ProLogis’ reporting presentation.
	•	Amounts due to employees under a non-qualified savings plan were classified as a component of “Accounts payable and accrued expenses” by Catellus. This balance has been reclassified to “Other liabilities” to conform to ProLogis’ reporting presentation.

	•	Lease termination fees were included as a component of “Interest and other income” which Catellus excludes in computing “Operating income.” These fees have been reclassified to “Rental income” to conform to ProLogis’ presentation.
	•	Land holding costs were included as a component of “Other expense” which Catellus excludes in computing “Operating income.” ProLogis includes these costs as a component “Operating income” as an “Other expense.” Catellus’ land holding costs have been reclassified to conform to ProLogis’ presentation.
	•	Catellus includes the proceeds from sales as a separate line item in “Revenues” and the costs of sales as a separate line item in “Expenses.” ProLogis presents similar transactions in a separate section but also as a component of “Operating income.” Catellus’ balances have been reclassified to conform to ProLogis’ presentation.
	•	Catellus includes certain net gains as a component of “Other income.” ProLogis presents similar items below “Earnings before minority interest.” Catellus’ balances are reclassified to conform to ProLogis’ presentation.
	•	Catellus presents separate sections titled “Other income” and “Other expenses” below “Operating income” while ProLogis has one section below “Operating income” that includes both income and expense items. Such balances of Catellus that remain in these sections after the reclassifications of lease termination fees, land holding costs and net gains are reclassified to conform to ProLogis’ presentation.
	•	Catellus’ total income taxes are reclassified to present current income taxes and deferred income taxes separately, which is consistent with ProLogis’ presentation.

F-7

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F-8

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Table of Contents

Calculation of purchase price
	Issuance of 56,028,604 ProLogis common shares based on a 0.822 exchange ratio in exchange for 68,161,318 shares of outstanding Catellus common stock, canceled restricted stock, canceled restricted stock units and canceled stock options after adjustments applicable to the withholding of associated taxes			$	2,291,290
	Payment of aggregate merger consideration in exchange for 37,119,196 shares of outstanding Catellus common stock, canceled restricted stock, canceled restricted stock units and canceled stock options after adjustments applicable to the exercise price of canceled stock options and the withholding of associated taxes				1,255,000
	Payment of withholding taxes associated with the Catellus restricted stock, restricted stock units and stock options that were canceled pursuant to the terms of the merger agreement				25,377
		Total merger consideration			3,571,667
	Catellus secured debt and assessment bonds outstanding at book value				1,255,104
	Adjustment to record Catellus secured debt and assessment bonds at fair value under purchase accounting				80,090
	All other Catellus liabilities at book value				462,719
	Adjustment to record Catellus liabilities at fair value under purchase accounting				96,689
	Estimated fees and other expenses related to the merger				90,000
		Total purchase price		$	5,556,269

Issued and outstanding shares of Catellus stock at March 31, 2005			103,875,231
Outstanding restricted stock and restricted stock units to be canceled at the merger date that will be exchanged for cash and ProLogis common shares			1,666,340
Outstanding stock options to be canceled at the merger date, less adjustment for shares that will not be exchanged for cash and ProLogis common shares (shares will not be exchanged for cash and ProLogis commons shares to the extent of the combined exercise price of the canceled stock options)			493,866
Shares that will not be exchanged for cash and ProLogis common shares due to the payment of applicable withholding taxes on behalf of the employees			(754,923	)
			105,280,514

Advisory fees			$	21,500
Legal, accounting and other fees and costs				11,000
Share registration and issuance costs				1,400
Debt issuance and debt assumption fees				16,900
Termination, severance, change in control and other employee related costs				39,200
	Total		$	90,000

F-9

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Table of Contents

								Palmtree
				Reclassified				Acquisition
				Catellus(B)				Corporation				Pro Forma
				(Pre merger)				(Post merger)				Adjustments				Comments
ASSETS
Real estate				$	2,353,626			$	4,573,539			$	2,219,913				C-1
	Less accumulated depreciation				(492,347	)			—				492,347				C-2
					1,861,279				4,573,539				2,712,260
Investments in and advances to unconsolidated investees					(1,061	)			167,263				168,324				C-3
Restricted cash					12,867				12,867				—
Cash and cash equivalents					54,138				22,515				(31,623	)			C-4
Notes receivable					296,150				296,150				—
Accounts receivable					30,720				30,720				—
Other assets					218,080				298,574				80,494				C-5
Goodwill					—				153,241				153,241				C-6
		Total assets		$	2,472,173			$	5,554,869			$	3,082,696
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
	Lines of credit and short-term borrowings			$	—			$	570,377			$	570,377				C-7
	Senior notes				—				800,000				800,000				C-7
	Secured debt and assessment bonds				1,255,104				1,335,194				80,090				C-8
	Accounts payable and accrued expenses				76,326				36,931				(39,395	)			C-9
	Construction costs payable				34,842				34,842				—
	Other liabilities				351,551				487,635				136,084				C-10
		Total liabilities			1,717,823				3,264,979				1,547,156
Shareholders equity:
	Common shares				1,050				560				(490	)			C-11
	Additional paid-in capital				515,787				2,289,330				1,773,543				C-11
	Unvested awards				(24,018	)			—				24,018				C-11
	Retained earnings				261,531				—				(261,531	)			C-11
		Total shareholders’ equity			754,350				2,289,890				1,535,540
		Total liabilities and shareholders’ equity		$	2,472,173			$	5,554,869			$	3,082,696

C-1		Catellus’ real estate assets have been adjusted to their estimated fair value as of March 31, 2005.
C-2		Catellus’ historical accumulated depreciation balance is eliminated when the real estate assets are recorded at fair value.

F-10

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C-3		Catellus’ investments in operating joint ventures and development joint ventures have been adjusted to their estimated fair value as of March 31, 2005. The same valuation methods used for the direct owned real estate assets of Catellus were used in calculating this adjustment.
C-4		Prior to the closing of the merger, existing cash on hand of Catellus is assumed to be used to satisfy certain liabilities outstanding at March 31, 2005 and additional cash is assumed to be generated through the collection of an employee receivable outstanding at March 31, 2005 as follows:

Accrued dividends		$	(28,195	)
Accrued employee costs			(4,426	)
Note receivable from employee			998
		$	(31,623	)

C-5		Adjustments to Catellus’ historical balance of other assets are as follows:

Elimination of straight-line rent balance		$	(39,802	)
Elimination of capitalized debt issuance costs			(14,842	)
Elimination of capitalized leasing costs			(41,987	)
Recognition of intangible value of acquired in place leases			79,193
Recognition of asset associated with the acquired in place leases that have above market lease rates			68,940
Adjustment to fixed assets, deferred charges and long-term receivables as a result of purchase price allocation			24,848
Capitalization of issuance costs associated with debt issued in merger			5,142
Assumed repayment of employee note receivable			(998	)
		$	80,494

C-6		Represents the recognition of goodwill as a result of the purchase price allocation.
C-7		Borrowings under lines of credit, short-term borrowings and the issuance of senior notes are assumed to fund the aggregate cash consideration and other associated costs of the merger aggregating $1,370,377,000. ProLogis expects to: (i) issue $800.0 million of senior notes with a term of approximately ten years; (ii) borrow $115.4 million on its existing lines of credit to pay the estimated transaction costs of $90.0 million and the estimated payment of withholding taxes associated with the canceled Catellus restricted stock, restricted stock units and stock options of $25.4 million; and (iii) obtain short-term bridge financing of $455.0 million. The bridge financing is expected to be repaid after the merger with borrowings on new credit facilities and with the proceeds from asset sales subsequent to the merger.
C-8		Adjustment reflects Catellus’ existing fixed rate secured debt at the estimated fair value based on ProLogis management’s estimates of the interest rates that would be available to ProLogis for the issuance of debt with similar terms and remaining maturities. The fixed rate debt of Catellus will be assumed by ProLogis in the merger. The interest rates on the assumed debt are considered to be above market.
C-9		Adjustments to Catellus’ historical balance of accounts payable and accrued expenses are as follows:

Assumed payment of accrued dividends before closing		$	(28,195	)
Assumed payment of accrued employee costs before closing			(4,426	)
Elimination of accrued costs associated with incentive stock plans			(6,774	)
		$	(39,395	)

F-11

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C-10		Adjustments to Catellus’ historical balance of other liabilities are as follows:

Recognition of liability associated with the acquired in place leases that have below market lease rates		$	91,941
Adjustment to deferred revenues as a result of purchase price allocation			(20,644	)
Adjustment to income tax liabilities as a result of purchase price allocation			64,787
		$	136,084

C-11		Adjustments represent the elimination of historical Catellus balances and the issuance of ProLogis common shares in the merger. The ProLogis common shares issued are valued as follows:

Number of shares issued					56,028,604
Assumed price of ProLogis common shares				$	40.895
Value of shares issued (in thousands)				$	2,291,290
Less: share registration and issuance costs (in thousands)					(1,400	)
		Total value of shares issued (in thousands)		$	2,289,890
The total value of the ProLogis common shares issued is recognized as follows (in thousands):
	Par value, $0.01 par value per share			$	560
	Additional paid-in capital				2,289,330
				$	2,289,890

F-12

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		Year Ended				Three Months Ended
		December 31, 2004				March 31, 2005
Decrease in interest expense resulting from the amortization of the premium recognized at the merger date to adjust the assumed Catellus secured debt at fair value (see Comment C-8)		$	(19,962	)		$	(5,116	)
Increase in interest expense associated with new debt issued in the merger (see Comment C-7) and other interest bearing liabilities			73,237				18,507
Eliminate historical debt issuance costs amortization			(4,900	)			(1,225	)
Increase in interest expense resulting from the amortization of debt issuance costs associated with the new debt issued in the merger (see Comment C-7)			801				201
Net increase in interest capitalized due to the increase in the balance of qualifying expenditures due to the step up to fair value as a result of the purchase allocation partially offset by the impact of ProLogis’ lower average interest rate			(1,466	)			(367	)
		$	47,710			$	12,000

F-13

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Table of Contents

		Year Ended December 31, 2004												Three Months Ended March 31, 2005
		ProLogis				Reclassified				Pro Forma				ProLogis				Reclassified				Pro Forma
		Historical				Catellus				ProLogis				Historical				Catellus				ProLogis
Earnings from continuing operations attributable to common shares		$	203,446			$	146,484			$	159,498			$	64,682			$	32,614			$	62,134
Minority interest share in earnings			4,875				—				4,875				1,341				—				1,341
Adjusted earnings from operations attributable to common shares		$	208,321			$	146,484			$	164,373			$	66,023			$	32,614			$	63,475
Weighted average common shares outstanding—Basic			182,226				103,064				237,290				186,154				103,750				241,752
Incremental weighted average effect of conversion of limited partnership units			5,035				—				5,035				5,543				—				5,543
Incremental weighted average effect of potentially dilutive instruments			4,540				1,456				4,540				4,483				1,551				4,483
Adjusted weighted average common shares outstanding—Diluted			191,801				104,520				246,865				196,180				105,301				251,778
Earnings from continuing operations attributable to common shares—Basic		$	1.12			$	1.42			$	0.67			$	0.35			$	0.31			$	0.26
Earnings from continuing operations attributable to common shares—Diluted		$	1.09			$	1.40			$	0.67			$	0.34			$	0.31			$	0.25

F-14

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A-1

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Table of Contents

				Page
ARTICLE I  THE MERGER					A-8
SECTION 1.1		The Merger			A-8
SECTION 1.2		Closing			A-8
SECTION 1.3		Effective Time			A-8
SECTION 1.4		Certificate of Incorporation and By-laws of the Surviving Corporation			A-9
SECTION 1.5		Directors and Officers of the Surviving Corporation; Increase in Size of ProLogis Board of Trustees			A-9
SECTION 1.6		Conversion of Equity Securities in the Merger			A-9
SECTION 1.7		Election Procedure			A-10
SECTION 1.8		Exchange Procedure			A-12
SECTION 1.9		Rights as Shareholders; Share Transfers			A-13
SECTION 1.10		No Fractional Shares			A-13
SECTION 1.11		Share Options; Restricted Stock and Restricted Stock Units			A-14
SECTION 1.12		Appraisal Rights			A-15
SECTION 1.13		Tax Treatment			A-15
SECTION 1.14		Withholding Rights.			A-15
ARTICLE II  REPRESENTATIONS AND WARRANTIES					A-15
SECTION 2.1		Representations and Warranties of Catellus			A-15
SECTION 2.2		Representations and Warranties of ProLogis and Merger Sub.			A-30
ARTICLE III  COVENANTS RELATING TO CONDUCT OF BUSINESS PENDING THE MERGER					A-40
SECTION 3.1		Conduct of Business by Catellus			A-40
SECTION 3.2		Conduct of Business by ProLogis.			A-43
ARTICLE IV  ADDITIONAL COVENANTS					A-44
SECTION 4.1		Preparation of the Proxy Statement; Shareholders’ Meeting			A-44
SECTION 4.2		Access to Information; Confidentiality			A-46
SECTION 4.3		Commercially Reasonable Efforts			A-46
SECTION 4.4		Tax Treatment			A-47
SECTION 4.5		No Solicitation of Transactions			A-47
SECTION 4.6		Public Announcements.			A-48
SECTION 4.7		Transfer and Gains Taxes			A-48
SECTION 4.8		Employee Arrangements			A-48
SECTION 4.9		Indemnification; Trustees’ and Officers’ Insurance			A-49
SECTION 4.10		Assistance			A-50
SECTION 4.11		Proxy Solicitor			A-50
SECTION 4.12		Resignations			A-50
SECTION 4.13		Sarbanes-Oxley Act Compliance			A-50
SECTION 4.14		Listing of ProLogis Common Shares			A-50
SECTION 4.15		Declaration of Dividends			A-51
SECTION 4.16		Affiliates			A-51
SECTION 4.17		Change of Structure			A-52
ARTICLE V  CONDITIONS PRECEDENT					A-52
SECTION 5.1		Conditions to Each Party’s Obligation to Effect the Merger			A-52
SECTION 5.2		Conditions to Obligations of ProLogis and Merger Sub			A-52
SECTION 5.3		Conditions to Obligations of Catellus			A-53

A-2

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				Page
ARTICLE VI  BOARD ACTIONS					A-54
SECTION 6.1		Board Actions.			A-54
ARTICLE VII  TERMINATION, AMENDMENT AND WAIVER					A-55
SECTION 7.1		Termination			A-55
SECTION 7.2		Expenses			A-55
SECTION 7.3		Effect of Termination			A-56
SECTION 7.4		Amendment			A-56
SECTION 7.5		Extension; Waiver			A-56
ARTICLE VIII  GENERAL PROVISIONS					A-57
SECTION 8.1		Nonsurvival of Representations and Warranties			A-57
SECTION 8.2		Notices			A-57
SECTION 8.3		Interpretation			A-57
SECTION 8.4		Counterparts			A-58
SECTION 8.5		Entire Agreement; No Third-Party Beneficiaries			A-58
SECTION 8.6		Governing Law.			A-58
SECTION 8.7		Assignment			A-58
SECTION 8.8		Enforcement			A-58
SECTION 8.9		Exhibits; Disclosure Letter.			A-58
ARTICLE IX  CERTAIN DEFINITIONS					A-58
SECTION 9.1		Certain Definitions.			A-58

A-3

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Table of Contents

Exhibit				Title
	A			Specified Holders
	B			Form of Certificate of Merger
	C			Form of Rule 145 Affiliate Letter

Schedule				Title
	2	.1(a)		Organization, Standing and Corporate Power
	2	.1(b)(i)		Subsidiaries
	2	.1(b)(ii)		Joint Ventures
	2	.1(c)(i)(D)		Restricted Stock; Outstanding Stock Options and Restricted Stock Units
	2	.1(c)(i)(F)		Dividends
	2	.1(c)(ii)(A)		Voting and Convertible Securities; Options
	2	.1(c)(ii)(B)		Remote or Special Purpose Entities of Catellus Subsidiaries
	2	.1(c)(ii)(C)		Registration Rights
	2	.1(c)(ii)(D)		Ownership of Catellus Subsidiaries By Officers and Trustees
	2	.1(d)(iii)		Violation; Third Party Consents
	2	.1(d)(iv)		Consents of Governmental Entities
	2	.1(f)		Absence of Certain Changes or Events
	2	.1(g)		Liabilities
	2	.1(j)		Litigation
	2	.1(k)		Taxes
	2	.1(l)(i)		Qualification of Catellus Pension Plans
	2	.1(l)(iii)		Employee Benefit Plans
	2	.1(l)(iv)		Employee Benefit Plans — Claims of Non-Compliance
	2	.1(l)(v)		Employee Benefit Plans — Absence of Litigation
	2	.1(l)(vii)		Severance Agreements
	2	.1(l)(viii)		Assets of Catellus Employee Benefit Plans Invested in Catellus Securities
	2	.1(l)(x)		Severance Agreements — Excess Parachute Payments
	2	.1(l)(xii)		Employee Benefit Plans — Ability to Amend or Terminate
	2	.1(o)		Environmental Matters
	2	.1(p)(i)(A)		Properties
	2	.1(p)(i)(A)(1)		Mortgage Debt
	2	.1(p)(i)(B)		Notices of Condemnation or Zoning Violations
	2	.1(p)(i)(C)		Properties — Third Party Ownership
	2	.1(p)(ii)		Title Insurance
	2	.1(p)(iii)		Development and Acquisition of Properties
	2	.1(p)(iv)		Properties — Compliance with Laws; Physical Defects
	2	.1(p)(v)		Tenants’ Options to Purchase
	2	.1(p)(vi)		Restrictions on Transfer of Catellus Properties
	2	.1(p)(vii)		Title
	2	.1(p)(viii)		Catellus Capital Allocation Plan
	2	.1(q)		Insurance
	2	.1(v)(i)		Material Contracts
	2	.1(v)(ii)		Mortgages
	2	.1(v)(iii)		Restrictions on Conduct of Business
	2	.1(v)(iv)		Prepayment of Indebtedness
	2	.1(y)		Related Party Transactions

A-4

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Schedule				Title
	2	.1(z)		Beneficial Ownership of Catellus Common Shares
	3	.1(b)(v)		Commitments
	3	.1(b)(vi)		Encumbrances
	3	.1(b)(vii)		Guarantees
	3	.1(b)(viii)		Refinancings
	3	.1(b)(xi)		Catellus Employee Benefits
	5	.1(d)		Governmental Consents
	9	.1		Knowledge

A-5

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Table of Contents

Affiliate			A-59
Aggregate Cash Consideration			A-60
Aggregate Dissenter’s Value			A-60
Agreement			A-8
Cash Consideration			A-9
Cash Election Shares			A-10
Catellus			A-8
Catellus Board Designees			A-9
Catellus Capital Allocation Plan			A-29
Catellus Common Shares			A-8
Catellus Disclosure Letter			A-16
Catellus Dividend			A-52
Catellus Employee Benefit Plans			A-60
Catellus Employees			A-25
Catellus ERISA Affiliate			A-23
Catellus Excess Shares			A-17
Catellus Intangible Property			A-26
Catellus Joint Ventures			A-17
Catellus Material Adverse Effect			A-16
Catellus Material Contracts			A-29
Catellus Option			A-14
Catellus Pension Plans			A-23
Catellus Permits			A-21
Catellus Preferred Shares			A-17
Catellus Properties			A-27
Catellus Property			A-27
Catellus SEC Documents			A-20
Catellus Severance Agreements			A-24
Catellus Stock Option Plans			A-14
Catellus Stockholder Approval			A-29
Catellus Stockholder Meeting			A-19
Catellus Subsidiary			A-60
CERCLA			A-26
Certificate			A-10
Certificate of Merger			A-8
Closing			A-8
Closing Date			A-8
COBRA			A-49
Code			A-8
Commitment			A-42
Competing Transaction			A-48
Confidentiality Agreement			A-47
Corresponding ProLogis Dividend			A-52
Counter Proposal			A-55
DGCL			A-8
Dissenting Shares			A-15
Effective Time			A-9
Election Deadline			A-11
Election Form			A-10
Environmental Law			A-26
ERISA			A-23
Exchange Act			A-20
Exchange Agent			A-10
Exchange Fund			A-12
Exchange Ratio			A-9
Excluded Shares			A-9
Form S-4			A-45
GAAP			A-20
Hazardous Material			A-26
Indemnified Parties			A-50
Joint Proxy Statement/ Prospectus			A-45
Knowledge			A-60
Law			A-60
Lien			A-16
Maximum Premium Amount			A-50
Merger			A-8
Merger Consideration			A-9
Merger Sub			A-8
Merger Sub Common Stock			A-9
Morgan Stanley			A-29
Net Option Payment			A-14
New Holdco			A-53
Non-Election Shares			A-10
Non-Transferred Employee			A-49
Offered Employees			A-49
Option Consideration			A-14
PCBs			A-26
Person			A-60
ProLogis			A-8
ProLogis Break-Up Expenses			A-57
ProLogis Break-Up Fee			A-57
ProLogis Common Shares			A-60
ProLogis Employee Benefit Plans			A-60
ProLogis Employees			A-36
ProLogis ERISA Affiliate			A-35
ProLogis Intangible Property			A-36
ProLogis Material Adverse Effect			A-31
ProLogis Material Contracts			A-39
ProLogis Options			A-32
ProLogis Pension Plans			A-35
ProLogis Permits			A-34
ProLogis Preferred Shares			A-31
ProLogis Properties			A-37
ProLogis Property			A-37

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ProLogis SEC Documents			A-33
ProLogis Shareholder Approval			A-38
ProLogis Shareholder Meeting			A-32
ProLogis Stock Option Plans			A-32
ProLogis Subsidiary			A-60
Reallocated Cash Shares			A-11
Reallocated Stock Shares			A-12
REIT			A-23
Release			A-26
Rule 145 Affiliates			A-52
Sarbanes-Oxley Act			A-51
SEC			A-19
Securities Act			A-20
Series C Preferred Shares			A-31
Series F Preferred Shares			A-31
Series G Preferred Shares			A-31
Share Consideration			A-9
Share Election Shares			A-10
Specified Holders			A-8
Subsidiary			A-60
Superior Competing Transaction			A-48
Surviving Corporation			A-8
Takeover Statute			A-30
Tax			A-60
Tax Protection Agreement			A-61
Tax Return			A-61
Teachers Loan			A-61
Termination Date			A-56
Transfer and Gains Taxes			A-49
Transferred Employee			A-49
Voting Agreements			A-8
Voting Debt			A-61

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	(a) Each share of common stock, par value $0.01 per share (“Merger Sub Common Stock”), of Merger Sub issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding and shall be unchanged by the Merger.
	(b) Each Catellus Common Share that is owned by Catellus, any wholly owned Subsidiary of Catellus, ProLogis or any wholly owned subsidiary of ProLogis immediately prior to the Effective Time and each Catellus Common Share that constitutes a Catellus RSU immediately prior to the Effective Time (collectively, the “Excluded Shares”), shall automatically be canceled and retired and shall cease to exist, and no payment shall be made with respect thereto (except for Catellus Common Shares that constitute Catellus RSUs immediately prior to the Effective Time, which shall be treated in accordance with Section 1.11(b)).
	(c) Subject to Sections 1.7 and 1.10, each Catellus Common Share issued and outstanding immediately prior to the Effective Time (other than Excluded Shares and Dissenting Shares) shall automatically be converted into, and shall be canceled in exchange for, the right to receive, at the option of the holder, as contemplated by and subject to Section 1.7, the following:

	(i) 0.822 (as it may be adjusted pursuant to Section 1.6(e), the “Exchange Ratio”) of a ProLogis Common Share (the “Share Consideration”); or
	(ii) an amount in cash equal to $33.81, without interest (the “Cash Consideration”).

(d) The Share Consideration and the Cash Consideration and any cash payable in lieu of fractional ProLogis Common Shares pursuant to Section 1.10 are referred to collectively as the “Merger Consideration.” All Catellus Common Shares converted into the right to receive the Merger Consideration pursuant to Section 1.6(c) (other than Dissenting Shares, which shall be treated in accordance with Section 1.12, and Excluded Shares, which shall be canceled in accordance with Section 1.6(b)) shall cease to be outstanding and shall be canceled and retired and shall cease to exist, and each holder of a certificate that immediately prior to the Effective Time represented such Catellus Common Shares (a “Certificate”) shall thereafter cease to have any rights with respect to such Catellus Common Shares, except the right to receive the Merger Consideration to be issued in

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	consideration therefor and any dividends or other distributions to which holders of Catellus Common Shares become entitled in accordance with this Article I upon the surrender of such Certificate.
	(e) Notwithstanding anything in this Agreement to the contrary, if, between the date of this Agreement and the Effective Time, the outstanding ProLogis Common Shares or Catellus Common Shares shall be changed into a different number of shares or a different class by reason of any reclassification, recapitalization, split-up, combination, exchange of shares or readjustment, the Exchange Ratio, the Share Consideration and the Cash Consideration shall be adjusted accordingly, without duplication, to provide the holders of shares of Catellus Common Shares the same economic effect as contemplated by this Agreement prior to such event.

	(i) to elect to receive the Share Consideration for one or more Catellus Common Shares held by such holder (“Share Election Shares”);
	(ii) to elect to receive the Cash Consideration for one or more Catellus Common Shares held by such holder (“Cash Election Shares”); and
	(iii) to indicate that such holder makes no such election with respect to one or more Catellus Common Shares held by such holder (“Non-Election Shares”).

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	(i) If the number of Cash Election Shares times the Cash Consideration is less than the Aggregate Cash Consideration, then:

	(A) all Cash Election Shares shall be converted into the right to receive the Cash Consideration;
	(B) Non-Election Shares shall be deemed to be Cash Election Shares to the extent necessary to have the total number of Cash Election Shares times the Cash Consideration equal the Aggregate Cash Consideration. If less than all of the Non-Election Shares need to be treated as Cash Election Shares in order to have the total number of Cash Election Shares times the Cash Consideration equal the Aggregate Cash Consideration, then the Exchange Agent shall select which Non-Election Shares shall be treated as Cash Election Shares in accordance with Section 1.7(j), and all remaining Non-Election Shares shall thereafter be treated as Share Election Shares;
	(C) if the total number of Cash Election Shares (including any Non-Election Shares treated as such) times the Cash Consideration remains less than the Aggregate Cash Consideration, then the Exchange Agent shall convert (on a pro rata basis as described in Section 1.7(j)) a sufficient number of Share Election Shares into Cash Election Shares (“Reallocated Cash Shares”) such that the sum of the number of Cash Election Shares (including any Non-Election Shares treated as such) plus the number of Reallocated Cash Shares times the Cash Consideration equals the Aggregate Cash Consideration, and all Reallocated Cash Shares will be converted into the right to receive the Cash Consideration; and
	(D) the Share Election Shares which are not Reallocated Cash Shares shall be converted into the right to receive the Share Consideration.

	(ii) If the number of Cash Election Shares times the Cash Consideration is greater than the Aggregate Cash Consideration, then:

	(A) all Share Election Shares and all Non-Election Shares shall be converted into the right to receive the Share Consideration;
	(B) the Exchange Agent shall convert (on a pro rata basis as described in Section 1.7(j)) a sufficient number of Cash Election Shares into Share Election Shares (“Reallocated Stock Shares”) such that the number of remaining Cash Election Shares times the Cash Consideration equals the Aggregate Cash Consideration, and all Reallocated Stock Shares shall be converted into the right to receive the Share Consideration; and

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	(C) the Cash Election Shares which are not Reallocated Stock Shares shall be converted into the right to receive the Cash Consideration.

(iii) If the number of Cash Election Shares times the Cash Consideration is equal to the Aggregate Cash Consideration, then Sections 1.7(i)(i) and 1.7(i)(ii) shall not apply and (A) all Non-Election Shares and all Share Election Shares shall be converted into the right to receive the Share Consideration and (B) all Cash Election Shares shall be converted into the right to receive the Cash Consideration.

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(a) Organization, Standing and Corporate Power of Catellus. Catellus is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware and has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Catellus is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of the business it is conducting, or the ownership, operation or leasing of its properties or the management of properties for others makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed, individually or in the aggregate, would not have, or would not be reasonably expected to have, a Catellus Material Adverse Effect. “Catellus Material Adverse Effect” means (x) a material adverse effect on the business, properties, assets, condition (financial or otherwise) or results of operations of Catellus and the Catellus Subsidiaries, taken as a whole, or (y) the effect of preventing or materially delaying the performance by Catellus of any of its obligations under this Agreement or the consummation of the Merger or any other transactions contemplated by this Agreement; provided,

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	however, that a Catellus Material Adverse Effect shall not include any change with respect to Catellus or any Catellus Subsidiary to the extent resulting from or attributable to (i) any change in general national or international economic, financial or political conditions or events, including the effects of terrorist acts that do not result in the destruction or material physical damage of a material portion of Catellus’s real properties, (ii) the announcement, pendency or consummation of this Agreement or the transactions contemplated hereby or (iii) any change in conditions generally affecting the securities markets or the industry in which Catellus and the Catellus Subsidiaries operate that does not affect Catellus or any Catellus Subsidiary to a materially greater extent than such change affects other Persons in the industry in which Catellus and the Catellus Subsidiaries operate. Catellus has heretofore made available to ProLogis complete and correct copies of the Catellus Certificate of Incorporation, as amended and supplemented to the date hereof, and the Catellus By-laws, as amended to the date hereof. Each jurisdiction in which Catellus is qualified or licensed to do business and each assumed name under which it conducts business in any jurisdiction are identified in Schedule 2.1(a) of the Disclosure Letter dated as of the date of this Agreement and delivered to ProLogis in connection with the execution hereof (the “Catellus Disclosure Letter”).
	(b) Catellus Subsidiaries; Catellus Joint Ventures. (i) Each Catellus Subsidiary that is a corporation is duly incorporated, validly existing and in good standing under the Laws of its jurisdiction of incorporation and has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Each Catellus Subsidiary that is a partnership, limited liability company or trust is duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization and has the requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Each Catellus Subsidiary is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership, operation or leasing of its properties or the management of properties for others makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed, individually or in the aggregate, would not reasonably be expected to have a Catellus Material Adverse Effect. Except as disclosed in Schedule 2.1(b)(i) of the Catellus Disclosure Letter, all outstanding shares of capital stock of each Catellus Subsidiary that is a corporation have been duly authorized, are validly issued, fully paid and nonassessable, and are not subject to any preemptive rights and are owned by Catellus or another Catellus Subsidiary and are so owned free and clear of all pledges, claims, liens, charges, encumbrances and security interests of any kind or nature whatsoever (each, a “Lien” and, collectively, “Liens”. Except as disclosed in Schedule 2.1(b)(i) of the Catellus Disclosure Letter, all equity interests in each Catellus Subsidiary or Catellus Joint Venture owned by Catellus or a Catellus Subsidiary that is a partnership, limited liability company, trust or other entity, have been duly authorized and are validly issued and are owned by Catellus or another Catellus Subsidiary and are so owned free and clear of all Liens. Schedule 2.1(b)(i) of the Catellus Disclosure Letter sets forth (A) all Catellus Subsidiaries and their respective jurisdictions of incorporation or organization and (B) each owner and the respective amount of such owner’s equity interest in each Catellus Subsidiary.
	(ii) Schedule 2.1(b)(ii) of the Catellus Disclosure Letter sets forth (A) all Catellus Joint Ventures and their respective jurisdictions of incorporation or organization and (B) Catellus’s equity interest in such Catellus Joint Venture and, to the Knowledge of Catellus, each other owner and the respective amount of such owner’s equity interest in each Catellus Joint Venture. Except for the capital stock of, or other equity interests in, the Catellus Subsidiaries and the other interests disclosed in Schedule 2.1(b)(ii) of the Catellus Disclosure Letter (such other interests, the “Catellus Joint Ventures”), neither Catellus nor any of the Catellus Subsidiaries owns any capital stock or other ownership interest in any Person. Neither Catellus nor any Catellus Subsidiary is in default under any agreement, document or contract governing its rights in, or obligations to, the Catellus Joint Ventures which default is, or could, with the passage of time, result in, a breach under such agreement, document or contract, except for defaults which, individually or in the aggregate, would not reasonably be expected to have a Catellus Material Adverse Effect. To the Knowledge of Catellus, the other

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	parties to such agreements, documents and contracts are not in material breach of any of their respective obligations under such agreements, documents or contracts.
	(c) Capital Structure.

	(i) Shares of Stock.

	(A) The authorized capital of Catellus consists of (1) 150,000,000 Catellus Common Shares, (2) 50,000,000 shares of preferred stock, par value $0.01 per share (“Catellus Preferred Shares”), and (3) 50,000,000 shares of excess stock, par value $0.01 per share (“Catellus Excess Shares”).
	(B) As of the date of this Agreement, (1) 104,159,590 Catellus Common Shares are issued and outstanding, including 510,964 restricted shares under the Catellus Option Plans, (2) no Catellus Preferred Shares are issued and outstanding, and (3) no Catellus Excess Shares are issued and outstanding. All outstanding Catellus Common Shares are duly authorized, validly issued, fully paid and nonassessable and not subject to, or issued in violation of, any preemptive right, purchase option, call option, right of first refusal, subscription or any other similar right.
	(C) As of the date of this Agreement, (1) 782,728 Catellus Common Shares are reserved for issuance upon exercise of outstanding Catellus Options and (2) 1,419,159 Catellus Common Shares are reserved for issuance upon payment of outstanding Catellus RSUs (not including the 510,964 restricted shares referred to in clause (B) above). All such Catellus Common Shares reserved for issuance will be, upon issuance in accordance with the terms specified in the instruments or agreements pursuant to which they are issuable, duly authorized, validly issued, fully paid and nonassessable and not subject to, or issued in violation of, any preemptive right, purchase option, call option, right of first refusal, subscription or any other similar right.
	(D) Except as provided herein or as disclosed in Schedule 2.1(c)(i)(D) of the Catellus Disclosure Letter, there are no outstanding restricted Catellus Common Shares, performance share awards, restricted stock units (including performance units), stock options, stock appreciation rights or dividend equivalent rights relating to the shares of Catellus’s capital stock.
	(E) There is no Voting Debt of Catellus or any Catellus Subsidiary outstanding.
	(F) Except as disclosed in Schedule 2.1(c)(i)(F) of the Catellus Disclosure Letter, all dividends or distributions on securities of Catellus or any Catellus Subsidiary that have been declared or authorized prior to the date of this Agreement have been paid in full.

	(ii) Miscellaneous

(A) Except as set forth in this Section 2.1(c) or in Schedule 2.1(c)(ii)(A) of the Catellus Disclosure Letter, there are issued and outstanding or reserved for issuance: (1) no Voting Debt or other voting securities or equity securities of Catellus; (2) no securities of Catellus or any Catellus Subsidiary or securities or assets of any other entity convertible into or exchangeable for Voting Debt or other voting securities or equity securities of Catellus or any Catellus Subsidiary; and (3) no subscriptions, options, warrants, conversion rights, calls, performance stock awards, stock appreciation rights or phantom stock rights, rights of first refusal, rights (including preemptive rights), commitments or arrangements or agreements to which Catellus or any Catellus Subsidiary is a party or by which it is bound obligating Catellus or any Catellus Subsidiary to issue, deliver, sell, purchase, redeem or acquire, or cause to be issued, delivered, sold, purchased, redeemed or acquired, additional Voting Debt or other voting securities or equity securities of Catellus or of any Catellus Subsidiary, or obligating Catellus or any Catellus Subsidiary to grant, extend or enter into any such subscription, option, warrant, conversion right, call, performance stock award, stock appreciation right or phantom stock right, right of first refusal, right, commitment or

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	arrangement or agreement. Except as set forth in Schedule 2.1(c)(ii)(A) of the Catellus Disclosure Letter or otherwise in this Section 2.1(c), there are no awards outstanding under the Catellus Stock Option Plans.
	(B) Except for this Agreement and the Voting Agreements, there are no (x) shareholder agreements, voting trusts or other agreements or understandings relating to the voting of any capital stock of Catellus or any Catellus Subsidiary or interests in any Catellus Subsidiary or (y) agreements or understandings relating to the sale or transfer of any shares of Catellus or any ownership interests in any Catellus Subsidiary, in the case of (x) and (y) to which Catellus or any Catellus Subsidiary is a party other than as provided in the organizational documents of Catellus, any Catellus Subsidiary or any Catellus Joint Venture and other than as listed on Schedule 2.1(c)(ii)(B) of the Catellus Disclosure Letter. Except as set forth in the applicable organizational documents of any Catellus Subsidiary or as imposed and required by lenders in connection with bankruptcy remote or special purpose entities that are Subsidiaries, which bankruptcy remote or special purpose entities are specified in Schedule 2.1(c)(ii)(B) of the Catellus Disclosure Letter, there are no restrictions on Catellus’s ability to vote the equity interests of any of the Catellus Subsidiaries.
	(C) Except as set forth in Schedule 2.1(c)(ii)(C) of the Catellus Disclosure Letter, no holder of securities in Catellus (other than Catellus Common Shares that will be converted pursuant to Section 1.6) or any Catellus Subsidiary has any right to have such securities registered by Catellus or any Catellus Subsidiary, as the case may be. All prior issuances of securities by Catellus or any Catellus Subsidiary were, in all material respects, made in compliance with all applicable federal and state securities Laws.
	(D) Except as set forth in Schedule 2.1(c)(ii)(D) of the Catellus Disclosure Letter, there are no Catellus Subsidiaries or Catellus Joint Ventures in which any officer or director of Catellus or any Catellus Subsidiary owns any shares of beneficial interest, capital stock or other securities. Schedule 2.1(c)(ii)(D) of the Catellus Disclosure Letter sets forth a true, accurate and complete list of: (1) the name of any such officer or director owning beneficial interests, capital stock or other securities in any Catellus Subsidiary, (2) the name of the entity or entities in which such officer or director owns an interest, and (3) the type and amount of beneficial interests, capital stock or other securities owned by such officer or director in such entities. There are no agreements or understandings between Catellus or any Catellus Subsidiary and any Person listed in Schedule 2.1(c)(ii)(D) of the Catellus Disclosure Letter that could cause such Person to be treated as holding any beneficial interest, capital stock or security in Catellus or any Catellus Subsidiary or as an agent for, or nominee of, Catellus or any Catellus Subsidiary.

	(d) Authority; No Violations; Consents and Approval.

	(i) The Board of Directors of Catellus has approved and declared advisable the Merger and the other transactions contemplated by this Agreement and has authorized that the Merger be submitted for consideration at a special meeting of the Catellus stockholders (the “Catellus Stockholder Meeting”). Catellus has all requisite power and authority to enter into this Agreement and, subject, with respect to the consummation of the Merger, to receipt of the Catellus Stockholder Approval, to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action on the part of Catellus, subject, with respect to the consummation of the Merger, to receipt of the Catellus Stockholder Approval.
	(ii) This Agreement has been duly executed and delivered by Catellus and, subject, with respect to the consummation of the Merger, to receipt of the Catellus Stockholder Approval and assuming this Agreement constitutes the valid and binding obligation of ProLogis and Merger Sub, constitutes a valid and binding obligation of Catellus and is enforceable in accordance with its terms, subject, as to enforceability, to bankruptcy, insolvency, reorganization, moratorium and

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	other Laws of general applicability relating to or affecting creditors’ rights and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at Law).
	(iii) Except as set forth in Schedule 2.1(d)(iii) of the Catellus Disclosure Letter, the execution and delivery of this Agreement by Catellus do not, and the consummation of the transactions contemplated hereby, and compliance with the provisions hereof, will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any material obligation, or give rise to a right of purchase under, result in the creation of any Lien upon any of the properties or assets of Catellus or any of the Catellus Subsidiaries under or require the consent or approval of any third party under, any provision of (A) the Catellus Certificate of Incorporation or the Catellus By-laws or any provision of the comparable charter or organizational documents of any of the Catellus Subsidiaries, (B) any Catellus Material Contract (it being understood that no representation is being given as to whether the Surviving Corporation and the Catellus Subsidiaries will be in compliance with any financial covenants contained therein following the Merger), or (C) assuming the consents, approvals, authorizations or permits and filings or notifications referred to in Schedules 2.1(d)(iii) and (iv) of the Catellus Disclosure Letter are duly and timely obtained or made and the Catellus Stockholder Approval is obtained, any judgment, order, decree, statute, Law, ordinance, rule or regulation applicable to Catellus or any of the Catellus Subsidiaries, or any of their respective properties or assets, other than, in the case of clauses (B) or (C), any such conflicts, violations, defaults, rights or Liens that, individually or in the aggregate, would not reasonably be expected to have a Catellus Material Adverse Effect.
	(iv) Except as set forth in Schedule 2.1(d)(iv) of the Catellus Disclosure Letter, no consent, approval, order or authorization of, or registration, declaration or filing with, or permit from any Governmental Entity, is required by or with respect to Catellus or any of the Catellus Subsidiaries in connection with the execution and delivery of this Agreement by Catellus or the consummation by Catellus of the transactions contemplated hereby, except for: (A) the filing with the Securities and Exchange Commission (the “SEC”) of (1) (a) the Joint Proxy Statement/ Prospectus or (b) other documents otherwise required in connection with the transactions contemplated hereby and (2) such reports under Section 13(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and such other compliance with the Exchange Act, the Securities Act of 1933, as amended (the “Securities Act”), and the rules and regulations thereunder, as may be required in connection with this Agreement and the transactions contemplated hereby; (B) the filing of the Certificate of Merger with, and the acceptance for record of the Certificate of Merger by, the Secretary of State of the State of Delaware; (C) such filings and approvals as may be required by any applicable Environmental Laws as more specifically described in Schedule 2.1(d)(iv) of the Catellus Disclosure Letter; (D) such filings as may be required under applicable federal and state securities laws, and (E) any such consent, approval, order, authorization, registration, declaration, filing or permit that the failure to obtain or make, individually or in the aggregate, would not reasonably be expected to have a Catellus Material Adverse Effect.

(e) SEC Documents. Catellus has made available to ProLogis (by public filing with the SEC or otherwise) a true and complete copy of each report, schedule, registration statement and definitive proxy statement filed by either Catellus or any Catellus Subsidiary with the SEC since January 1, 2002 (the “Catellus SEC Documents”), which are all of the documents required to have been filed by any of them with the SEC since that date. As of their respective dates, the Catellus SEC Documents complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such Catellus SEC Documents and none of the Catellus SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made,

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	not misleading, except to the extent such statements have been modified or superseded by later Catellus SEC Documents filed and publicly available prior to the date of this Agreement. As of the date hereof, neither Catellus nor any Catellus Subsidiary has any outstanding and unresolved comments from the SEC with respect to the Catellus SEC Documents. The consolidated financial statements of Catellus and Catellus Subsidiaries included in the Catellus SEC Documents complied as to form in all material respects with the applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with generally accepted accounting principles (“GAAP”) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto, or, in the case of the unaudited statements, as permitted by Rule 10-01 of Regulation S-X under the Exchange Act) and fairly presented, in accordance with applicable requirements of GAAP and the applicable rules and regulations of the SEC (subject, in the case of the unaudited statements, to normal, recurring adjustments, none of which are material), the consolidated financial position of Catellus and the Catellus Subsidiaries, taken as a whole, as of their respective dates and the consolidated statements of income and the consolidated cash flows of Catellus and the Catellus Subsidiaries for the periods presented therein, in each case, except to the extent such financial statements have been modified or superseded by later Catellus SEC Documents filed and publicly available prior to the date of this Agreement. No Catellus Subsidiary is required to make any filing with the SEC.
	(f) Absence of Certain Changes or Events. Except as disclosed or reflected in the Catellus SEC Documents filed with the SEC prior to the date of this Agreement or as disclosed in Schedule 2.1(f) of the Catellus Disclosure Letter or as otherwise permitted by this Agreement (including any action or events permitted by Section 3.1), since December 31, 2004 there has not been: (i) (A) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, shares or property) with respect to any of Catellus’s capital stock except for regular quarterly dividends on the Catellus Common Shares; (B) any amendment of any term of any outstanding equity security of Catellus or any Catellus Subsidiary; (C) any repurchase, redemption or other acquisition by Catellus or any Catellus Subsidiary of any outstanding shares of capital stock or other equity securities of, or other ownership interests in, Catellus or any Catellus Subsidiary; (D) any change in any method of accounting or accounting practice or any tax method, practice or election by Catellus or any Catellus Subsidiary that would materially affect its assets, liabilities or business, except insofar as may have been required by a change in applicable Law or GAAP; (E) any Catellus Material Adverse Effect; (F) any (1) amendment of any employment, consulting, severance, retention or other agreement between Catellus and any officer or director of Catellus; (2) grant of any severance or termination pay to any director or officer of Catellus or any Catellus Subsidiary; (3) entering into of any employment agreement with any director or officer of Catellus or any Catellus Subsidiary; (4) material increase in any benefits payable under any existing severance or termination pay policies or employment agreements; or (5) increase in compensation, bonus or other benefits payable to directors or officers of Catellus or any Catellus Subsidiary; (G) any incurrence, assumption or guarantee by Catellus or any Catellus Subsidiary of any indebtedness for borrowed money other than in the ordinary course of business consistent with past practices; (H) any creation or assumption by Catellus or any Catellus Subsidiary of any Lien in an amount, individually or in the aggregate, in excess of $50 million on any asset other than in the ordinary course of business consistent with past practices; or (I) any making of any loan, advance or capital contribution to or investment in any Person in an amount exceeding $25 million or (ii) except for the issuance of awards under the Catellus Stock Option Plans and the issuance of Catellus Common Shares, any split, combination or reclassification of any of Catellus’s capital stock or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of, or in substitution for, or giving the right to acquire by exchange or exercise, capital stock or any issuance of an ownership interest in, any Catellus Subsidiary.
	(g) No Undisclosed Material Liabilities. Except as disclosed in the Catellus SEC Documents, as set forth in Schedule 2.1(g) of the Catellus Disclosure Letter or as otherwise would not reasonably be expected to have a Catellus Material Adverse Effect, there are no liabilities of Catellus or any of the

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	Catellus Subsidiaries or Catellus Joint Ventures, whether accrued, contingent, absolute or determined, and, to Catellus’s Knowledge, there is no existing condition, situation or set of circumstances that would reasonably be expected to result in such a liability, other than: (i) liabilities adequately provided for on the balance sheet of Catellus dated as of December 31, 2004 (including the notes thereto); (ii) liabilities adequately provided for on the balance sheets of the Catellus Joint Ventures dated as of December 31, 2004; or (iii) liabilities incurred in the ordinary course of business subsequent to December 31, 2004. Schedule 2.1(g) of the Catellus Disclosure Letter sets forth a complete list of all material loan or credit agreements, notes, bonds, mortgages, indentures and other agreements and instruments existing at the date of this Agreement pursuant to which any material indebtedness of Catellus, any Catellus Subsidiary or, to Catellus’s Knowledge, any Catellus Joint Venture is outstanding or may be incurred and the respective principal amounts outstanding thereunder as of May 31, 2005.
	(h) No Default. None of Catellus, any of the Catellus Subsidiaries or, to Catellus’s Knowledge, any of the Catellus Joint Ventures is in default or violation (and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation) of any term, condition or provision of (i) the Catellus Certificate of Incorporation or the Catellus By-laws or the comparable charter or organizational documents of any of the Catellus Subsidiaries or Catellus Joint Ventures, (ii) any loan or credit agreement, note, or any bond, mortgage or indenture, to which Catellus or any of the Catellus Subsidiaries or any Catellus Joint Venture is a party or by which Catellus, any of the Catellus Subsidiaries, any Catellus Joint Venture or any of their respective properties or assets is bound, or (iii) any order, writ, injunction, decree, statute, rule or regulation applicable to Catellus, any of the Catellus Subsidiaries or any of the Catellus Joint Ventures, except in the case of (ii) and (iii) for defaults or violations which, individually or in the aggregate, would not reasonably be expected to have a Catellus Material Adverse Effect.
	(i) Compliance with Applicable Laws. Catellus, the Catellus Subsidiaries and, to Catellus’s Knowledge, the Catellus Joint Ventures hold all permits, licenses, variances, exemptions, orders and approvals of all Governmental Entities necessary for the lawful conduct of their respective businesses (the “Catellus Permits”), except where the failure so to hold such Catellus Permits, individually or in the aggregate, would not reasonably be expected to have a Catellus Material Adverse Effect. Catellus and the Catellus Subsidiaries are in compliance with the terms of the Catellus Permits, except where the failure to so comply, individually or in the aggregate, would not reasonably be expected to have a Catellus Material Adverse Effect. Except as disclosed in the Catellus SEC Documents, the businesses of Catellus and the Catellus Subsidiaries are not being conducted in violation of any Law, except for violations which, individually or in the aggregate, would not reasonably be expected to have a Catellus Material Adverse Effect. Except as set forth in the Catellus SEC Documents, no investigation or review by any Governmental Entity with respect to Catellus, any Catellus Subsidiary or, to Catellus’s Knowledge, any Catellus Joint Venture is pending or, to Catellus’s Knowledge, threatened, other than those the outcome of which, individually or in the aggregate, would not reasonably be expected to have a Catellus Material Adverse Effect.
	(j) Litigation. Except as disclosed in the Catellus SEC Documents or as set forth in Schedule 2.1(j) of the Catellus Disclosure Letter and except for routine litigation arising from the ordinary course of business of Catellus, the Catellus Subsidiaries and the Catellus Joint Ventures which are adequately covered by insurance, there is no suit, action or proceeding pending or, to the Knowledge of Catellus, threatened against Catellus, any Catellus Subsidiary or, to Catellus’s Knowledge, any Catellus Joint Venture or any of their respective properties or assets that, individually or in the aggregate, would reasonably be expected to have a Catellus Material Adverse Effect.

	(i) Each of Catellus and the Catellus Subsidiaries has timely filed all material Tax Returns required to be filed by it (after giving effect to any filing extension properly granted by a Governmental Entity having authority to do so). Catellus and each Catellus Subsidiary has paid (or Catellus has paid on its behalf), all material Taxes that are shown as due and payable on

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	such Tax Returns. True, correct and complete copies of all U.S. federal, state and local Tax Returns for Catellus and each Catellus Subsidiary with respect to tax years commencing on or after January 1, 1999, and all written communications with any Tax authority relating to such Tax Returns, have been delivered or made available to ProLogis or representatives of ProLogis. In addition, all written communications with any Tax authority requested by ProLogis or its representatives have been delivered or made available to representatives of ProLogis. With respect to Tax years commencing on or after January 1, 1999 and other open years, all transactions and Tax positions with material Tax consequences to Catellus or any Catellus Subsidiary have been disclosed to ProLogis or its representatives. All material Taxes which Catellus or the Catellus Subsidiaries are required by Law to withhold or collect, including Taxes required to have been withheld in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder or other third party and sales, gross receipts and use taxes, have been duly withheld or collected and, to the extent required, have been paid over to the proper Governmental Entities within the time period prescribed by law. Catellus believes that the most recent audited financial statements contained in the Catellus SEC Documents filed with the SEC prior to the date of this Agreement reflect an adequate reserve for all material Taxes payable by Catellus and the Catellus Subsidiaries for all taxable periods and portions thereof through the date of such financial statements. Catellus and each Catellus Subsidiary has established (and until the Closing Date shall continue to establish and maintain) on its books and records reserves that are adequate for the payment of all material Taxes not yet due and payable. Catellus has incurred no liability for any material Taxes under Sections 857(b), 860(c) or 4981 of the Code, IRS Notice 88-19, Treasury Regulation Section 1.337(d)-5, or Treasury Regulation Section 1.337(d)-6 including any material Tax arising from a prohibited transaction described in Section 857(b)(6) of the Code, and neither Catellus nor any of the Catellus Subsidiaries has incurred any material liability for Taxes other than in the ordinary course of business and other than transfer or similar Taxes arising in connection with the sales of property. No event has occurred, and no condition or circumstance exists, which presents a material risk that any material Tax will be imposed upon Catellus or any Catellus Subsidiary pursuant to Sections 857 or 4981 of the Code. Neither Catellus nor any Catellus Subsidiary is the subject of any audit, examination, or other proceeding in respect of U.S. federal, state, local and foreign income Taxes and, to the Knowledge of Catellus, no audit, examination or other proceeding in respect of U.S. federal, state, local and foreign income Taxes involving Catellus or any Catellus Subsidiary is being considered by any Tax authority. No deficiencies for any Taxes have been asserted or assessed in writing (or to the Knowledge of Catellus or any Catellus Subsidiary, proposed) against Catellus or any of the Catellus Subsidiaries, including claims by any taxing authority in a jurisdiction where Catellus or any Catellus Subsidiary does not file Tax Returns but in which any of them is or may be subject to taxation, which individually or in the aggregate would be material, and no requests for waivers of the time to assess any such Taxes have been granted and remain in effect or a re pending. There are no Liens for Taxes upon the assets of Catellus or the Catellus Subsidiaries except for statutory Liens for Taxes not yet due.
	(ii) Catellus (A) for each taxable year beginning with its taxable year ended on December 31, 2004 and ending at the Effective Time, has been subject to taxation as a real estate investment trust (a “REIT”) within the meaning of the Code and has satisfied the requirements to qualify as a REIT for such years, (B) has operated, and intends to continue to operate, consistent with the requirements for qualification and taxation as a REIT through the Effective Time and (C) has not taken or omitted to take any action which could reasonably be expected to result in the loss of its status as a REIT, and no such challenge is pending, or to Catellus’s Knowledge, threatened. Each Catellus Subsidiary which is a partnership, joint venture or limited liability company has since its acquisition by Catellus been classified for U.S. federal income tax purposes as a partnership or treated as a disregarded entity and not as an association taxable as a corporation, or a “publicly traded partnership” within the meaning of Section 7704(b) of the Code that is treated as a corporation for U.S. federal income tax purposes

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	under Section 7704(a) of the Code. Each Catellus Subsidiary which is a corporation, has since the later of January 1, 2004 or its acquisition by Catellus been a REIT, a qualified REIT subsidiary under Section 856(i) of the Code or a taxable REIT subsidiary under Section 856(l) of the Code.
	(iii) As of the date of this Agreement, Catellus does not have any earnings and profits attributable to Catellus or any other corporation in any non-REIT year within the meaning of Section 857 of the Code.
	(iv) None of Catellus, any of the Catellus Subsidiaries or any of the Catellus Joint Ventures is (i) subject, directly or indirectly, to any Tax Protection Agreement or (ii) in violation of or in default under any Tax Protection Agreement.
	(v) To Catellus’s Knowledge, as of the date hereof, Catellus is a “domestically-controlled qualified investment entity” within the meaning of Section 897(h) of the Code.
	(vi) Neither Catellus nor any Catellus Subsidiary is a party to any Tax allocation or sharing agreement.
	(vii) Catellus does not have any liability for the Taxes of any person other than Catellus and the Catellus Subsidiaries, and the Catellus Subsidiaries do not have any liability for the Taxes of any person other than Catellus and the Catellus Subsidiaries (A) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), (B) as a transferee or successor, (C) by contract or (D) otherwise.

	(l) Pension and Benefit Plans; ERISA.

	(i) Except as set forth in Schedule 2.1(l)(i) of the Catellus Disclosure Letter, all “employee pension benefit plans,” as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), maintained or contributed to by Catellus or any of the Catellus Subsidiaries or any trade or business (whether or not incorporated) which is under common control, or which is treated as a single employer, with Catellus under Section 414(b), (c), (m) or (o) of the Code (a “Catellus ERISA Affiliate”) (the “Catellus Pension Plans”) intended to qualify under Section 401(a) of the Code have been determined by the IRS to be qualified under Section 401(a) of the Code (or have been timely submitted to the IRS for such determination), no such determination has been modified, revoked or limited and each such determination covers all amendments to each such plan for which the remedial amendment period has expired.
	(ii) Neither Catellus nor any Catellus ERISA Affiliate or Catellus Subsidiary currently sponsors, contributes to, maintains or has liability (whether contingent or otherwise) under (A) a “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA) or (B) an employee benefit plan that is subject to Part 3 of Subtitle B of Title I of ERISA, or Section 412 of the Code, or Title IV of ERISA.
	(iii) Except as set forth in Schedule 2.1(l)(iii) of the Catellus Disclosure Letter, each Catellus Employee Benefit Plan, related trust (or other funding or financing arrangement, if applicable) and all amendments thereto are listed in Schedule 2.1(l)(iii) of the Catellus Disclosure Letter, true and complete copies of which have been made available to ProLogis, as have the most recent summary plan descriptions, Form 5500s, applicable trust agreements and, with respect to any Catellus Employee Benefit Plan intended to be qualified pursuant to Section 401(a) of the Code, a current determination letter.
	(iv) Except as set forth in the Catellus SEC Documents and Schedule 2.1(l)(iv) of the Catellus Disclosure Letter or except as would not reasonably be expected to have a Catellus Material Adverse Effect, all Catellus Employee Benefit Plans are in substantial compliance with and have been administered in form and in operation in all material respects in accordance with their terms and with all requirements of applicable Laws and, to the Knowledge of Catellus, none of Catellus nor any of the Catellus Subsidiaries has received any claim or notice that any such

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	Catellus Employee Benefit Plan is not in compliance with, its terms and all applicable Laws, regulations, rulings and other authority issued thereunder and all other applicable governmental Laws, regulations and orders, and prohibited transaction exemptions, including the requirements of ERISA and all Tax rules for which favorable Tax treatment is intended and, to the Knowledge of Catellus, no event has occurred which will or could cause any such Catellus Employee Benefit Plan to fail to comply with such requirements.
	(v) Except as set forth in Schedule 2.1(l)(v) of the Catellus Disclosure Letter, there are no actions, disputes, suits, claims, arbitration or legal, administrative or other proceeding or governmental investigation pending (other than routine claims for benefits) or, to the Knowledge of Catellus, threatened alleging any breach of the terms of any Catellus Employee Benefit Plan or of any fiduciary duties thereunder or violation of any applicable Law with respect to any such plan.
	(vi) All contributions, premiums and other payments required by Law or any Catellus Employee Benefit Plan to have been made under any such plan to any fund, trust or account established thereunder or in connection therewith have been made by the due date thereof, except as does not, or would not reasonably be expected to, result in a Catellus Material Adverse Effect.
	(vii) Schedule 2.1(l)(vii) of the Catellus Disclosure Letter lists all Catellus Employee Benefit Plans that, upon the execution and delivery of this Agreement and related documents, or the consummation or performance of any of the transactions contemplated herein or therein, will (either alone or together with any other event) (i) result in any payment (including any bonus, severance, unemployment compensation, deferred compensation, forgiveness of indebtedness, or golden parachute payment) becoming due to any Catellus officer or director or former Catellus officer or director, (ii) increase any benefit otherwise payable under any Catellus Employee Benefit Plan, or (iii) result in the acceleration of the time of payment, vesting or funding of any such benefit (collectively, the “Catellus Severance Agreements”).
	(viii) Except as set forth in Schedule 2.1(l)(viii) of the Catellus Disclosure Letter, none of the assets of any Catellus Employee Benefit Plan (excluding the Catellus Stock Option Plans) are invested in employer securities or employer real property.
	(ix) To the Knowledge of Catellus, there have been no acts or omissions by Catellus, any Catellus ERISA Affiliate or Catellus Subsidiary which have given rise to or may give rise to fines, penalties, taxes or related charges under section 502 of ERISA or Chapters 43, 47, 68 or 100 of the Code for which any of them may be liable.
	(x) Except as set forth in Schedule 2.1(l)(x) of the Catellus Disclosure Letter, none of the payments contemplated by the Catellus Employee Benefit Plans or any other agreements to which Catellus or any of the Catellus Subsidiaries is a party, would, individually or in the aggregate, constitute excess parachute payments (as defined in section 280G of the Code (without regard to subsection (b)(4) thereof)) or would exceed the amount deductible pursuant to section 162(m) of the Code.
	(xi) Except as required by applicable Law, no Catellus Employee Benefit Plan provides any of the following retiree or post-employment benefits to any Person: medical, disability or life insurance benefits. To the Knowledge of Catellus, there has been no communication to any employee, consultant or director of Catellus or any Catellus Subsidiary promising or guaranteeing any such retiree medical, disability or life insurance on a permanent basis.
	(xii) Except as set forth in Schedule 2.1(l)(xii) of the Catellus Disclosure Letter, to the Knowledge of Catellus, there have been no acts or omissions that would impair the ability of Catellus, any Catellus Subsidiary (or any successor thereto) to unilaterally amend or terminate any Catellus Employee Benefit Plan.

	(m) Labor and Employment Matters.

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	(i) Except as set forth in the Catellus SEC Documents or as would not be reasonably expected to have, individually or in the aggregate, a Catellus Material Adverse Effect, there are no actions, disputes, suits or claims pending or, to Catellus’s Knowledge, threatened between Catellus or any Catellus Subsidiary and any of their respective employees (collectively, the “Catellus Employees”).
	(ii) Neither Catellus nor any Catellus Subsidiary is a party to any collective bargaining agreement or other labor union contract applicable to Catellus Employees, nor to Catellus’s Knowledge are there any activities or proceedings of any labor union to organize any Catellus Employees.
	(iii) Except as would not reasonably be expected to have, individually or in the aggregate, a Catellus Material Adverse Effect, Catellus and each Catellus Subsidiary has complied, and is in compliance in all material respects, with all applicable laws relating to labor and employment practices, including all laws relating to terms and conditions of employment, wages, hours, collective bargaining, workers’ compensation, occupational safety and health, equal employment opportunity and immigration, and is not engaged in any unfair labor or unlawful employment practice.
	(iv) No National Labor Relations Board unfair labor practice charge (or litigation alleging such claim) has been filed or threatened or is presently pending against either Catellus or any Catellus Subsidiary relating to a Catellus Employee. As of the date hereof, there is no strike, work stoppage, walkout, slowdown, handbilling, picketing or other “concerted action” involving any Catellus Employees, and no grievance proceeding or other controversy is in progress, pending or, to the Knowledge of Catellus, threatened between Catellus or any Catellus Subsidiary and any Catellus Employee or any union or collective bargaining unit relating thereto.

	(n) Intangible Property. Catellus and the Catellus Subsidiaries own, possess or have adequate rights to use all trademarks, trade names, patents, service marks, brand marks, brand names, computer programs, databases, industrial designs and copyrights necessary for the operation of the businesses of each of Catellus and the Catellus Subsidiaries (collectively, the “Catellus Intangible Property”), except where the failure to possess or have adequate rights to use such properties, individually or in the aggregate, would not reasonably be expected to have a Catellus Material Adverse Effect. All of the Catellus Intangible Property is owned or licensed by Catellus or the Catellus Subsidiaries free and clear of any and all Liens, except those that, individually or in the aggregate, would not reasonably be expected to have a Catellus Material Adverse Effect, and neither Catellus nor any such Catellus Subsidiary has forfeited or otherwise relinquished any Catellus Intangible Property which forfeiture has resulted in, individually or in the aggregate, or would reasonably be expected to result in a Catellus Material Adverse Effect. To the Knowledge of Catellus, the use of Catellus Intangible Property by Catellus or the Catellus Subsidiaries does not in any material respect, conflict with, infringe upon, violate or interfere with or constitute an appropriation of any right, title, interest or goodwill, including any intellectual property right, trademark, trade name, patent, service mark, brand mark, brand name, computer program, database, industrial design, copyright or any pending application therefor, of any other Person, and neither Catellus nor any of the Catellus Subsidiaries has received any notice of any claim or otherwise knows that any of the Catellus Intangible Property is invalid or conflicts with the asserted rights of any other Person or has not been used or enforced or has failed to have been used or enforced in a manner that would result in the abandonment, cancellation or unenforceability of any of the Catellus Intangible Property, except for any such conflict, infringement, violation, interference, claim, invalidity, abandonment, cancellation or unenforceability that, individually or in the aggregate, would not reasonably be expected to have a Catellus Material Adverse Effect.
	(o) Environmental Matters. For purposes of this Agreement, (x) “Environmental Law” means any Law of any Governmental Entity relating to human health, safety or protection of the environment, including the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”) and (y) “Hazardous Material” means (A) any

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petroleum or petroleum products, radioactive materials, asbestos-containing materials, urea formaldehyde foam insulation, and transformers and other equipment that contain dielectric fluid containing greater than 50 parts per million polychlorinated biphenyls (“PCBs”); or (B) any chemicals, materials, substances or wastes which are defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants” or words of similar import, under any applicable Environmental Law. Except as disclosed in Schedule 2.1(o) of the Catellus Disclosure Letter or in the environmental audits/reports listed thereon or as disclosed in the Catellus SEC Documents, and except as would not reasonably be expected to have a Catellus Material Adverse Effect (all representations being made only to the Knowledge of Catellus):

	(i) None of Catellus, the Catellus Subsidiaries or the Catellus Joint Ventures has received written notice that any complaint has been filed that remains unresolved, any penalty has been assessed that has not been paid and any investigation or review is pending or threatened by any Governmental Entity with respect to any alleged failure by Catellus, any Catellus Subsidiary or any Catellus Joint Venture to have any permit required under any applicable Environmental Law or with respect to any treatment, storage, recycling, transportation, disposal or “release” (as defined in 42 U.S.C. (S) 9601(22) (“Release”)) by Catellus, any Catellus Subsidiary or any Catellus Joint Venture of any Hazardous Material in material violation of any Environmental Law.
	(ii) Except in material compliance with applicable Environmental Laws, (A) there are no asbestos-containing materials present on any property currently owned or operated by Catellus, any Catellus Subsidiary or any Catellus Joint Venture, (B) there are no regulated levels of PCBs present on any property currently owned or operated by Catellus, any Catellus Subsidiary or any Catellus Joint Venture, and (C) there are no underground storage tanks, active or abandoned, used for the storage of Hazardous Materials currently present on any property currently owned or operated by Catellus, any Catellus Subsidiary or any Catellus Joint Venture.
	(iii) None of Catellus, any Catellus Subsidiary or any Catellus Joint Venture has received written notice of a claim against any of them, that has not been resolved, to the effect that it is liable to a third party, including a Governmental Entity, as a result of a Release of a Hazardous Material into the environment in material violation of any Environmental Law at any property currently owned or operated by Catellus, a Catellus Subsidiary or a Catellus Joint Venture.
	(iv) None of Catellus, any Catellus Subsidiary or any Catellus Joint Venture has received written notice of (A) any Liens arising under or pursuant to any applicable Environmental Law on any Catellus Property or (B) any action taken which could subject any Catellus Property to such Liens. To the Knowledge of Catellus, no such action is in process. Catellus, the Catellus Subsidiaries and the Catellus Joint Ventures currently do not have any duty under any applicable Environmental Law to place any restriction relating to the presence of Hazardous Material at any Catellus Property which have not been placed.
	(v) None of Catellus, the Catellus Subsidiaries or the Catellus Joint Ventures has transported or arranged for the transportation of any Hazardous Material to any location which, is the subject of any action, suit or proceeding that could be reasonably expected to result in claims against Catellus, the Catellus Subsidiaries, or the Catellus Joint Ventures related to such Hazardous Material for clean-up costs, remedial work, damages to natural resources or personal injury claims, including claims under CERCLA and the rules and regulations promulgated thereunder.
	(vi) No property now owned or operated by Catellus, the Catellus Subsidiaries, or the Catellus Joint Ventures is listed or, to the Knowledge of Catellus, proposed for listing on the National Priorities List promulgated pursuant to CERCLA or on any similar list of sites under any Environmental Law of any other Governmental Entity where such listing requires active investigation or clean-up.

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(vii) None of Catellus, the Catellus Subsidiaries or the Catellus Joint Ventures has in its possession or control any environmental assessment or investigation reports prepared within the last four years that disclose a material environmental condition with respect to the Catellus Properties which has not been addressed or remediated (or is not in the process of being remediated) or been made the subject of an environmental insurance policy maintained by Catellus, a Catellus Subsidiary or a Catellus Joint Venture, except for such reports that (1) contain information regarding the environmental condition of any such property that has been provided to ProLogis or (2) reflect the results of abatement work performed in the ordinary course of renovation or demolition activities.

	(p) Properties.

	(i) (A) Except as listed in Schedule 2.1(p)(i)(A) of the Catellus Disclosure Letter or as would not reasonably be expected to have a Catellus Material Adverse Effect, Catellus, a Catellus Subsidiary or a Catellus Joint Venture owns fee simple title to or has a valid leasehold interest in, each of the real properties reflected on the most recent balance sheet of Catellus included in the Catellus SEC Documents and as identified in Schedule 2.1(p)(i)(A) of the Catellus Disclosure Letter (each, a “Catellus Property” and collectively, the “Catellus Properties”), which are all of the real estate properties owned or leased by them, in each case free and clear of Liens except for (1) debt and other matters identified on Schedule 2.1(p)(i)(A)(1) of the Catellus Disclosure Letter, (2) inchoate mechanics’, workmen’s, repairmen’s and other inchoate Liens imposed for construction work in progress or otherwise incurred in the ordinary course of business, (3) mechanics’, workmen’s and repairmen’s Liens (other than inchoate Liens for work in progress) which have heretofore been bonded or insured; (4) all matters disclosed on existing title policies; (5) real estate Taxes and special assessments not yet due and payable or which are being contested in good faith in the ordinary course of business and (6) Liens and other encumbrances that would not cause a material adverse effect on the value or use of the affected property; (B) except as listed in Schedule 2.1(p)(i)(B) of the Catellus Disclosure Letter or as would not reasonably be expected to have a Catellus Material Adverse Effect, none of Catellus, a Catellus Subsidiary or a Catellus Joint Venture has received written notice to the effect that there are any condemnation proceedings that are pending or, to the Knowledge of Catellus and the Catellus Subsidiaries, threatened with respect to any material portion of any of the Catellus Properties; and (C) except for the owners of the properties in which Catellus, any Catellus Subsidiary or any Catellus Joint Venture has a leasehold interest as listed in Schedule 2.1(p)(i)(C) of the Catellus Disclosure Letter no Person other than Catellus, a Catellus Subsidiary, a Catellus Joint Venture or any Subsidiary of a Catellus Joint Venture has any ownership interest in any of the Catellus Properties.
	(ii) Except as provided in Schedule 2.1(p)(ii) of the Catellus Disclosure Letter or as would not reasonably be expected to have a Catellus Material Adverse Effect, policies of title insurance or updates or endorsements have been issued, insuring Catellus’s, the applicable Catellus Subsidiary’s or the applicable Catellus Joint Venture’s fee simple title to each of the Catellus Properties owned by Catellus and acquired in the past five years, in amounts at least equal to the purchase price paid for ownership of such Catellus Properties or such entity that owned such Catellus Properties at the time of the issuance of each such policy, and no material claim has been made against any such policy that has not been resolved.
	(iii) All buildings currently under construction by Catellus, the Catellus Subsidiaries or the Catellus Joint Ventures and all properties currently under contract for acquisition as of the date of this Agreement by Catellus, the Catellus Subsidiaries and the Catellus Joint Ventures are listed as such in Schedule 2.1(p)(iii) of the Catellus Disclosure Letter, other than tenant improvements and building maintenance and improvements in the ordinary course.
	(iv) Except as provided in Schedule 2.1(p)(iv) of the Catellus Disclosure Letter, Catellus, the Catellus Subsidiaries and, to the Knowledge of Catellus, the Catellus Joint Ventures

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	(A) have not received written notice of any violation of any Law issued by any Governmental Entity which would reasonably be expected to have a Catellus Material Adverse Effect, (B) have not received written notice of any structural defects relating to any Catellus Property which would reasonably be expected to have a Catellus Material Adverse Effect, or (C) have not received written notice of any physical damage to any Catellus Property which would, individually or in the aggregate, reasonably be expected to have a Catellus Material Adverse Effect for which there is not insurance in effect covering the cost of the restoration and the loss of revenue.
	(v) Schedule 2.1(p)(v) of the Catellus Disclosure Letter, to the Knowledge of Catellus, sets forth, and identifies as such, those tenants that have existing options to purchase Catellus Properties that are an income producing properties.
	(vi) Except as set forth in Schedule 2.1(p)(vi) of the Catellus Disclosure Letter and except for secured loan documents entered into in the ordinary course of business, there are no written agreements which restrict Catellus, any Catellus Subsidiary or any of the Catellus Joint Ventures from transferring any of the Catellus Properties, and none of the Catellus Properties is subject to any restriction on the sale or other disposition thereof (other than rights of first offer or rights of first refusal) or on the financing or release of financing thereon.
	(vii) Except as set forth in Schedule 2.1(p)(vii) of the Catellus Disclosure Letter, Catellus, and the Catellus Subsidiaries have good and sufficient title to, or are permitted to use under valid and existing leases, all personal and non-real properties and assets reflected in their books and records as being owned by them or reflected on the most recent balance sheet of Catellus included in the Catellus SEC Documents (except as since sold or otherwise disposed of in the ordinary course of business) or used by them in the ordinary course of business, free and clear of all Liens, and except as would not reasonably be expected to have a Catellus Material Adverse Effect.
	(viii) Schedule 2.1(p)(viii) of the Catellus Disclosure Letter sets forth a correct and complete schedule of Catellus’s capital allocation plan with respect to the period from the date hereof through December 31, 2005 (the “Catellus Capital Allocation Plan”).

	(q) Insurance. Catellus and each of the Catellus Subsidiaries maintains insurance with financially responsible insurers in such amounts and covering such risks as Catellus believes are in accordance with normal industry practice for companies engaged in the ownership, acquisition, operation and development of industrial properties (taking into account the cost and availability of such insurance), including all risk replacement cost coverage and earthquake replacement cost coverage. Except as set forth in Schedule 2.1(q) of the Catellus Disclosure Letter, to Catellus’s Knowledge, neither Catellus nor any of the Catellus Subsidiaries has received any written notice of cancellation or termination (excluding cancellation upon expiration or failure to renew) with respect to any existing material insurance policy of Catellus or any of the Catellus Subsidiaries.
	(r) Opinion of Financial Advisor. The Board of Directors of Catellus has received the written opinion of Morgan Stanley & Co. Incorporated (“Morgan Stanley”), to the effect that, as of the date of such opinion, the Merger Consideration is fair from a financial point of view to the holders of Catellus Common Shares.
	(s) Vote Required. The affirmative vote (in person or by proxy) of the holders of a majority of the Catellus Common Shares (the “Catellus Stockholder Approval”) is the only vote required to approve the Merger and the other transactions contemplated by this Agreement.
	(t) Brokers. Except for the fees and expenses payable to Morgan Stanley (which fees have been disclosed to ProLogis), no broker, investment banker or other Person is entitled to any broker’s, finder’s or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Catellus or any Catellus Subsidiary. Catellus has previously provided ProLogis with a true and complete copy of the engagement letter with Morgan Stanley as in effect on the date hereof, pursuant to which such fees and expenses are

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	payable, and the amounts payable by Catellus pursuant to such letter shall not have been increased between the date of this Agreement and the Closing Date.
	(u) Investment Company Act of 1940. Neither Catellus nor any of the Catellus Subsidiaries is, or at the Effective Time will be, required to be registered as an investment company under the Investment Company Act of 1940, as amended.
	(v) Contracts.

	(i) Except as set forth in Schedule 2.1(v)(i) of the Catellus Disclosure Letter, the Catellus SEC Documents list all Catellus Material Contracts. Except as set forth in Schedule 2.1(v)(i) of the Catellus Disclosure Letter or in the Catellus SEC Documents, each Catellus Material Contract is valid, binding and enforceable and in full force and effect against Catellus (if it is a party thereto) and each Catellus Subsidiary that is a party thereto and, to Catellus’s Knowledge, each other party thereto, except where such failure to be so valid, binding and enforceable and in full force and effect would not, individually or in the aggregate, reasonably be expected to have a Catellus Material Adverse Effect. None of Catellus (if it is a party thereto) or any Catellus Subsidiary that is a party thereto is in default under a Catellus Material Contract and, to Catellus’s Knowledge, no other party to any Catellus Material Contract is in default thereunder, except for such defaults that would not, individually or in the aggregate, reasonably be expected to have a Catellus Material Adverse Effect. For purposes of this Agreement, “Catellus Material Contracts” means any agreements required to be filed as exhibits to the Catellus SEC Documents pursuant to Item 601(b)(10) of Regulation S-K of Title 17, Part 229 of the Code of Federal Regulations.
	(ii) All mortgages on any of the assets of Catellus, any Catellus Subsidiary or, to Catellus’s Knowledge, any Catellus Joint Venture as of the date of this Agreement are listed in Schedule 2.1(v)(ii) of the Catellus Disclosure Letter.
	(iii) Except as set forth in Schedule 2.1(v)(iii) of the Catellus Disclosure Letter, there is no non-competition agreement or other contract or agreement that contains covenants that (A) restrict Catellus’s, any Catellus Subsidiary’s or, to Catellus’ Knowledge, any Catellus Joint Venture’s ability to own, operate or lease industrial warehouses in any location or (B) materially restrict Catellus’s, any Catellus Subsidiary’s or, to Catellus’ Knowledge, any Catellus Joint Venture’s ability to conduct any other business in any location.
	(iv) Except as set forth in Schedule 2.1(v)(iv) of the Catellus Disclosure Letter, none of Catellus, any Catellus Subsidiary or, to Catellus’s Knowledge, any Catellus Joint Venture is a party to any agreement that would restrict any of them from prepaying any of their indebtedness without penalty or premium at any time or that requires any of them to maintain any amount of indebtedness with respect to any of the Catellus Properties.

	(w) State Takeover Statutes; Charter Waiver. Catellus has taken all action necessary to exempt the transactions contemplated by this Agreement from operation of any “fair price,” “business combination,” “moratorium,” “control share acquisition” or any other anti-takeover statute or similar statute enacted under federal or state Laws of the United States or similar statute or regulation (a “Takeover Statute”). Catellus and the Catellus Board of Directors have taken all appropriate and necessary actions to waive or remove, or to exempt ProLogis and its beneficial owners from triggering, any and all limitations on ownership of Catellus Common Shares contained in Catellus’s Certificate of Incorporation or By-laws by reason of the Merger and the other transactions contemplated by this Agreement.
	(x) Rule 16b-3. As of the Closing Date, Catellus will have taken all necessary action, including causing the Catellus Board of Directors to adopt resolutions authorizing and approving the Merger, this Agreement and the other transactions contemplated by this Agreement, to exempt such transactions under Rule 16b-3 of the Exchange Act from the provisions of Section 16(b) of the Exchange Act.

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	(y) Related Party Transactions. Except as expressly described in the Catellus SEC Documents or as set forth in Schedule 2.1(y) of the Catellus Disclosure Letter and except for employment and indemnification agreements or memoranda of understanding or stock and equity award agreements, there are no material arrangements, agreements or contracts entered into by Catellus or any of the Catellus Subsidiaries, on the one hand, and any Person who is currently an officer, director or Affiliate of Catellus or any Catellus Subsidiary, any relative of the foregoing or an entity of which any of the foregoing is an Affiliate, on the other hand. Copies of all such documents have been previously provided to ProLogis.
	(z) Beneficial Ownership of Catellus Common Shares. Except as set forth in Schedule 2.1(z) of the Catellus Disclosure Letter, neither Catellus nor the Catellus Subsidiaries “beneficially own” (as defined in Rule 13d-3 promulgated under the Exchange Act) any of the outstanding Catellus Common Shares.

	(a) Organization, Standing and Corporate Power.

	(i) ProLogis is a real estate investment trust duly formed, validly existing and in good standing under the laws of the State of Maryland. Merger Sub is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Each of ProLogis and Merger Sub is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its businesses or the ownership, operation or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed, individually or in the aggregate, would not have, or would not reasonably be expected to have, a ProLogis Material Adverse Effect. “ProLogis Material Adverse Effect” means (x) a material adverse effect on the business, properties, assets, condition (financial or otherwise) or results of operations of ProLogis and the ProLogis Subsidiaries, taken as a whole, or (y) the effect of preventing or materially delaying the performance by ProLogis or Merger Sub of any of its obligations under this Agreement or the consummation of the Merger or any other transactions contemplated by the Agreement; provided, however, that a ProLogis Material Adverse Effect shall not include any change with respect to ProLogis or any of its Subsidiaries, to the extent resulting from or attributable to (i) any change in general national or international economic, financial or political conditions or events, including the effects of terrorist acts that do not result in the destruction or material physical damage of a material portion of ProLogis’s real properties, (ii) the announcement, pendency or consummation of this Agreement or the transactions contemplated hereby or (iii) any change in conditions generally affecting the securities markets or the industry in which ProLogis and its Subsidiaries operate that does not affect ProLogis or any ProLogis Subsidiary to a materially greater extent than such change affects other Persons in the industry in which ProLogis and the ProLogis Subsidiaries operate.
	(ii) Each ProLogis Subsidiary that is a corporation is duly incorporated, validly existing and in good standing under the Laws of its jurisdiction of incorporation and has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Each ProLogis Subsidiary that is a partnership, limited liability company or trust is duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization and has the requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Each ProLogis Subsidiary is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership, operation or leasing of its properties or the management of properties for others makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed, individually or in the aggregate, would not reasonably be expected to have a ProLogis Material Adverse Effect.

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(iii) Neither ProLogis nor any ProLogis Subsidiary is in default under any agreement, document or contract governing its rights in, or obligations to, the ProLogis Joint Ventures which default is, or could, result in, a breach under such agreement, document or contract, except for defaults which, individually or in the aggregate, would not reasonably be expected to have a ProLogis Material Adverse Effect. To the Knowledge of ProLogis, the other parties to such agreements, documents and contracts are not in material breach of any of their respective obligations under such agreements, documents or contracts.

	(b) Capital Structure.

	(i) As of the date of this Agreement, the authorized capital of ProLogis consists of 275,000,000 shares of beneficial interest, par value $0.01 per share, consisting of (1) 246,380,000 ProLogis Common Shares, (2) 2,300,000 Series C Cumulative Redeemable Preferred Shares (the “Series C Preferred Shares”), (3) 5,060,000 Series F Cumulative Redeemable Preferred Shares (“Series F Preferred Shares”), and (4) 5,060,000 Series G Cumulative Redeemable Preferred Shares (“Series G Preferred Shares” and, together with the Series C Preferred Shares and the Series F Preferred Shares, the “ProLogis Preferred Shares”). As of the Closing Date, the authorized capital of ProLogis will consist of 375,000,000 shares of beneficial interest, par value $0.01 per share.
	(ii) As of the date of this Agreement, (1) 186,787,773 ProLogis Common Shares are issued and outstanding, (2) 2,000,000 Series C Preferred Shares are issued and outstanding, (3) 5,000,000 Series F Preferred Shares are issued and outstanding and (4) 5,000,000 Series G Preferred Shares are issued and outstanding. All outstanding ProLogis Common Shares and ProLogis Preferred Shares are, and all ProLogis Common Shares to be issued in connection with the Merger will be, duly authorized, validly issued, fully paid and nonassessable and not subject to, or issued in violation of, any preemptive right, purchase option, call option, right of first refusal, subscription or any other similar right.
	(iii) As of the date of this Agreement, (1) 8,649,713 ProLogis Common Shares are reserved for issuance upon exercise of outstanding options (“ProLogis Options”) granted under any employee stock option or compensation plan or arrangement of ProLogis (the “ProLogis Stock Option Plans”), (2) 702,700 ProLogis Common Shares are reserved for issuance upon payment of outstanding restricted share units granted under the ProLogis Stock Option Plans, (3) 1,012,576 ProLogis Common Shares are reserved for issuance upon settlement of outstanding dividend equivalent units granted under the ProLogis Stock Option Plans, and (4) 563,250 ProLogis Common Shares are reserved for issuance upon settlement of outstanding performance share awards issued under the ProLogis Stock Option Plans. All such ProLogis Common Shares reserved for issuance will be, upon issuance in accordance with the terms specified in the instruments or agreements pursuant to which they are issuable, duly authorized, validly issued, fully paid and nonassessable and not subject to, or issued in violation of, any preemptive right, purchase option, call option, right of first refusal, subscription or any other similar right.
	(iv) The authorized capital stock of Merger Sub consists of 1,000 shares of Merger Sub Common Stock and 1,000 shares of preferred stock, par value $0.01 per share. All of the issued and outstanding capital stock of Merger Sub is owned by ProLogis or Subsidiaries of ProLogis. Merger Sub does not have issued or outstanding any options, warrants, subscriptions, calls, rights, convertible securities or other agreements or commitments obligating Merger Sub to issue, transfer or sell any shares of Merger Sub Common Stock to any Person, other than Subsidiaries of ProLogis.
	(v) Except as provided herein, there are no outstanding restricted ProLogis Common Shares, performance share awards, stock options, stock appreciation rights or dividend equivalent rights relating to ProLogis Common Shares.
	(vi) There is no Voting Debt of ProLogis or any ProLogis Subsidiary outstanding.

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	(vii) Except for second quarter 2005 dividends that have been declared on ProLogis Preferred Shares, all dividends or distributions on securities of ProLogis that have been declared or authorized prior to the date of this Agreement have been paid in full.

	(c) Authority; No Violations; Consents and Approvals.

	(i) The Board of Trustees of ProLogis has approved and declared advisable the Merger and the other transactions contemplated by this Agreement and has authorized that the issuance of ProLogis Common Shares contemplated by this Agreement be submitted for consideration at a special meeting of the ProLogis shareholders (the “ProLogis Shareholder Meeting”). Each of ProLogis and Merger Sub has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action on the part of ProLogis and Merger Sub, subject, in connection with the issuance of ProLogis Common Shares in the Merger, to obtaining the ProLogis Shareholder Approval.
	(ii) This Agreement has been duly executed and delivered by ProLogis and Merger Sub, and subject, in connection with the issuance of ProLogis Common Shares in the Merger, to obtaining the ProLogis Shareholder Approval and assuming that this Agreement constitutes the valid and binding obligation of Catellus, constitutes a valid and binding obligation of ProLogis and Merger Sub, enforceable in accordance with its terms, subject as to enforceability, to bankruptcy, insolvency, reorganization, moratorium and other Laws of general applicability relating to or affecting creditors’ rights and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at Law).
	(iii) The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated hereby, and compliance with the provisions hereof, will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any material obligation, or give rise to a right of purchase under, result in the creation of any Lien upon any of the properties or assets of ProLogis or Merger Sub under, or require the consent or approval of any third-party lender under any provision of (A) the Declaration of Trust or By-laws of ProLogis or the Certificate of Incorporation or By-laws of Merger Sub, (B) any ProLogis Material Contract, (C) any joint venture or other ownership arrangement to which ProLogis is a party or (D) assuming the consents, approvals, authorizations or permits and filings or notifications referred to in Section 2.2(c)(iv) are duly and timely obtained or made, any judgment, order, decree or Law applicable to ProLogis or Merger Sub or any of their respective properties or assets, other than, in the case of clauses (B), (C) and (D), any such conflicts, violations, defaults, rights or Liens that, individually or in the aggregate, would not reasonably be expected to result in a ProLogis Material Adverse Effect.
	(iv) No consent, approval, order or authorization of, or registration, declaration or filing with, or permit from any Governmental Entity is required by or with respect to ProLogis or Merger Sub in connection with the execution and delivery by ProLogis and Merger Sub of this Agreement or the consummation by ProLogis and Merger Sub of the transactions contemplated hereby, except for: (A) the filing with the SEC of such reports under Section 13(a) of the Exchange Act and such other compliance with the Securities Act and the Exchange Act and the rules and regulations thereunder as may be required in connection with this Agreement and the transactions contemplated hereby; (B) the filing of the Certificate of Merger with, and the acceptance for record of the Certificate of Merger by, the Secretary of State of the State of Delaware; (C) any such consent, approval, order, authorization, registration, declaration, filing or permit that the failure to obtain or make would not reasonably be expected to materially impair the ability of ProLogis or Merger Sub to perform its obligations hereunder or prevent the consummation of any of the transactions contemplated hereby or result in a ProLogis Material

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	Adverse Effect and (D) such filings as may be required under applicable federal and state securities laws.

	(d) Litigation. Except as disclosed in the ProLogis SEC Documents and except for routine litigation arising from the ordinary course of business of ProLogis or the ProLogis Subsidiaries which are adequately covered by insurance, there is no suit, action or proceeding pending or, to the Knowledge of ProLogis, threatened against ProLogis or any ProLogis Subsidiary or, to ProLogis’s Knowledge, any ProLogis Joint Venture, or any of their respective properties or assets that, individually or in the aggregate, would reasonably be expected to have a ProLogis Material Adverse Effect.
	(e) SEC Documents. ProLogis has made available to Catellus (by public filing with the SEC or otherwise) a true and complete copy of each report, schedule, registration statement and definitive proxy statement filed by ProLogis or any ProLogis Subsidiary, with the SEC since January 1, 2002 (the “ProLogis SEC Documents”), which are all of the documents required to have been filed by any of them with the SEC since that date. As of their respective dates, the ProLogis SEC Documents complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such ProLogis SEC Documents and none of the ProLogis SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except to the extent such statements have been modified or superseded by later ProLogis SEC Documents filed and publicly available prior to the date of this Agreement. As of the date hereof, neither ProLogis nor any ProLogis Subsidiary has any outstanding and unresolved comments from the SEC with respect to the ProLogis SEC Documents. The consolidated financial statements of ProLogis included in the ProLogis SEC Documents complied as to form in all material respects with the applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto, or, in the case of the unaudited statements, as permitted by Rule 10-01 of Regulation S-X under the Exchange Act) and fairly presented, in accordance with applicable requirements of GAAP and the applicable rules and regulations of the SEC (subject, in the case of the unaudited statements, to normal, recurring adjustments, none of which are material), the consolidated financial position of ProLogis and the ProLogis Subsidiaries, taken as a whole, as of their respective dates and the consolidated statements of income and the consolidated cash flows of ProLogis and the ProLogis Subsidiaries for the periods presented therein. No other ProLogis Subsidiary is required to make any filing with the SEC.
	(f) Absence of Certain Changes or Events. Except as disclosed or reflected in the ProLogis SEC Documents filed with the SEC prior to the date of this Agreement or as otherwise permitted by this Agreement (including any action or events permitted by Section 3.2), since December 31, 2004 there has not been: (i) (A) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, shares or property) with respect to any of ProLogis’s shares except for regular quarterly dividends on the ProLogis Common Shares and ProLogis Preferred Shares; (B) any amendment of any term of any outstanding equity security of ProLogis or any ProLogis Subsidiary; (C) any repurchase, redemption or other acquisition by ProLogis or any ProLogis Subsidiary of any outstanding shares or other equity securities of, or other ownership interests in, ProLogis or any ProLogis Subsidiary; (D) any change in any method of accounting or accounting practice or any tax method, practice or election by ProLogis or any ProLogis Subsidiary that would materially affect its assets, liabilities or business, except insofar as may have been required by a change in applicable Law or GAAP; or (E) any ProLogis Material Adverse Effect.
	(g) No Undisclosed Material Liabilities. Except as disclosed in the ProLogis SEC Documents or as otherwise would not reasonably be expected to have a ProLogis Material Adverse Effect, there are no liabilities of ProLogis or any of the ProLogis Subsidiaries, whether accrued, contingent, absolute or determined, and, to ProLogis’s Knowledge, there is no existing condition, situation or set of

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	circumstances that would reasonably be expected to result in such a liability, other than: (i) liabilities adequately provided for on the balance sheet of ProLogis dated as of December 31, 2004 (including the notes thereto); or (ii) liabilities incurred in the ordinary course of business subsequent to December 31, 2004.
	(h) No Default. None of ProLogis or any of the ProLogis Subsidiaries is in default or violation (and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation) of any term, condition or provision of (i) the ProLogis Declaration of Trust or the ProLogis By-laws or the comparable charter or organizational documents of any of the ProLogis Subsidiaries, (ii) any loan or credit agreement, note, or any bond, mortgage or indenture, to which ProLogis or any of the ProLogis Subsidiaries is a party or by which ProLogis, any of the ProLogis Subsidiaries or any of their respective properties or assets is bound, or (iii) any order, writ, injunction, decree, statute, rule or regulation applicable to ProLogis, any of the ProLogis Subsidiaries, except in the case of (ii) and (iii) for defaults or violations which, individually or in the aggregate, would not reasonably be expected to have a ProLogis Material Adverse Effect.
	(i) Compliance with Applicable Laws. ProLogis and the ProLogis Subsidiaries and, to ProLogis’s Knowledge, the ProLogis Joint Ventures hold all permits, licenses, variances, exemptions, orders and approvals of all Governmental Entities necessary for the lawful conduct of their respective businesses (the “ProLogis Permits”), except where the failure so to hold such ProLogis Permits, individually or in the aggregate, would not reasonably be expected to have a ProLogis Material Adverse Effect. ProLogis and the ProLogis Subsidiaries are in compliance with the terms of the ProLogis Permits, except where the failure to so comply, individually or in the aggregate, would not reasonably be expected to have a ProLogis Material Adverse Effect. Except as disclosed in the ProLogis SEC Documents, the businesses of ProLogis and the ProLogis Subsidiaries are not being conducted in violation of any Law, except for violations which, individually or in the aggregate, would not reasonably be expected to have a ProLogis Material Adverse Effect. No investigation or review by any Governmental Entity with respect to ProLogis or any ProLogis Subsidiary is pending or, to ProLogis’s Knowledge, threatened, other than those the outcome of which, individually or in the aggregate, would not reasonably be expected to have a ProLogis Material Adverse Effect.
	(j) Pension and Benefit Plans; ERISA.

	(i) All “employee pension benefit plans,” as defined in Section 3(2) of ERISA, maintained or contributed to by ProLogis or any of the ProLogis Subsidiaries or any trade or business (whether or not incorporated) which is under common control, or which is treated as a single employer, with ProLogis under Section 414(b), (c), (m) or (o) of the Code (a “ProLogis ERISA Affiliate”) (the “ProLogis Pension Plans”) intended to qualify under Section 401(a) of the Code have been determined by the IRS to be qualified under Section 401(a) of the Code (or have been timely submitted to the IRS for such determination), no such determination has been modified, revoked or limited and each such determination covers all amendments to each such plan for which the remedial amendment period has expired.
	(ii) Neither ProLogis nor any ProLogis ERISA Affiliate or ProLogis Subsidiary currently sponsors, contributes to, maintains or has liability (whether contingent or otherwise) under (A) a “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA) or (B) an employee benefit plan that is subject to Part 3 of Subtitle B of Title I of ERISA, or Section 412 of the Code, or Title IV of ERISA.
	(iii) Except as set forth in the ProLogis SEC Documents and except as would not reasonably be expected to have a ProLogis Material Adverse Effect, all ProLogis Employee Benefit Plans are in substantial compliance with and have been administered in form and in operation in all material respects in accordance with their terms and with all requirements of applicable Laws and, to the Knowledge of ProLogis, none of ProLogis nor any of the ProLogis Subsidiaries has received any claim or notice that any such ProLogis Employee Benefit Plan is not in compliance with, its terms and all applicable Laws, regulations, rulings and other authority issued thereunder and all other applicable governmental Laws, regulations and orders, and

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	prohibited transaction exemptions, including the requirements of ERISA and all Tax rules for which favorable Tax treatment is intended and, to the Knowledge of ProLogis, no event has occurred which will or could cause any such ProLogis Employee Benefit Plan to fail to comply with such requirements.
	(iv) There are no actions, disputes, suits, claims, arbitration or legal, administrative or other proceeding or governmental investigation pending (other than routine claims for benefits) or, to the Knowledge of ProLogis, threatened alleging any breach of the terms of any ProLogis Employee Benefit Plan or of any fiduciary duties thereunder or violation of any applicable Law with respect to any such plan, except for any such actions, disputes, suits, claims, arbitrations or other proceedings or investigations as would not, individually or in the aggregate, reasonably be expected to have a ProLogis Material Adverse Effect.
	(v) All contributions, premiums and other payments required by Law or any ProLogis Employee Benefit Plan to have been made under any such plan to any fund, trust or account established thereunder or in connection therewith have been made by the due date thereof, except as does not, or would not reasonably be expected to, result in a ProLogis Material Adverse Effect.
	(vi) To the Knowledge of ProLogis, there have been no acts or omissions by ProLogis, any ProLogis ERISA Affiliate or ProLogis Subsidiary which have given rise to or may give rise to fines, penalties, taxes or related charges under section 502 of ERISA or Chapters 43, 47, 68 or 100 of the Code for which any of them may be liable.

	(k) Labor and Employment Matters.

	(i) Except as set forth in the ProLogis SEC Documents or as would not be reasonably expected to have, individually or in the aggregate, a ProLogis Material Adverse Effect, there are no actions, disputes, suits or claims pending or, to ProLogis’s Knowledge, threatened between ProLogis or any ProLogis Subsidiary and any of their respective employees (collectively, the “ProLogis Employees”).
	(ii) Except as would not reasonably be expected to have, individually or in the aggregate, a ProLogis Material Adverse Effect, ProLogis and each ProLogis Subsidiary has complied, and is in compliance in all material respects, with all applicable laws relating to labor and employment practices, including all laws relating to terms and conditions of employment, wages, hours, collective bargaining, workers’ compensation, occupational safety and health, equal employment opportunity and immigration, and is not engaged in any unfair labor or unlawful employment practice.
	(iii) No National Labor Relations Board unfair labor practice charge (or litigation alleging such claim) has been filed or threatened or is presently pending against either ProLogis or any ProLogis Subsidiary relating to a ProLogis Employee. As of the date hereof, there is no strike, work stoppage, walkout, slowdown, handbilling, picketing or other “concerted action” involving any ProLogis Employees, and no grievance proceeding or other controversy is in progress, pending or, to the Knowledge of ProLogis, threatened between ProLogis or any ProLogis Subsidiary and any ProLogis Employee or any union or collective bargaining unit relating thereto.

(l) Intangible Property. ProLogis and the ProLogis Subsidiaries own, possess or have adequate rights to use all trademarks, trade names, patents, service marks, brand marks, brand names, computer programs, databases, industrial designs and copyrights necessary for the operation of the businesses of each of ProLogis and the ProLogis Subsidiaries (collectively, the “ProLogis Intangible Property”), except where the failure to possess or have adequate rights to use such properties, individually or in the aggregate, would not reasonably be expected to have a ProLogis Material Adverse Effect. All of the ProLogis Intangible Property is owned or licensed by ProLogis or the ProLogis Subsidiaries free and clear of any and all Liens, except those that, individually or in the aggregate, would not reasonably be expected to have a ProLogis Material Adverse Effect, and neither ProLogis nor any such ProLogis Subsidiary has forfeited or otherwise relinquished any ProLogis

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	Intangible Property which forfeiture has resulted in, individually or in the aggregate, or would reasonably be expected to result in a ProLogis Material Adverse Effect. To the Knowledge of ProLogis, the use of ProLogis Intangible Property by ProLogis or the ProLogis Subsidiaries does not in any material respect, conflict with, infringe upon, violate or interfere with or constitute an appropriation of any right, title, interest or goodwill, including any intellectual property right, trademark, trade name, patent, service mark, brand mark, brand name, computer program, database, industrial design, copyright or any pending application therefor, of any other Person, and neither ProLogis nor any of the ProLogis Subsidiaries has received any notice of any claim or otherwise knows that any of the ProLogis Intangible Property is invalid or conflicts with the asserted rights of any other Person or has not been used or enforced or has failed to have been used or enforced in a manner that would result in the abandonment, cancellation or unenforceability of any of the ProLogis Intangible Property, except for any such conflict, infringement, violation, interference, claim, invalidity, abandonment, cancellation or unenforceability that, individually or in the aggregate, would not reasonably be expected to have a ProLogis Material Adverse Effect.
	(m) Environmental Matters. Except as would not reasonably be expected to have a ProLogis Material Adverse Effect (all representations being made only to the Knowledge of ProLogis):

	(i) None of ProLogis, or the ProLogis Subsidiaries or the ProLogis Joint Ventures has received written notice that any complaint has been filed that remains unresolved, any penalty has been assessed that has not been paid and any investigation or review is pending or threatened by any Governmental Entity with respect to any alleged failure by ProLogis, or any ProLogis Subsidiary or any ProLogis Joint Venture to have any permit required under any applicable Environmental Law or with respect to any treatment, storage, recycling, transportation, disposal or Release by ProLogis, or any ProLogis Subsidiary or any ProLogis Joint Venture of any Hazardous Material in material violation of any Environmental Law.
	(ii) Except in material compliance with applicable Environmental Laws, (A) there are no asbestos-containing materials present on any property currently owned or operated by ProLogis, or any ProLogis Subsidiary or any ProLogis Joint Venture, (B) there are no regulated levels of PCBs present on any property currently owned or operated by ProLogis, or any ProLogis Subsidiary or any ProLogis Joint Venture, and (C) there are no underground storage tanks, active or abandoned, used for the storage of Hazardous Materials currently present on any property currently owned or operated by ProLogis, or any ProLogis Subsidiary or any ProLogis Joint Venture.
	(iii) None of ProLogis, or any ProLogis Subsidiary or any ProLogis Joint Venture has received written notice of a claim against any of them, that has not been resolved, to the effect that it is liable to a third party, including a Governmental Entity, as a result of a Release of a Hazardous Material into the environment in material violation of any Environmental Law at any property currently owned or operated by ProLogis, or a ProLogis Subsidiary or a ProLogis Joint Venture.
	(iv) None of ProLogis, or any ProLogis Subsidiary or any ProLogis Joint Venture has received written notice of (A) any Liens arising under or pursuant to any applicable Environmental Law on any ProLogis Property or (B) any action taken which could subject any ProLogis Property to such Liens. To the Knowledge of ProLogis, no such action is in process. ProLogis, and the ProLogis Subsidiaries and the ProLogis Joint Ventures currently do not have any duty under any applicable Environmental Law to place any restriction relating to the presence of Hazardous Material at any ProLogis Property which have not been placed.
	(v) None of ProLogis, or the ProLogis Subsidiaries or the ProLogis Joint Ventures has transported or arranged for the transportation of any Hazardous Material to any location which, is the subject of any action, suit or proceeding that could be reasonably expected to result in claims against ProLogis, or the ProLogis Subsidiaries, or the ProLogis Joint Ventures related to such Hazardous Material for clean-up costs, remedial work, damages to natural resources or personal

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	injury claims, including claims under CERCLA and the rules and regulations promulgated thereunder, which would reasonably be expected to have a ProLogis Material Adverse Effect.
	(vi) No property now owned or operated by ProLogis, or the ProLogis Subsidiaries, or the ProLogis Joint Ventures is listed or, to the Knowledge of ProLogis, proposed for listing on the National Priorities List promulgated pursuant to CERCLA or on any similar list of sites under any Environmental Law of any other Governmental Entity where such listing requires active investigation or clean-up.

	(n) Properties.

	(i) Except as would not reasonably be expected to have a ProLogis Material Adverse Effect, ProLogis, a ProLogis Subsidiary or a ProLogis Joint Venture owns fee simple title to or has a valid leasehold interest in, each of the real properties reflected on the most recent balance sheet of ProLogis included in the ProLogis SEC Documents (each, a “ProLogis Property” and collectively, the “ProLogis Properties”). Except as would not reasonably be expected to have a ProLogis Material Adverse Effect, none of ProLogis, any ProLogis Subsidiary or, to the Knowledge of ProLogis, any ProLogis Joint Venture has received written notice to the effect that there are any condemnation proceedings that are pending or, to the Knowledge of ProLogis, threatened with respect to any material portion of any of the ProLogis Properties.
	(ii) Except as would not reasonably be expected to have a ProLogis Material Adverse Effect and except in jurisdictions where it is not customary or practicable to obtain such title insurance policies, updates or endorsements, policies of title insurance or updates or endorsements have been issued, insuring ProLogis’s, the applicable ProLogis Subsidiary’s or the applicable ProLogis Joint Venture’s fee simple title to each of the ProLogis Properties owned by ProLogis and acquired in the past five years, in amounts at least equal to the purchase price paid for ownership of such ProLogis Properties or such entity that owned such ProLogis Properties at the time of the issuance of each such policy, and no material claim has been made against any such policy that has not been resolved.
	(iii) ProLogis, the ProLogis Subsidiaries and, to the Knowledge of ProLogis, the ProLogis Joint Ventures (A) have not received written notice of any violation of any Law issued by any Governmental Entity which would reasonably be expected to have a ProLogis Material Adverse Effect, (B) have not received written notice of any structural defects relating to any ProLogis Property which would reasonably be expected to have a ProLogis Material Adverse Effect, or (C) have not received written notice of any physical damage to any ProLogis Property which would, individually or in the aggregate, reasonably be expected to have a ProLogis Material Adverse Effect for which there is not insurance in effect covering the cost of the restoration and the loss of revenue.
	(iv) ProLogis and the ProLogis Subsidiaries have good and sufficient title to, or are permitted to use under valid and existing leases, all personal and non-real properties and assets reflected in their books and records as being owned by them or reflected on the most recent balance sheet of ProLogis included in the ProLogis SEC Documents (except as since sold or otherwise disposed of in the ordinary course of business) or used by them in the ordinary course of business, except as would not reasonably be expected to have a ProLogis Material Adverse Effect.

(o) Insurance. ProLogis and each of the ProLogis Subsidiaries maintains insurance with financially responsible insurers in such amounts and covering such risks as ProLogis believes are in accordance with normal industry practice for companies engaged in the ownership, acquisition, operation and development of industrial properties (taking into account the cost and availability of such insurance). To ProLogis’s Knowledge, neither ProLogis nor any of the ProLogis Subsidiaries has received any written notice of cancellation or termination (excluding cancellation upon expiration or failure to renew) with respect to any existing material insurance policy of ProLogis or any of the ProLogis Subsidiaries.

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	(p) Opinion of Financial Advisor. The Board of Directors of ProLogis has received the opinion of Banc of America Securities LLC to the effect that, as of the date of such opinion, the Merger Consideration is fair, from a financial point of view, to ProLogis.
	(q) Vote Required. The affirmative vote (in person or by proxy) of the holders of a majority of the ProLogis Common Shares cast at the ProLogis Shareholders Meeting or any adjournment or postponement thereof to approve the issuance of ProLogis Common Shares contemplated by this Agreement, provided that the total vote cast represents at least a majority of the ProLogis Common Shares entitled to vote thereon (the “ProLogis Shareholder Approval”), is the only vote of the holders of any class or series of shares of beneficial interest of ProLogis necessary to approve the issuance of ProLogis Common Shares in connection with the Merger and the other transactions contemplated by this Agreement. ProLogis, as the sole stockholder of Merger Sub, has adopted this Agreement, and such adoption is the only vote or approval of the holders of any class or series of the capital stock of Merger Sub that is necessary to adopt this Agreement and consummate the Merger and the other transactions contemplated hereby.
	(r) Brokers. Except for the fees and expenses payable to Banc of America Securities LLC, no broker, investment banker or other Person is entitled to any broker’s, finder’s or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of ProLogis or any ProLogis Subsidiary.
	(s) Investment Company Act of 1940. Neither ProLogis nor any of the ProLogis Subsidiaries is, or at the Effective Time will be, required to be registered as an investment company under the Investment Company Act of 1940, as amended.
	(t) Contracts. The ProLogis SEC Documents list all ProLogis Material Contracts. Except as set forth in the ProLogis SEC Documents, each ProLogis Material Contract is valid, binding and enforceable and in full force and effect against ProLogis (if it is a party thereto) and each ProLogis Subsidiary that is a party thereto and, to ProLogis’s Knowledge, each other party thereto, except where such failure to be so valid, binding and enforceable and in full force and effect would not, individually or in the aggregate, reasonably be expected to have a ProLogis Material Adverse Effect. None of ProLogis (if it is a party thereto) or any ProLogis Subsidiary that is a party thereto is in default under a ProLogis Material Contract and, to ProLogis’s Knowledge, no other party to any ProLogis Material Contract is in default thereunder, except for such defaults that would not, individually or in the aggregate, reasonably be expected to have a ProLogis Material Adverse Effect. For purposes of this Agreement, “ProLogis Material Contracts” means any agreements required to be filed as exhibits to the ProLogis SEC Documents pursuant to Item 601(b)(10) of Regulation S-K of Title 17, Part 229 of the Code of Federal Regulations, except for agreements required to be filed by Item 601(b)(10)(iii) thereof.
	(u) Dissenters’ Rights. No dissenters’ or appraisal rights shall be available to shareholders of ProLogis or Merger Sub with respect to the Merger or the other transactions contemplated by this Agreement.
	(v) State Takeover Statutes; Charter Waiver. ProLogis has taken all action necessary to exempt the transactions contemplated by this Agreement from operation of any Takeover Statute. ProLogis and the ProLogis Board of Trustees have taken all appropriate and necessary actions to waive or remove, or to exempt Catellus and its beneficial owners from triggering, any and all limitations on ownership of ProLogis Common Shares contained in ProLogis Declaration of Trust or By-laws by reason of the Merger and the other transactions contemplated by this Agreement.
	(w) Taxes. Except as set forth in the ProLogis SEC Documents filed prior to the date of this Agreement:

	(i) Each of ProLogis and the ProLogis Subsidiaries has timely filed all material Tax Returns required to be filed by it (after giving effect to any filing extension properly granted by a Governmental Entity having authority to do so). Each such Tax Return is accurate and complete in all material respects. ProLogis and each ProLogis Subsidiary has paid (or ProLogis has paid

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	on its behalf), all material Taxes that are shown as due and payable on such Tax Returns. All material Taxes which ProLogis or the ProLogis Subsidiaries are required by Law to withhold or collect, including Taxes required to have been withheld in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder or other third party and sales, gross receipts and use taxes, have been duly withheld or collected and, to the extent required, have been paid over to the proper Governmental Entities within the time period prescribed by law. ProLogis believes that the most recent audited financial statements contained in the ProLogis SEC Documents filed with the SEC prior to the date of this Agreement reflect an adequate reserve for all material Taxes payable by ProLogis and the ProLogis Subsidiaries for all taxable periods and portions thereof through the date of such financial statements. ProLogis and each ProLogis Subsidiary has established (and until the Closing Date shall continue to establish and maintain) on its books and records reserves that are adequate for the payment of all material Taxes not yet due and payable. ProLogis has incurred no liability for any material Taxes under Sections 857(b), 860(c) or 4981 of the Code, IRS Notice 88-19, Treasury Regulation Section 1.337(d)-5, or Treasury Regulation Section 1.337(d)-6 including any material Tax arising from a prohibited transaction described in Section 857(b)(6) of the Code, and neither ProLogis nor any of the ProLogis Subsidiaries has incurred any material liability for Taxes other than in the ordinary course of business and other than transfer or similar Taxes arising in connection with the sales of property. No event has occurred, and no condition or circumstance exists, which presents a material risk that any material Tax will be imposed upon ProLogis or any ProLogis Subsidiary pursuant to Sections 857 or 4981 of the Code. Neither ProLogis nor any ProLogis Subsidiary is the subject of any audit, examination, or other proceeding in respect of U.S. federal income Taxes; to the Knowledge of ProLogis, no audit, examination or other proceeding in respect of U.S. federal income Taxes involving ProLogis or any ProLogis Subsidiary is being considered by any Tax authority. No deficiencies for any Taxes have been asserted or assessed in writing (or to the Knowledge of ProLogis or any ProLogis Subsidiary, proposed) against ProLogis or any of the ProLogis Subsidiaries, including claims by any taxing authority in a jurisdiction where ProLogis or any ProLogis Subsidiary does not file Tax Returns but in which any of them is or may be subject to taxation, which individually or in the aggregate would be material, and no requests for waivers of the time to assess any such Taxes have been granted and remain in effect or are pending. There are no Liens for Taxes upon the assets of ProLogis or the ProLogis Subsidiaries except for statutory Liens for Taxes not yet due.
	(ii) ProLogis (A) for each taxable year beginning with its taxable year ended on December 31, 2004 and ending at the Effective Time, has been and intends to be subject to taxation as a REIT within the meaning of the Code and has satisfied the requirements to qualify as a REIT for such years, (B) has operated, and intends to continue to operate, consistent with the requirements for qualification and taxation as a REIT through the Effective Time and (C) has not taken or omitted to take any action which could reasonably be expected to result in the loss of its status as a REIT, and no such challenge is pending, or to ProLogis’s Knowledge, threatened. Each ProLogis Subsidiary which is a partnership, joint venture or limited liability company has since the end of the first calendar quarter following its acquisition by ProLogis been classified for U.S. federal income tax purposes as a partnership or treated as a disregarded entity and not as an association taxable as a corporation, or a “publicly traded partnership” within the meaning of Section 7704(b) of the Code that is treated as a corporation for U.S. federal income tax purposes under Section 7704(a) of the Code. Each ProLogis Subsidiary which is a corporation has since its acquisition by ProLogis been a REIT, a qualified REIT subsidiary under Section 856(i) of the Code or a taxable REIT subsidiary under Section 856(l) of the Code.
	(iii) As of the date of this Agreement, ProLogis does not have any earnings and profits attributable to ProLogis or any other corporation in any non-REIT year within the meaning of Section 857 of the Code.

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	(iv) None of ProLogis, any of the ProLogis Subsidiaries or, to ProLogis’s Knowledge, any of the ProLogis Joint Ventures is in violation of or in default under any Tax Protection Agreement.
	(v) To ProLogis’s Knowledge, as of the date hereof, ProLogis is a “domestically-controlled qualified investment entity” within the meaning of Section 897(h) of the Code.
	(vi) Neither ProLogis nor any ProLogis Subsidiary is a party to any Tax allocation or sharing agreement.
	(vii) ProLogis does not have any liability for the Taxes of any person other than ProLogis and the ProLogis Subsidiaries and the ProLogis Subsidiaries do not have any liability for the Taxes of any person other than ProLogis and the ProLogis Subsidiaries (A) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), (B) as a transferee or successor, (C) by contract or (D) otherwise.

	(x) Financing. At the Effective Time, ProLogis will have available the funds necessary to pay the Cash Consideration payable pursuant to the terms of this Agreement, to pay the amounts contemplated by Section 1.11 and to pay all fees and expenses in connection therewith.
	(y) Operations of Merger Sub. Merger Sub was formed solely for the purpose of engaging in the transactions contemplated by this Agreement, has engaged in no other business activities and has conducted its operations only as contemplated hereby.

(i) (A) declare, set aside or pay any dividends on, or make any other distributions in respect of, any of Catellus’s shares of stock or the partnership interests, stock or other equity interests in any Catellus Subsidiary that is not directly or indirectly wholly-owned by Catellus, except the authorization and payment of regular quarterly dividends or other distributions with respect to the Catellus Common Shares in accordance with Section 4.15, (B) split, combine or reclassify any shares

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	of beneficial interest, partnership interests, stock or other equity interests or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of such shares of beneficial interest, partnership interests, stock or other equity interests or (C) purchase, redeem or otherwise acquire any shares of Catellus’s stock or the partnership interests, stock or other equity interests in any Catellus Subsidiary or any Catellus Joint Venture or any options, warrants or rights to acquire, or security convertible into, shares of Catellus’s stock or the partnership interests, stock or other equity interests in any Catellus Subsidiary or any Catellus Joint Venture, except to repurchase Catellus Common Shares issued under any Catellus Stock Option Plan or in connection with the use of Catellus Common Shares to pay the exercise price or Tax withholding obligation upon the exercise of a Catellus Option as presently permitted under the Catellus Stock Option Plans;
	(ii) (A) issue, deliver, sell or grant any option or other material right in respect of, any shares, capital stock, any other voting or redeemable securities of Catellus or any Catellus Subsidiary or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible or redeemable securities, except (i) to Catellus or a wholly-owned Catellus Subsidiary, (ii) in connection with the exercise of outstanding Catellus Options under the Catellus Stock Option Plans and (iii) in connection with conversion of any of Catellus convertible securities outstanding as of the date hereof or (B) change, or consent to a change in, the ownership of any Catellus Subsidiary;
	(iii) amend the Catellus Certificate of Incorporation or the Catellus By-laws or any other charter or organizational documents of any Catellus Subsidiary or Catellus Joint Venture, except as required by this Agreement;
	(iv) merge, consolidate or enter into any other similar extraordinary corporate transaction with any Person;
	(v) except as set forth in Schedule 3.1(b)(v) of the Catellus Disclosure Letter or pursuant to written contractual obligations existing as of the date hereof, (A) commit to make any capital expenditures, except as set forth in the Catellus Capital Allocation Plan or in the ordinary course of business consistent with past practice and not exceeding $3 million individually or $6 million in the aggregate, (B) acquire, enter into any option to acquire, or exercise an option or other right or election or enter into any other commitment or contractual obligation (each, a “Commitment”) for the acquisition of any real property or other transaction involving a purchase price in excess of $10 million, other than the acquisition of property necessary to effect 1031 exchanges (provided, that with respect to any 1031 exchange, Catellus shall give ProLogis reasonable opportunity to review and consult with respect to the terms thereof); (C) commence construction of, or enter into any Commitment to develop or construct, other real estate projects involving in excess of $10 million individually or $25 million in the aggregate; (D) incur additional indebtedness (secured or unsecured) except under its revolving line(s) of credit (it being agreed and understood that, with respect to the Teachers Loan, if ProLogis elects not to consent to the entering into of such loan and the Merger is not consummated, ProLogis shall indemnify and hold harmless Catellus for any and all reasonable out-of-pocket costs incurred by Catellus in connection therewith, including (i) those paid to Teachers, including break-up fees and related costs (including any of Teachers’ attorneys’ fees in connection with the preparation and negotiation of the refinancing documents) and (ii) Catellus’ reasonable attorneys’ fees in connection with the preparation and negotiation of the refinancing documents); or (E) make any loans, advances, capital contributions or investments in any other Person in excess of $1 million individually and $5 million in the aggregate;
	(vi) (A) except as set forth in Schedule 3.1(b)(vi) of the Catellus Disclosure Letter or pursuant to written contractual obligations existing as of the date hereof, sell, mortgage, lease (other than leases that involve aggregate lease consideration in excess of $5 million), subject to Lien or otherwise dispose of any of the Catellus Properties; (B) pledge or otherwise encumber shares of beneficial interest, partnership interests, capital stock or securities of Catellus, any Catellus Subsidiary or any Catellus Joint Venture; or (C) except as set forth in Schedule 3.1(b)(vi) of the Catellus Disclosure Letter, sell, lease, mortgage, subject to Lien or otherwise dispose of any of its personal or

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	intangible property, except for transactions made in the ordinary course of business which are not material individually or in the aggregate; provided, however, that Catellus shall provide not less than three days’ prior notice to ProLogis of any lease Catellus or any Catellus Subsidiary proposes to enter into that involves aggregate lease consideration in excess of $1 million but does not require ProLogis’s consent pursuant hereto;
	(vii) except as set forth in Schedule 3.1(b)(vii) of the Catellus Disclosure Letter, guarantee the indebtedness of another Person, enter into any “keep well” or other agreement to maintain any financial statement condition of another Person or enter into any arrangement having the economic effect of any of the foregoing;
	(viii) except as set forth in Schedule 3.1(b)(viii) of the Catellus Disclosure Letter, (A) prepay, refinance or amend any existing indebtedness, or (B) pay, discharge or satisfy any claims, Liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) other than the payment, discharge or satisfaction, in the ordinary course of business consistent with past practice, in accordance with their terms or of Liabilities disclosed, reflected or reserved against in the most recent consolidated financial statements (or the notes thereto) of Catellus included in the Catellus SEC Documents filed prior to the date of this Agreement;
	(ix) make or rescind any express or deemed material election relating to Taxes (unless Catellus reasonably determines after consultation with ProLogis that such action is (A) required by Law, or (B) necessary to preserve Catellus’s status as a REIT or the partnership status of any Catellus Subsidiary which files Tax Returns as a partnership for U.S. federal tax purposes, in which event Catellus shall make such election in a timely manner); provided, however, that nothing in this Agreement shall preclude Catellus from designating dividends paid by it as “capital gain dividends” within the meaning of Section 857 of the Code, with the prior written consent of ProLogis, which will not be unreasonably withheld;
	(x) (A) change in any material respect that is adverse to Catellus any of its methods, principles or practices of accounting in effect or (B) settle or compromise any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, except in the case of settlements or compromises relating to Taxes in an amount not to exceed $500,000 individually and $2 million in the aggregate or change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its U.S. federal income Tax Return for the taxable year ended December 31, 2004, except as to clauses (A) and (B) as may be required by the SEC, applicable Law or GAAP;
	(xi) except as set forth in Schedule 3.1(b)(xi) of the Catellus Disclosure Letter, adopt any new employee benefit plan, incentive plan, severance plan, bonus plan, change in control, retention, retirement, health, life, disability, compensation or special remuneration plan, share option or similar plan, program, policy or arrangement, grant new share options, shares of restricted shares, share appreciation rights or other equity-based awards or amend any existing plan or rights, or enter into or amend any employment agreement, consulting agreement, severance, change in control, termination agreement, retention agreement or any similar agreement or arrangement or, except in the ordinary course of business consistent with past practice, grant or become obligated to grant any increase in the compensation of current officers or employees, except such changes as are required by Law or which are not more favorable to participants than provisions presently in effect;
	(xii) enter into or amend or otherwise modify any material agreement or arrangement with persons that are Affiliates or, as of the date of this Agreement, are officers or directors of Catellus or any Catellus Subsidiary;
	(xiii) except as required by this Agreement, authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation or dissolution of Catellus, any of the Catellus Subsidiaries or any Catellus Joint Venture;
	(xiv) settle or compromise any material litigation (including any shareholder derivative or class action claims (without regard to materiality), other than any litigation in respect of Taxes (which

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	shall be governed by clause (x) of this Section 3.1(b)) arising out of or in connection with any of the transactions contemplated by this Agreement), other than the settlement or satisfaction of any litigation which do not require payments (after the application of insurance proceeds) greater than $500,000 individually and $2 million in the aggregate;
	(xv) except as otherwise permitted under this Agreement, amend or terminate, or waive compliance with the terms of, or breaches under, in any material respect any Catellus Material Contract or enter into a new contract, agreement or arrangement that, if entered into prior to the date of this Agreement, would have been required to have been listed in Schedule 2.1(v)(i) of the Catellus Disclosure Letter;
	(xvi) enter into any Tax Protection Agreement;
	(xvii) sell, securitize, factor or otherwise transfer any accounts receivable;
	(xviii) accept a promissory note in payment of the exercise price payable under any option to purchase Catellus Common Shares; or
	(xix) take any action inconsistent with any of the foregoing.

(i) (A) declare, set aside or pay any dividends on, or make any other distributions in respect of, any of ProLogis’s shares of beneficial interest, except the authorization and payment of regular quarterly dividends with respect to the ProLogis Common Shares in accordance with Section 4.15 and with respect to the ProLogis Preferred Shares in accordance with the terms thereof, (B) split, combine or reclassify any shares of beneficial interest of ProLogis, or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for such shares of beneficial interest of ProLogis or (C) purchase, redeem or otherwise acquire any shares of beneficial interest of ProLogis or any options, warrants or rights to acquire, or security convertible into, shares of beneficial interest of ProLogis, except in each case (i) to repurchase ProLogis Common Shares issued under any ProLogis Stock Option Plan or in connection with the use of ProLogis Common Shares to pay the exercise price or Tax withholding obligation upon the exercise of a ProLogis Option as presently permitted under the ProLogis Stock Option Plans, (ii) in connection with the redemption or exchange of any outstanding securities redeemable or exchangeable for ProLogis Common Shares, (iii) the issuance of ProLogis Common Shares pursuant to any dividend reinvestment or share purchase plan, ProLogis’s existing continuous equity offering program or employee share purchase program, (iv) the grant of any award under any employee benefit program, and (v) the redemption of any ProLogis securities in accordance with their terms;

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	(ii) issue, deliver, sell or grant any option or other material right in respect of, ProLogis Common Shares or any securities convertible into, or any rights, warrants or options to acquire, any ProLogis Common Shares, except (A) to ProLogis or a wholly-owned ProLogis Subsidiary, (B) in connection with the exercise of outstanding ProLogis Options or the making of any award under the ProLogis Stock Option Plans, (C) in connection with conversion of any of ProLogis convertible securities outstanding as of the date hereof, or (D) pursuant to any dividend reinvestment or share purchase plan, ProLogis’s existing continuous equity offering program or employee share purchase program;
	(iii) amend the ProLogis Declaration of Trust or the ProLogis By-laws, except as required by this Agreement and except that ProLogis may (without Catellus’s consent) amend its Declaration of Trust to increase its authorized capital to consist of 375,000,000 shares of beneficial interest, par value $0.01 per share;
	(iv) merge, consolidate or enter into any other similar extraordinary corporate transaction with any Person;
	(v) make or rescind any express or deemed material election relating to Taxes (unless ProLogis reasonably determines that such action is (A) required by Law, (B) necessary to preserve ProLogis’s status as a REIT or the partnership status of any ProLogis Subsidiary which files Tax Returns as a partnership for U.S. federal tax purposes, in which event ProLogis shall make such election in a timely manner), or (C) consistent with elections historically made by ProLogis; provided that nothing in this Agreement shall preclude ProLogis from designating dividends paid by it as “capital gain dividends” within the meaning of Section 857 of the Code, with the prior written consent of ProLogis, which will not be unreasonably withheld;
	(vi) change in any material respect that is adverse to ProLogis any of its methods, principles or practices of accounting in effect, except as may be required by the SEC, applicable Law or GAAP;
	(vii) authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation or dissolution of ProLogis or Merger Sub; or
	(viii) take any action inconsistent with any of the foregoing.

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	(a) Shareholder Approval. Each of the Catellus Stockholder Approval and the ProLogis Shareholder Approval shall have been obtained.
	(b) NYSE Listing. The ProLogis Common Shares to be issued as part of the Merger Consideration shall have been approved for listing on the New York Stock Exchange, subject to official notice of issuance.
	(c) No Injunctions or Restraints. No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Merger shall be in effect.
	(d) Other Approvals. All consents, approvals, permits and authorizations required to be obtained from any Governmental Entity as indicated in Schedule 5.1(d) of the Catellus Disclosure Letter in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby shall have been made or obtained (as the case may be).
	(e) Registration Statement. The Form S-4 shall have become effective under the Securities Act and shall not be subject to any stop order or proceedings seeking a stop order.

	(a) Representations and Warranties. The representations and warranties of Catellus set forth in this Agreement shall be true and correct on and as of the date of this Agreement and on and as of the Closing Date, as though made on and as of the Closing Date (except (x) for such changes resulting from actions permitted under Section 3.1 and (y) to the extent any representation or warranty is expressly limited by its terms to another date), except where the failure of such representations and warranties to be true and correct (without giving effect to any materiality, Catellus Material Adverse Effect or any similar qualification or limitation), individually or in the aggregate, would not or would not reasonably be likely to have a Catellus Material Adverse Effect, and ProLogis shall have received a certificate signed on behalf of Catellus by the Chief Executive Officer and the Chief Financial Officer of Catellus to such effect.
	(b) Performance of Covenants and Obligations of Catellus. Catellus shall have performed in all material respects all covenants and obligations required to be performed by it under this Agreement at or prior to the Effective Time, and ProLogis shall have received a certificate signed on behalf of Catellus by the Chief Executive Officer and the Chief Financial Officer of Catellus to such effect.

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	(c) Material Adverse Change. Since the date of this Agreement, there shall have occurred no changes, events or circumstances which, individually or in the aggregate, constitute a Catellus Material Adverse Effect. ProLogis shall have received a certificate signed on behalf of Catellus by the Chief Executive Officer and the Chief Financial Officer of Catellus to such effect.
	(d) Opinion Relating to REIT Status. ProLogis shall have received an opinion dated as of the Closing Date of O’Melveny & Myers LLP or another nationally recognized law firm, in form and substance reasonably satisfactory to ProLogis, to the effect that Catellus has qualified for treatment as a REIT under the Code for its taxable year ending December 31, 2004, and that Catellus’s organization and proposed method of operation will enable it to continue to meet the requirements for qualification and taxation as a REIT under the Code for its taxable year ending in 2005. For purposes of such opinion, O’Melveny & Myers LLP or such other nationally recognized law firm may rely on customary exceptions, qualifications, assumptions and representations for opinions of this type.
	(e) Opinion Relating to the Merger. ProLogis shall have received an opinion dated as of the Closing Date from Mayer, Brown, Rowe & Maw LLP, based upon customary certificates and letters, which letters and certificates are to be in a form to be agreed upon by the parties and dated the Closing Date, and with customary exceptions, assumptions and qualifications, to the effect that if the Merger is consummated in accordance with the terms of this Agreement, the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Code.

	(a) Representations and Warranties. The representations and warranties of ProLogis set forth in this Agreement shall be true and correct on and as of the date of this Agreement and on and as of the Closing Date, as though made on and as of the Closing Date (except (x) for such changes resulting from actions permitted under Section 3.2 and (y) to the extent any representation or warranty is expressly limited by its terms to another date), except where the failure of such representations and warranties to be true and correct (without giving effect to any materiality, ProLogis Material Adverse Effect or any similar qualification or limitation), individually or in the aggregate, would not or would not reasonably be likely to have a ProLogis Material Adverse Effect, and Catellus shall have received a certificate signed on behalf of ProLogis by the Chief Executive Officer and the Chief Financial Officer of ProLogis to such effect.
	(b) Performance of Covenants or Obligations of ProLogis. ProLogis shall have performed in all material respects all covenants and obligations required to be performed by it under this Agreement at or prior to the Effective Time, and Catellus shall have received a certificate signed on behalf of ProLogis by the Chief Executive Officer and the Chief Financial Officer of ProLogis to such effect.
	(c) Material Adverse Change. Since the date of this Agreement, there shall have occurred no change, events or circumstances which, individually or in the aggregate, would have a ProLogis Material Adverse Effect. Catellus shall have received a certificate signed on behalf of ProLogis by the Chief Executive Officer and Chief Financial Officer of ProLogis to such effect.
	(d) Opinion Relating to REIT Status. Catellus shall have received an opinion dated as of the Closing Date, of Mayer, Brown, Rowe & Maw LLP, in form and substance reasonably satisfactory to Catellus, to the effect that, (i) commencing with its taxable year ending December 31, 2000 through and including the taxable year ending December 31, 2004, ProLogis qualified for treatment as a REIT under the Code, and that ProLogis’s organization and proposed method of operation will enable it to meet the requirements for qualification and taxation as a REIT under the Code commencing with its taxable year ending on December 31, 2005 and each year thereafter and (ii) Merger Sub is organized in conformity with the requirements for qualification and taxation as a REIT under the Code and, commencing with its taxable year ending December 31, 2005, and continuing thereafter, Merger Sub’s proposed method of operations will enable it to satisfy the requirements for such qualification and taxation as a REIT under the Code. For purposes of such opinion, Mayer, Brown, Rowe & Maw LLP

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	may rely on customary exceptions, qualifications, assumptions and representations for opinions of this type.
	(e) Opinion Relating to the Merger. Catellus shall have received an opinion dated the Closing Date from O’Melveny & Myers LLP, based upon customary certificates and letters, which letters and certificates are to be in a form to be agreed upon by the parties and dated the Closing Date, and with customary exceptions, assumptions and qualifications, to the effect that if the Merger is consummated in accordance with the terms of this Agreement, the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Code.

	(a) disclose to its shareholders any information required to be disclosed under applicable Law;
	(b) to the extent applicable, comply with Rule 14e-2(a) promulgated under the Exchange Act with respect to a Competing Transaction; provided, however, that neither Catellus nor its Board of Directors shall be permitted to approve or recommend a Competing Transaction except in compliance with, and as contemplated by, Section 6.1(e);
	(c) if it receives a proposal for a Competing Transaction (that was not solicited, encouraged or facilitated in violation of Section 4.5), (x) furnish non-public information with respect to Catellus and the Catellus Subsidiaries to the Person who made such proposal (provided that Catellus (i) has previously or concurrently furnished such information to ProLogis and (ii) shall furnish such information pursuant to a confidentiality agreement which is at least as favorable to Catellus as the Confidentiality Agreement) and (y) contact such third party and its advisors solely for the purpose of clarifying the proposal and any material contingencies and the capability of consummation, so as to determine whether the proposal for a Competing Transaction is reasonably likely to lead to a Superior Competing Transaction;
	(d) if its Board of Directors determines in good faith (after consulting with its outside counsel and financial advisors of nationally recognized reputation) that a proposal for a Competing Transaction (which proposal was not solicited, encouraged or facilitated in violation of Section 4.5) is reasonably likely to lead to a Superior Competing Transaction, continue to furnish non-public information and participate in negotiations regarding such proposal; and
	(e) if its Board of Directors determines in good faith (after consulting with its outside legal counsel and financial advisors of nationally recognized reputation) that such action is consistent with its fiduciary duties under applicable Law, approve or recommend (and in connection therewith withdraw or modify its approval or recommendation of this Agreement and the Merger) a Superior Competing Transaction or enter into an agreement with respect to such Superior Competing Transaction if but only if, Catellus: (A) complies fully with Section 4.5 and this Article VI and (B)(i) provides ProLogis with at least three (3) business days’ prior written notice of its intent to withdraw, modify, amend or qualify its recommendation of this Agreement or the Merger, (ii) if, in the event that during such three (3) business days ProLogis makes a counter proposal to such Superior Competing Transaction (any such counter proposal being referred to in this Agreement as a “Counter Proposal”), the Catellus Board of Directors in good faith, after consultation with its outside legal counsel and financial advisors of recognized reputation, determines that the Counter Proposal is not at least as favorable to Catellus stockholders as the Superior Competing Transaction (taking into account all financial and strategic considerations and other relevant factors, including relevant legal, financial, regulatory and other aspects of such proposals, and the conditions, prospects and time required for completion of such proposal, in each case as deemed relevant by the Catellus Board of Directors in good faith) and (iii) Catellus shall have terminated this Agreement in accordance with Section 7.1(i) and paid the ProLogis Break-Up Fee and ProLogis Expenses.

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	(a) by mutual written consent duly authorized by the Board of Directors of Catellus and the Board of Trustees of ProLogis;
	(b) by ProLogis, upon a breach of any representation, warranty, covenant or agreement on the part of Catellus set forth in this Agreement, or if any representation or warranty of Catellus shall have become untrue, in either case such that the conditions set forth in Section 5.2(a) or 5.2(b), as the case may be, would be incapable of being satisfied by December 31, 2005 (the “Termination Date”);
	(c) by Catellus, upon a breach of any representation, warranty, covenant or agreement on the part of ProLogis set forth in this Agreement, or if any representation or warranty of the ProLogis shall have become untrue, in either case such that the conditions set forth in Section 5.3(a) or 5.3(b), as the case may be, would be incapable of being satisfied by the Termination Date;
	(d) by either ProLogis or Catellus, if any judgment, injunction, order, decree or action by any Governmental Entity of competent authority preventing the consummation of the Merger shall have become final and nonappealable;
	(e) by either ProLogis or Catellus, if the Merger shall not have been consummated before the Termination Date; provided, however, that a party that has materially breached a representation, warranty or covenant of such party set forth in this Agreement shall not be entitled to exercise its right to terminate under this Section 7.1(e);
	(f) by ProLogis if, upon a vote at a duly held Catellus Stockholder Meeting or any adjournment thereof, the Catellus Stockholder Approval shall not have been obtained;
	(g) by Catellus if, upon a vote at a duly held ProLogis Shareholder Meeting or any adjournment thereof, the ProLogis Shareholder Approval shall not have been obtained;
	(h) by ProLogis, if (i) prior to the Catellus Stockholder Meeting the Board of Directors of Catellus or any committee thereof shall have withdrawn, amended or modified in any manner adverse to ProLogis its approval or recommendation of the Merger or this Agreement in connection with, or approved or recommended, any Superior Competing Transaction, (ii) Catellus shall have entered into any agreement with respect to any Superior Competing Transaction or (iii) the Board of Directors of Catellus or any committee thereof shall have resolved to do any of the foregoing; or
	(i) by Catellus, if it has complied with Sections 4.5 and 6.1 and the Board of Directors of Catellus has approved or recommended (and in connection therewith withdrawn or modified its approval or recommendation of this Agreement and the Merger) a Superior Competing Transaction or resolved to enter into an agreement with respect to such Superior Competing Transaction.

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	(a) if to ProLogis, to:

	ProLogis
	14100 East 35th Place
	Aurora, Colorado 80011
	Attn: General Counsel
	Fax: (303) 576-2761
	with a copy to:
	Mayer, Brown, Rowe & Maw LLP
	71 South Wacker Drive
	Chicago, Illinois 60606

	Attn:	Michael T. Blair, Esq. or

	D. Michael Murray, Esq.
	Fax: (312) 701-7711

	(b) if to Catellus, to:

	Catellus Development Corporation
	201 Mission Street
	San Francisco, California 94105
	Attn: General Counsel
	Fax: (415) 974-4613
	with a copy to:
	O’Melveny & Myers, LLP
	400 South Hope Street
	Los Angeles, California 90017
	Attn: Mark Easton, Esq.
	Fax: (213) 430-6407

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	PROLOGIS

	By:	/s/ Jeffrey H. Schwartz

	Jeffrey H. Schwartz
	Chief Executive Officer
	PALMTREE ACQUISITION CORPORATION

	By:	/s/ Jeffrey H. Schwartz

	Jeffrey H. Schwartz
	Chief Executive Officer
	CATELLUS DEVELOPMENT CORPORATION

	By:	/s/ Nelson C. Rising

	Nelson C. Rising
	Chief Executive Officer

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Name of Corporation		State of Domicile
Catellus Development Corporation			Delaware
Palmtree Acquisition Corporation			Delaware

	PALMTREE ACQUISITION CORPORATION,
	a Delaware corporation

	By:
	Its:

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“THESE SHARES WERE ISSUED IN A TRANSACTION PURSUANT TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), APPLIES. THESE SHARES MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF SUCH RULE, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR OTHERWISE IN ACCORDANCE WITH AN AFFILIATE’S AGREEMENT BETWEEN THE ORIGINAL HOLDER OF SUCH SHARES AND THE TRUST, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF THE TRUST.”

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	Very truly yours,

	[Name]

Agreed to and accepted:
PROLOGIS

By:

Name:
Title:

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	(i) reviewed certain publicly available financial statements and other business and financial information of ProLogis and Catellus, respectively;
	(ii) reviewed certain internal financial statements and other financial and operating data concerning ProLogis and Catellus, respectively;
	(iii) reviewed certain financial forecasts relating to ProLogis and Catellus provided to or discussed with us by the managements of ProLogis and Catellus, respectively;
	(iv) reviewed and discussed with senior executives of ProLogis information relating to certain cost savings and strategic, financial and operational benefits anticipated by the management of ProLogis to result from the Merger;
	(v) discussed with senior executives of ProLogis the past and current operations, financial condition and prospects of ProLogis and Catellus, and discussed with senior executives of Catellus the past and current operations, financial condition and prospects of Catellus;
	(vi) reviewed the potential pro forma financial impact of the Merger on the funds from operations per share, and certain financial ratios, of ProLogis;
	(vii) reviewed the reported prices and trading activity for ProLogis Common Shares and Catellus Common Stock;
	(viii) compared the financial performance of ProLogis and Catellus and the prices and trading activity of ProLogis Common Shares and Catellus Common Stock with each other and with that of certain other publicly traded companies we deemed relevant;

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	(ix) compared certain financial terms of the Merger to financial terms, to the extent publicly available, of certain other business combination transactions we deemed relevant;
	(x) participated in discussions and negotiations among representatives of ProLogis, Catellus and their respective advisors;
	(xi) reviewed the Agreement; and
	(xii) performed such other analyses and considered such other factors as we have deemed appropriate.

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	Very truly yours,
	/s/ Banc of America Securities LLC
	BANC OF AMERICA SECURITIES LLC

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	i. reviewed certain publicly available financial statements and other business and financial information of the Company and the Acquiror;
	ii. reviewed certain internal financial statements and other financial and operating data concerning the Company and the Acquiror prepared by the managements of the Company and the Acquiror, respectively;
	iii. reviewed certain internal financial projections prepared by the managements of the Company and the Acquiror, respectively;
	iv. discussed the past and current operations and financial condition and the prospects of the Company and the Acquiror with senior executives of the Company and the Acquiror, respectively;
	v. reviewed the reported prices and trading activity for the Company Common Stock and the Acquiror Common Stock;
	vi. compared the financial performance of the Company and the Acquiror and the prices and trading activity of the Company Common Stock and the Acquiror Common Stock with that of certain other publicly-traded companies comparable with the Company and the Acquiror, respectively, and their securities;
	vii. reviewed the financial terms, to the extent publicly available, of certain comparable transactions;
	viii. reviewed information relating to certain strategic, financial and operational benefits anticipated from the Merger, prepared by the management of the Acquiror;

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	ix. reviewed the pro forma impact of the Merger on the Acquiror’s funds from operations per share, consolidated capitalization, and financial ratios;
	x. participated in discussions and negotiations among representatives of the Company, the Company’s legal advisors, the Acquiror, and the Acquiror’s financial and legal advisors;
	xi. reviewed the Merger Agreement and certain related documents; and
	xii. considered such other factors and performed such other analyses as we have deemed appropriate.

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	Very truly yours,
	MORGAN STANLEY & CO. INCORPORATED

	By:	/s/ Cameron Clough

	Cameron Clough
	Managing Director

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	(1) Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in subsection (f) of § 251 of this title.
	(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock anything except:

	a. Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;
	b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or held of record by more than 2,000 holders;
	c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a. and b. of this paragraph; or
	d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a., b. and c. of this paragraph.

	(3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 253 of this title is not owned by the parent corporation immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.

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	(1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for such meeting with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) hereof that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section. Each stockholder electing to demand the appraisal of such stockholder’s shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder’s shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or
	(2) If the merger or consolidation was approved pursuant to § 228 or § 253 of this title, then, either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder’s shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder’s shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given.

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ITEM 20.	Indemnification of Trustees and Officers

“To the maximum extent that Maryland law in effect from time to time permits limitation of the liability of trustees of a real estate investment trust, no Trustee of the Trust shall be liable to the Trust or to any Shareholder for money damages. Neither the amendment nor repeal of this Section 10, nor the adoption or amendment of any other provision of this Declaration of Trust inconsistent with this Section 10, shall apply to or affect in any respect the applicability of the preceding sentence with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption. In the absence of any Maryland statute limiting the liability of trustees of a Maryland real estate investment trust for money damages in a suit by or on behalf of the Trust or by any Shareholder, no Trustee of the Trust shall be liable to the Trust or to any Shareholder for money damages except to the extent that (i) the Trustee actually received an improper benefit or profit in money, property or services, for the amount of the benefit or profit in money, property or services actually received; or (ii) a judgment or other final adjudication adverse to the Trustee is entered in a proceeding based on a finding in the proceeding that the Trustee’s action or failure to act was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding.”

“The Trust shall indemnify each Trustee, to the fullest extent permitted by Maryland law, as amended from time to time, in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she was a Trustee of the Trust or is or was serving at the request of the Trust as a director, trustee, officer, partner, manager, member, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, limited liability company, other enterprise or employee benefit plan, from all claims and liabilities to which such person may become subject by reason of service in such capacity and shall pay or reimburse reasonable expenses, as such expenses are incurred, of each Trustee in connection with any such proceedings.”

“To the maximum extent that Maryland law in effect from time to time permits limitation of the liability of officers of a real estate investment trust, no officer of the Trust shall be liable to the Trust or to any Shareholder for money damages. Neither the amendment nor repeal of this Section 1, nor the adoption or amendment of any other provision of this Declaration of Trust inconsistent with this Section 1, shall apply to or affect in any respect the applicability of the preceding sentence with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption. In the absence of any Maryland statute limiting the liability of officers of a Maryland real estate investment trust for money damages in a suit by or on behalf of the Trust or by any Shareholder, no officer of the Trust shall be liable to the Trust or to any Shareholder for money damages except to the extent that (i) the officer actually received an improper benefit or profit in money, property or services, for the amount of the benefit or profit in money, property or services actually received; or (ii) a judgment or other final adjudication adverse to the officer is entered in a proceeding based on a finding in the proceeding that the officer’s action or failure to act was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding.”

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“The Trust shall have the power to indemnify each officer, employee and agent, to the fullest extent permitted by Maryland law, as amended from time to time, in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she was an officer, employee or agent of the Trust or is or was serving at the request of the Trust as a director, trustee, officer, partner, manager, member, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, limited liability company, other enterprise or employee benefit plan, from all claims and liabilities to which such person may become subject by reason of service in such capacity and shall pay or reimburse reasonable expenses, as such expenses are incurred, of each officer, employee or agent in connection with any such proceedings.”

ITEM 21.	Exhibits and Financial Statement Schedules

	See Index to Exhibits, which is incorporated by reference in this item.

	Not applicable.

ITEM 22.	Undertakings

	(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

	(i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
	(ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
	(iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

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	provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by ProLogis pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement;

	(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment will be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time will be deemed to be the initial bona fide offering thereof.
	(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
	(4) That, for the purpose of determining any liability under the Securities Act of 1933, each filing of ProLogis’ annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement will be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time will be deemed to be the initial bona fide offering thereof.
	(5) That, prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.
	(6) That every prospectus: (i) that is filed pursuant to paragraph (5) immediately preceding, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Securities Act of 1933 and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment will be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time will be deemed to be the initial bona fide offering thereof.
	(7) To respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.
	(8) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

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	PROLOGIS

	By:	/s/ Jeffrey H. Schwartz

	Name: Jeffrey H. Schwartz
	Title:   Chief Executive Officer

Signature				Title		Date
/s/ Jeffrey H. Schwartz   (Jeffrey H. Schwartz)				Chief Executive Officer (Principal Executive Officer) and Trustee		July 13, 2005
/s/ Walter C. Rakowich   (Walter C. Rakowich)				President, Chief Operating Officer, Chief Financial Officer (Principal Financial Officer) and Trustee		July 13, 2005
/s/ Jeffrey S. Finnin   (Jeffrey S. Finnin)				Senior Vice President and Chief Accounting Officer		July 13, 2005
/s/ K. Dane Brooksher   (K. Dane Brooksher)				Trustee		July 13, 2005
/s/ Stephen L. Feinberg   (Stephen L. Feinberg)				Trustee		July 13, 2005
/s/ George L. Fotiades   (George L. Fotiades)				Trustee		July 13, 2005
/s/ Donald P. Jacobs   (Donald P. Jacobs)				Trustee		July 13, 2005

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Signature				Title		Date
/s/ Irving F. Lyons, III   (Irving F. Lyons, III)				Trustee		July 13, 2005
/s/ Kenneth N. Stensby   (Kenneth N. Stensby)				Trustee		July 13, 2005
/s/ D. Michael Steuert   (D. Michael Steuert)				Trustee		July 13, 2005
/s/ J. André Teixeira   (J. André Teixeira)				Trustee		July 13, 2005
/s/ William D. Zollars   (William D. Zollars)				Trustee		July 13, 2005
/s/ Andrea M. Zulberti   (Andrea M. Zulberti)				Trustee		July 13, 2005

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Exhibit
Number				Description
	2	.1		Agreement and Plan of Merger, dated as of June 5, 2005, by and among the Registrant, Palmtree Acquisition Corporation and Catellus Development Corporation (attached as Annex A to the joint proxy statement-prospectus forming a part of this Registration Statement and incorporated herein by reference)
	3	.1		Articles of Amendment and Restatement of Declaration of Trust of the Registrant dated as of June 24, 1999 (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 10-Q for the fiscal quarter ended June 30, 1999)
	3	.2		Articles of Amendment to Amended and Restated Declaration of Trust of the Registrant dated as of May 22, 2002 (incorporated by reference to Exhibit 99.1 to the Registrant’s Form 8-K dated May 30, 2002)
	3	.3		Articles of Amendment to Amended and Restated Declaration of Trust of the Registrant dated as of May 19, 2005 (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on May 20, 2005)
	3	.4		Articles of Amendment to Amended and Restated Declaration of Trust of the Registrant dated as of July 12, 2005 (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K dated July 13, 2005)
	3	.5		Articles Supplementary Classifying and Designating the Series F Cumulative Redeemable Preferred Shares of Beneficial Interest (incorporated by reference to Exhibit 4.2 to the Registrant’s Form 8-K dated December 24, 2003)
	3	.6		Articles Supplementary Classifying and Designating the Series G Cumulative Redeemable Preferred Shares of Beneficial Interest (incorporated by reference to Exhibit 4.2 to the Registrant’s Form 8-K dated December 24, 2003)
	3	.7		Articles Supplementary Reclassifying and Designating Shares of Beneficial Interest of the Registrant as Common Shares of Beneficial Interest (incorporated by reference to Exhibit 3.2 to the Registrant’s Form 8-K dated July 13, 2005)
	3	.8		Amended and Restated Bylaws of ProLogis dated as of March 15, 2005 (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on March 21, 2005)
	5	.1		Opinion of Mayer, Brown, Rowe & Maw LLP regarding the legality of the common shares of beneficial interest of the Registrant to be registered under this Registration Statement
	8	.1		Opinion of Mayer, Brown, Rowe & Maw LLP regarding certain United States federal income tax matters*
	8	.2		Opinion of O’Melveny & Myers LLP regarding certain United States federal income tax matters*
	8	.3		Opinion of Goodwin Procter LLP regarding certain United States federal income tax matters*
	10	.1		Employment Agreement, dated as of June 5, 2005, by and between the Registrant and Ted R. Antenucci
	10	.2		Separation Agreement, dated as of July 13, 2005, between the Registrant and John W. Seiple, Jr. (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on July 13, 2005)
	15	.1		Acknowledgment of KPMG LLP, independent registered public accounting firm for the Registrant
	23	.1		Consent of KPMG LLP, independent registered public accounting firm for the Registrant
	23	.2		Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm for Catellus Development Corporation
	23	.3		Consent of Mayer, Brown, Rowe & Maw LLP (included as part of its opinion filed as Exhibit 5.1 and incorporated herein by reference)
	23	.4		Consent of Mayer, Brown, Rowe & Maw LLP (included as part of its opinion filed as Exhibit 8.1 and incorporated herein by reference)*

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Exhibit
Number				Description
	23	.5		Consent of O’Melveny & Myers LLP (included as part of its opinion filed as Exhibit 8.2 and incorporated herein by reference)*
	23	.6		Consent of Goodwin Procter LLP (included as part of its opinion filed as Exhibit 8.3 and incorporated herein by reference)*
	24	.1		Powers of Attorney of the Registrant’s trustees (included on signature page)
	99	.1		Form of Proxy Card for the Registrant’s common shareholders
	99	.2		Form of Proxy Card for Catellus Development Corporation’s common stockholders*
	99	.3		Form of Election Form for Catellus Development Corporation common stockholders
	99	.4		Voting Agreement, dated as of June 5, 2005, among the Registrant, Nelson C. Rising, Ted R. Antenucci, C. William Hosler and Vanessa L. Washington
	99	.5		Consent of Banc of America Securities LLC
	99	.6		Consent of Morgan Stanley & Co. Incorporated
	99	.7		Consent of Nelson C. Rising
	99	.8		Consent of Christine Garvey

*	To be filed by amendment.