<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 COMMISSION FILE NUMBER 0-18694
CATELLUS DEVELOPMENT
CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 94-2953477
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
201 MISSION STREET,
SAN FRANCISCO, CALIFORNIA 94105
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(415) 974-4500
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE ON WHICH
TITLE OF EACH CLASS REGISTERED
------------------- ------------------------------
Common Stock, $.01 par value per share New York, Pacific, Chicago Stock
Exchanges
$3.75 Series A Cumulative Convertible New York Stock Exchange
Preferred Stock
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___
---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes ___ No X
---
The aggregate market value of the voting stock held by non-affiliates of the
Registrant was approximately $356,000,000 on March 15, 1996.
As of March 15, 1996, there were 74,498,115 issued and outstanding shares of
the Registrant's Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement for the 1996 Annual Meeting of
Stockholders are incorporated by reference in Part III.
================================================================================
<PAGE>
PART I
ITEM 1. BUSINESS
Catellus Development Corporation (the Company) was organized in the state of
Delaware in 1984 as an indirect, wholly-owned subsidiary of Santa Fe Pacific
Corporation (SFP) to conduct the non-railroad real estate activities of Santa Fe
Industries and Southern Pacific Company. In December 1989, SFP sold 19.9% of
the Company to Bay Area Real Estate Investment Associates, L.P. (BAREIA), a
California limited partnership whose general partner was JMB/Bay Area Partners
and whose limited partner was the California Public Employees' Retirement System
(CALPERS). In December 1990, SFP distributed its remaining 80.1% interest in
the Company to its stockholders in the form of a stock dividend. In November
1995, BAREIA was liquidated and CALPERS became the sole holder of BAREIA's
stock. As of December 31, 1995, CALPERS owns 41.1% of the Company's common
stock and 40.7% of the Company's Series A preferred stock.
The Company's principal office is located at 201 Mission Street, San
Francisco, California, 94105; its telephone number is (415) 974-4500.
The Company is a full service real estate company that, as of December 31,
1995 owned 855,170 acres of land, 14.1 million square feet of income producing
property, 5,400 acres of land leases and interests in eight joint ventures.
Approximately 80% of the Company's assets are located in California, with the
balance mainly concentrated in Dallas, metropolitan Chicago and Phoenix.
COMPANY STRATEGIES - OVERVIEW
During late 1994 and continuing in 1995, the Company undertook a
comprehensive review of its operations and activities with the primary goals
being to increase cash flow and return on stockholders' equity. In particular,
the Company focused its efforts on reducing costs, selling non-strategic land
assets, reducing debt, increasing development activity, increasing third party
fee management revenue and minimizing the development costs and time frames for
its major development projects. The Company has taken the following specific
actions:
. In November 1994, the Company implemented significant staff reductions to
reduce costs and reorganized to focus on increasing operating earnings. These
reductions, when combined with other cost-reduction measures, resulted in
annual cost savings for 1995 of approximately $10.1 million. General and
administrative costs declined by $3.7 million; overhead associated with
operating the portfolio declined by $3.4 million and overhead associated with
selling properties declined by $1.5 million. In addition, the Company has
benefited by a $1.5 million reduction in overhead costs associated with the
Company's development activities.
. In October 1995, the Company began the process of substantially increasing its
asset sales activity, with the primary focus on its non-strategic land assets.
Sales proceeds will be applied to a combination of debt reduction, in order to
reduce interest costs, and reinvestment in activities that could generate
increased operating earnings. The Company's goal is to sell $100 million of
non-strategic land assets over a 15-month period ending December 31, 1996.
Sales totaling $47.1 million closed in the fourth quarter of 1995.
. During 1995, the Company reduced its total debt by a net $34.5 million. This
net reduction represents the difference between $68.5 million of principal
reductions on existing borrowings and $34 million of new borrowings which
funded the development of pre-leased industrial and retail buildings. It is
expected that the debt service on the new borrowings will be covered by the
cash flow from the completed buildings; therefore, the Company's future
operations should be improved by the interest savings on the $68.5 million of
principal reductions.
2
<PAGE>
. During 1995 and continuing into 1996, the Company has placed a greater
emphasis on increasing its development and fee development businesses. During
1995, the Company commenced construction on 910,000 square feet of new
development, compared to 381,000 in 1994. In addition, at December 31, 1995,
the Company had signed leases for new development totalling 648,000 square
feet for which construction will commence in 1996. In March 1996, the Company
acquired The Akins Companies to better position itself to pursue existing
residential development opportunities on certain of its land holdings, as well
as to pursue fee development opportunities on land not currently owned by the
Company.
. During 1995 and continuing into 1996, the Company has also placed a greater
emphasis on increasing its third party management business. In January 1996,
the Company announced a new five-year contract to manage the non railroad real
estate assets for the Burlington Northern Santa Fe Corporation.
. Beginning in 1994 and continuing throughout 1995, the Company undertook a
review of its major land development projects with the goal of increasing
profitability, minimizing up front capital requirements and shortening the
time required to develop the properties. As a result of this review, the
decision was made to modify certain of the entitlements, abandon others and
sell one property that management believed could not be developed in a
reasonable time frame. It is management's expectation that these decisions
will both accelerate the time frame in which the projects will be developed
and minimize the up front cash requirements associated with development.
The Company's long-term financial goal is to increase its return on
stockholder equity. In order to accomplish this, the Company will continue with
the revenue enhancement and cost reduction initiatives discussed above and will
seek opportunities to reduce its capital commitment to projects through joint
ventures, where the Company would seek financial partners to participate in some
of its more capital intensive businesses. In addition, as the Company completes
its disposition program of non-strategic land assets, it will evaluate
opportunities to increase stockholder returns through strategic reinvestment
and/or stock repurchases.
PORTFOLIO SUMMARY
- -----------------
The following tables provide information on the Company's income producing
assets, land assets and joint venture investments. In addition, supplemental
current value information is provided for the Company's land assets and joint
venture investments. Current value information is provided in recognition of
the significance of the Company's land assets in relation to its total assets
and the lack of traditional cash flow or earnings measures available to evaluate
the land portfolio. Current value does not represent the net realizable value
of the Company's portfolio as a whole, nor does it contemplate liquidation or a
distressed sale of the Company's assets. Current value accounting continues to
represent an experimental approach; authoritative criteria have not been
established for its preparation and presentation. The Company engaged Landauer
and Associates to provide a concurring appraisers report on its estimate of
values, which is included in an exhibit to this 10-K.
3
<PAGE>
PORTFOLIO BY ASSET CATEGORY
INCOME PRODUCING PROPERTIES
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1995
-------------------------------------- NET OPERATING INCOME/(1)/
NUMBER OF BUILDINGS SQUARE --------------------------
ACRES OR LEASES FEET 1995 1994
------- ------------------- ------ ------------- -----------
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
INDUSTRIAL
Buildings and associated land... 606 163 11,424 $39,704 $38,813
Land leases..................... 5,239 17 - 1,746 1,743
RETAIL
Buildings and associated land... 76 29 957 8,423 5,024
Land leases..................... 53 16 - 1,721 2,018
OFFICE
Buildings and associated land... 76 32 1,687 16,483 18,399
Land leases..................... 106 21 - 2,707 2,616
----- --- ------ ------- -------
Total......................... 6,156 278 14,068 $70,784 $68,613
===== === ====== ======= =======
</TABLE>
JOINT VENTURES
<TABLE>
<CAPTION>
CATELLUS SHARE OF CURRENT VALUE/(3)/
----------------------------------
12/31/95 12/31/94 /(2)/
--------- --------------
(in thousands)
<S> <C> <C>
Hotels.......................... $ 77,276 $65,430
Land............................ 26,157 17,760
Other........................... 850 3,165
-------- -------
Total......................... $104,283 $86,355
======== =======
</TABLE>
LAND DEVELOPMENT AND LAND HOLDINGS
<TABLE>
<CAPTION>
CURRENT VALUE/(3)/ NET OPERATING INCOME/(1)/
------------------------ ------------------------------
ACRES 12/31/95 12/31/94/(2)/ 1995 1994
------- -------- ------------- ------- -------
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Major mixed-use projects........ 1,156 $310,040 $305,205 $ 1,576 $ 963
Industrial development.......... 1,671 125,121 134,674 (1,111) (1,350)
Retail and office development
and other land................. 6,086 145,151 159,051 393 656
Residential development......... 550 45,986 48,847 (197) (140)
Natural resource land........... 833,844 176,892 165,123 (936) (1,463)
Held for sale................... 11,863 131,211 137,243 (2,017) (2,596)
------- -------- -------- ------- -------
Total......................... 855,170 $934,401 $950,143 $(2,292) $(3,930)
======= ======== ======== ======= =======
</TABLE>
Notes:
- ------
(1) Net operating income represents rental revenue, less property operating
costs.
(2) Current value at December 31, 1994 represents the value of those assets
still owned at December 31, 1995.
4
<PAGE>
Notes (cont.)
- ---------------
(3) The Company estimates the current value of its land assets primarily using
the direct sales comparison method. However, in cases where relevant comparable
sales data is not available, current value is estimated using the residual land
analysis method. Under the direct sales comparison approach, recent sales of
similar properties are used as a basis for estimated current value. Current
value estimates for large contiguous parcels include a discount to reflect
current market absorption rates for undeveloped land. Under the residual land
analysis approach, current value is derived based on anticipated future cash
flows associated with the Company's intended development plan. Infrastructure
costs, development costs (including costs to remediate known environmental
contamination), operating cash flow and residual sales amounts are projected
over an assumed period of development and operation. These amounts are
discounted to the balance sheet date using a discount rate the Company believes
is appropriate given the level of project risk. Current values for investments
in joint ventures represent the Company's proportionate equity in the underlying
net assets of the ventures. The current values of assets and liabilities of
joint ventures were based on methods and assumptions similar to those used to
estimate the current values of similar assets and liabilities of the Company.
Current values calculated using the above methods are adjusted to reflect the
estimated costs to remediate known environmental contamination.
The following summarizes leasing statistics for the Company's operating
properties (square feet in thousands).
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Industrial buildings
Square feet owned 11,424 10,985 10,809
Square feet leased 10,945 10,432 10,389
Percent leased 95.8% 95.0% 96.1%
Office buildings
Square feet owned 1,687 1,687 1,806
Square feet leased 1,553 1,618 1,654
Percent leased 92.1% 95.9% 91.6%
Retail buildings
Square feet owned 957 837 652
Square feet leased 883 777 540
Percent leased 92.3% 92.8% 82.8%
Land development
Square feet owned 100 100 100
Square feet leased 100 100 100
Percent leased 100.0% 100.0% 100.0%
Total*
Square feet owned 14,168 13,609 13,367
Square feet leased 13,481 12,927 12,683
Percent leased 95.1% 95.0% 94.9%
</TABLE>
* Square feet owned and occupied, as well as net operating income, excludes
approximately 1.4 million square feet of existing buildings, primarily at
Mission Bay. These buildings will be razed as development proceeds.
5
<PAGE>
For the five years from 1996 through 2000, leases for 20.1%, 14.0%, 7.4%,
8.7%, and 10.1% of total rentable square footage are scheduled to expire.
INDUSTRIAL INCOME PRODUCING PROPERTIES
- --------------------------------------
As of the end of 1995, the Company's industrial income producing portfolio
included 11.4 million square feet in 163 buildings. At the year end, these
buildings were 95.8% leased. The portfolio also included 5,239 acres of land
leased for industrial uses.
At the end of 1995, the Company also had 642,000 square feet under
construction and leases signed for an additional 648,000 square feet to be
constructed in 1996. When these buildings are completed, the Company's
industrial income producing portfolio will be expanded to 12.7 million square
feet and 169 buildings.
Net Operating Income - The net operating income for the industrial
portfolio increased from $40.6 million in 1994 to $41.5 million in 1995. This
increase resulted primarily from the addition of new industrial buildings. The
decrease in 1994 compared to 1993 was due to the sale of 1.1 million square feet
of properties near the end of 1993 and in 1994. The following table summarizes
net operating income for the industrial portfolio (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- -------
<S> <C> <C> <C>
Industrial buildings $39,704 $38,813 $38,890
Industrial land leases 1,746 1,743 2,227
------- ------- -------
$41,450 $40,556 $41,117
======= ======= =======
</TABLE>
Location - The following table summarizes the Company's industrial
buildings by region as of December 31, 1995.
<TABLE>
<CAPTION>
NUMBER OF
BUILDINGS SQUARE FEET
--------- -----------
(in thousands)
<S> <C> <C>
Metro Chicago 4 791
Dallas 5 555
Phoenix 6 685
Southern California 117 7,088
Northern California 17 1,360
Other 14 945
--- ------
Total 163 11,424
=== ======
</TABLE>
Lease Expirations - The following table summarizes the lease expirations
in the industrial portfolio as of December 31, 1995.
<TABLE>
<CAPTION>
1996 1997 1998 1999 2000 2001 2002 2003 Thereafter
----- ----- ---- ----- ----- ----- ---- ---- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Percent 20% 13% 8% 9% 11% 11% 3% 3% 22%
Square feet (in thousands) 2,164 1,426 840 1,002 1,207 1,258 310 277 2,461
</TABLE>
Leases totalling 20% of the Company's industrial square footage expire in
1996. Of this, 38% are located in Southern California, where economic
conditions continue to improve, 20% represent month to month leases in multi-
tenant buildings, 17% are located in Phoenix, Arizona, and the balance is spread
throughout the portfolio.
6
<PAGE>
RETAIL INCOME PRODUCING PROPERTIES
- ----------------------------------
As of the end of 1995, the Company's retail income producing portfolio
consisted of 957,000 square feet of existing buildings and 53.3 acres of land
leased for retail uses. The existing income-producing retail portfolio
consisted of 29 buildings which were 92.3% leased as of December 31, 1995.
The Company's retail properties are located primarily in Northern and
Southern California with one complex each in Colorado and Oregon. The largest
retail project, East Baybridge Center, is located on 40 acres just across the
Bay from San Francisco in the cities of Emeryville and Oakland. The 270,000
square foot Phase I of this project opened in mid-1994 and was pre-leased to
such national retailers as Home Depot, Sportmart, OfficeMax, Safeway's Pak 'n
Save and CompUSA. A 117,000 square foot building for Kmart was added to the
center in 1995.
Net Operating Income - Net operating income for the Company's retail
building portfolio rose from $5.0 million in 1994 to $8.4 million in 1995, due
to the East Baybridge Center in Emeryville, California. The following table
summarizes net operating income for the retail portfolio (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
-------- ------- -------
<S> <C> <C> <C>
Retail buildings $ 8,423 $5,024 $4,450
Retail land leases 1,721 2,019 2,037
------- ------ ------
$10,144 $7,043 $6,487
======= ====== ======
</TABLE>
Location - The following table summarizes the Company's retail buildings by
region as of December 31, 1995.
<TABLE>
<CAPTION>
NUMBER OF
BUILDINGS SQUARE FEET
--------- -----------
(in thousands)
<S> <C> <C>
Southern California 13 358
Northern California 9 461
Colorado 5 100
Oregon 2 38
-- ---
Totals 29 957
== ===
</TABLE>
Lease expirations - The following table summarizes the lease expirations
in the retail portfolio as of December 31, 1995.
<TABLE>
<CAPTION>
1996 1997 1998 1999 2000 2001 2002 2003 THEREAFTER
---- ---- ---- ---- ---- ---- ---- ---- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Percent 18% 6% 5% 8% 8% 1% 0% 4% 50%
Square feet (in thousands) 160 50 46 69 69 11 0 35 443
</TABLE>
Development - The following table summarizes the Company's retail
development completed during the past three years.
1995 1994 1993
---- ---- ----
Completed projects (square feet) 117,000 269,310 -
7
<PAGE>
OFFICE INCOME PRODUCING PROPERTIES
- ----------------------------------
At the end of 1995, the Company's office income producing portfolio
consisted of 1.7 million square feet of office buildings and 105.9 acres of
land leased for office purposes. At year-end 1995, this portfolio of 32 office
buildings was 92.1% leased. The most significant office projects owned by the
Company are the South Bay Center in San Jose, California, 424,192 square feet,
and the Railway Exchange Building in Chicago, Illinois, 374,929 square feet.
Net Operating Income - The Company experienced a decline in net operating
income from office buildings in 1995. This decline is related primarily to the
Railway Exchange Building in Chicago, Illinois. An increase in property taxes
in Chicago and the replacement of a major tenant with lower rent tenants caused
the building to contribute less to office net operating income than in previous
years. The following table summarizes net operating income for the office
portfolio (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- --------
<S> <C> <C> <C>
Office buildings $16,483 $18,399 $17,407
Office land leases 2,707 2,616 2,717
------- ------- -------
$19,190 $21,015 $20,124
======= ======= =======
</TABLE>
Location - The following table summarizes the Company's office property by
region as of December 31, 1995.
<TABLE>
<CAPTION>
NUMBER OF
BUILDINGS SQUARE FEET
--------- -------------
(in thousands)
<S> <C> <C>
Southern California 13 578
Northern California 10 521
Metro Chicago 2 473
Other 7 115
-- -----
Totals 32 1,687
== =====
</TABLE>
Lease expirations - The following table summarizes the lease expirations in
the office portfolio as of December 31, 1995.
<TABLE>
<CAPTION>
1996 1997 1998 1999 2000 2001 2002 2003 THEREAFTER
---- ---- ---- ---- ---- ---- ---- ---- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Percent 25% 27% 7% 7% 5% 10% 8% 3% 8%
Square feet (in thousands) 381 416 115 103 79 161 130 45 123
</TABLE>
LAND DEVELOPMENT - MIXED USE PROJECTS
- -------------------------------------
The Company's land portfolio includes four major mixed use development
sites consisting of 1,156 acres which had a current value of $310 million at
December 31, 1995. An additional site located in Santa Fe, New Mexico was sold
to the City of Santa Fe in 1995.
Mission Bay, San Francisco, CA. The Company's property in San Francisco is
part of a 313 acre mixed-used development which was the subject of a 1991
Development Agreement between Catellus and the City and County of San
Francisco. After a thorough analysis of the 1991 Development Agreement in light
of current and anticipated market conditions, management terminated this
agreement and decided to seek a revised entitlement package.
8
<PAGE>
The revised plan will include more housing and retail and less office
space; a phased development approach which would include less upfront
investment; and the use of tax increment financing, as provided by redevelopment
law. As a result of this decision, the Company took an $84.8 million charge
against fourth quarter earnings. (See "Managements Discussion and Analysis of
Financial Condition and Results of Operations," and Note 7 to the Consolidated
Financial Statements).
Pacific Commons, Fremont, CA. In March 1995, the Company announced its
intention to pursue a retail, industrial and commercial development rather than
a previously proposed golf course residential community on its 600-acre vacant
site bordering Interstate 880 in Fremont, California. These are uses which were
called for by the City's General Plan designation prior to the approval of the
golf course residential project, and they are consistent with the current land
uses of adjacent property.
The Company has moved to re-entitle Pacific Commons to include
approximately 700,000 square feet of "power center" retail and more than 7.5
million square feet of office, R&D, industrial and warehouse product. The
vacancy rate of these uses continues to decline in Fremont and the inventory of
land for development is low.
Union Station, Los Angeles, CA. The Company owns 51 acres which surround
and include the historic Los Angeles Union Station. The Company completed the
acquisition of this site in early 1990 and is proceeding with plans to develop
it as a regional transportation center and mixed-use complex of office buildings
and retail space. Amtrak, the region's commuter rail system, suburban bus lines
and the City's new subway system serve this station daily. The site currently
is entitled for government uses. A revised entitlement package is being
processed which will allow a total of 7 million square feet of office
development but has the flexibility to substitute other uses such as retail, a
sports arena and housing based upon an impacts "equivalency" formula.
Construction of the first building on the site, the 626,000 square foot
headquarters facility owned and occupied by the Metropolitan Transportation
Authority (MTA), was started in 1993 and completed in late 1995. In addition,
the innovative multi-modal Patsaouras Transit Plaza which now serves as the
center for bus and rail service to downtown Los Angeles, was completed in 1995.
The MTA building and the Patsaouras Transit Plaza were the first two components
of Gateway Center (part of the Union Station project), a multi-phased project
that consists of two office towers comprising over 1.2 million square feet, the
3.5-acre regional public transit center and bus plaza, 20,000 square feet of
service retail, an underground parking garage and a new transit concourse
connecting the bus and train terminals.
Union Station has also been selected as the site of the new headquarters
facility for the Metropolitan Water District (MWD). An agreement has been
signed under which Catellus will sell a 4.2 acre site to MWD and construct a
550,000 square foot, 12 story office building for the MWD on the site.
Construction is scheduled to begin in mid-1996 with building completion and
occupancy targeted for late 1998.
Santa Fe Depot, San Diego, CA. The Company owns 17 acres on the waterfront
in downtown San Diego, California. The site is currently entitled for a mixture
of office, hotel, retail and housing development. Management is re-evaluating
the approved plan in light of current and projected market conditions.
INDUSTRIAL DEVELOPMENT
- ----------------------
The Company's plans call for expanding development activity beyond the
levels of the last two years. Approximately 1,700 acres in 15 separate locations
will be retained which will support the development of over 30 million square
feet of industrial development. The Company's goal is to develop approximately
20 million square feet over the next 5 to 7 years. The balance of the acreage
will be reserved for sale.
In 1995, the Company completed approximately 490,000 square feet of
industrial construction. At December 31, 1995, Catellus had 692,000 square feet
under construction and had signed leases for 648,000 square
9
<PAGE>
feet of new industrial development. This backlog will be enhanced during 1996
by the Company's efforts to obtain additional build-to-suit opportunities and
limited speculative development, in order to take advantage of local market
conditions.
Property - The following table summarizes selected industrial development
properties, including some held for sale at December 31, 1995:
<TABLE>
<CAPTION>
POTENTIAL SQUARE FEET OF
LOCATION ACRES ENTITLEMENTS (IN MILLIONS)
- -------- ------- --------------------------
<S> <C> <C>
Phoenix, Arizona 214.3 4.4
Dallas, Texas
Coppell 215.8 3.4
Garland 284.0 4.5
Chicago, Illinois
International Centre 655.7 9.6
Romeoville 118.2 1.4
Northern California
Fremont 46.5 .6
Southern California
Anaheim 18.8 .3
City of Industry 68.3 1.0
La Mirada 40.8 .6
Ontario 289.5 4.5
Rancho Cucamonga 32.6 .5
Santa Ana 32.6 .5
Santa Fe Springs 12.5 .2
Vernon 14.7 .2
Oklahoma City, Oklahoma 281.7 1.5
------- ----
Total 2,326.0 33.2
======= ====
</TABLE>
Development - The following table summarizes the Company's industrial
development activities, in square feet, during the past three years.
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Under construction, beginning of period 337,136 307,000 487,023
Construction starts 792,818 381,136 363,420
Completion (487,854) (351,000) (543,443)
-------- -------- --------
Under construction, end of period 642,100 337,136 307,000
======== ======== ========
</TABLE>
10
<PAGE>
RESIDENTIAL DEVELOPMENT
- -----------------------
In March 1996, the Company concluded the acquisition of The Akins
Companies, a residential real estate company, consisting of a diversified group
of entities involved in home building, community development and project
management services. The Akins Companies have developed more than 10,000 homes
throughout Southern California in the past 47 years.
The new entity, now called the Catellus Residential Group, will develop the
Company's residential land holdings, projects previously started by Akins and
new development activities on property owned by others.
The Company formed an Urban Housing division in 1995 to develop rental
housing with an affordable component on urban in-fill locations in California.
The new urban housing team within Catellus Residential Group gives the Company
the core competencies that will allow it to pursue additional higher yielding
development opportunities.
Property - The following table summarizes the Company's residential properties,
including those acquired as part of the Akins acquisition:
<TABLE>
<CAPTION>
CITY ACRES POTENTIAL # OF UNITS
- ---- ----- --------------------
<S> <C> <C>
Northern California
. Union City (1) 108 600
. Tracy (1) 680 1,800
. Stockton (1) 392 1,740
Southern California
. Buena Park (1) 70 350
. Oxnard (3) 20 198
. Ridgemoor, Rowland Heights (2) 277 510
. Rancho San Pasquale, San Diego (2) 872 580
. Kentwood Collection, Westchester (3) 11 49
. Chino Hills (2) 278 350
. Ocean Ridge, Newport Beach (3) 11 30
----- -----
Total 2,719 6,207
===== =====
</TABLE>
Notes:
- -----
(1) Owned
(2) Managed
(3) Joint venture
11
<PAGE>
JOINT VENTURES AND OTHER INVESTMENTS
- ------------------------------------
The Company's joint venture interests provided net distributions to the
Company of $8.3 million in 1995 and had a current value at December 31, 1995 of
$104.3 million. Joint ventures will continue to play an important role in
allowing the Company to accelerate the development of its land assets without
having to fund 100% of the required capital. In addition to its joint ventures,
the Company owns Golden Gate Fields, a racetrack leased to Ladbroke Racing.
<TABLE>
<CAPTION>
Operating Properties Location Type
- -------------------- -------- ----
<S> <C> <C>
New Orleans Hilton New Orleans, Louisiana Hotel
San Diego Embassy Suites San Diego, California Hotel
Park del Amo Torrance, California Office
Seabridge Apartments San Diego, California Residential
Pacific Design Center West Hollywood, California Furniture mart
Golden Gate Fields Albany, California Racetrack
<CAPTION>
Land Type
- ---- ----
<S> <C>
Dallas, Texas Industrial development
New Orleans, Louisiana Hotel development
La Mirada, California Industrial development
Collinsville, California Dredge disposal
West Hollywood, California Entertainment/retail development
</TABLE>
The following is a description of some of the Company's joint ventures and
other investments:
New Orleans Hilton. The Company owns a 25.2% interest in the 1,602-room New
Orleans Hilton Hotel. This property is strategically located between the dock
for the Flamingo Riverboat Casino and the land based Harrahs Casino.
San Diego Embassy Suites. The Company owns a 50% interest in this 337-room
hotel overlooking the San Diego Bay near the convention center. The property
generates positive cash flow, however the existing loan requires substantial
principal paydown and prohibits cash flow distributions to the partners.
Negotiations are underway to refinance the property.
Seabridge Apartments. The Company owns a 50% interest in this 387-unit
apartment building located one block east of the San Diego Bay. Although the
property is performing well (occupancy is consistently in the 95% range), it is
substantially overleveraged which results in nominal cash flow.
Golden Gate Fields. The Company owns 100% of this 230-acre race track
property in Albany, California, across the Bay from San Francisco, and leases it
to the Ladbroke Racing Company. Discussions are underway to either split cash
flow 50/50, including the card club revenue, or sell the property while
retaining the right to participate in future cash flow.
La Mirada. CDC owns a 37.8% interest in this master planned business park
located on a major distribution artery. Thirty acres from the 82-acre
development remain available for build-to-suit or sale. Recent activity
includes a 278,000 square foot build-to-suit for lease on 10.4 acres of land and
a sale of 3.3 acres of land. Land sales are expected to be completed in 1997
with build-to-suit leases providing ongoing cash flow.
12
<PAGE>
NATURAL RESOURCE LAND
- ---------------------
Catellus owns more than 790,000 acres of land in the Southern California
desert regions of Los Angeles, Kern, San Bernardino, Riverside, and Imperial
Counties, and more than 25,000 acres in the state's Central Valley.
The Company plans to aggressively maximize the value of its "outlying"
lands. The Catellus Resources Group was created in 1995 to focus on the
potential represented by the desert and Central Valley portfolios.
The hydrology, climate, geology and location of certain of these properties
may afford substantial water marketing, agricultural, telecommunications,
energy, and waste management opportunities for Catellus. In addition, a major
portion of the land is well suited for environmental mitigation purposes and for
strategic trades with federal and state entities to favorably enhance the
Company's development options with other locations.
The Resources Group will also coordinate the Company's in-house
environmental cost recovery, remediation and management activities.
Consistent with Catellus' commitment to leverage its core competencies
beyond increasing the value of its current assets, the Resources Group will
spearhead efforts to identify additional environmentally-related business
opportunities.
REAL ESTATE SERVICES
- --------------------
Management Services
Catellus, through its wholly owned subsidiary Catellus Management
Corporation (CMC), has entered into a five year contract with the Burlington
Northern Santa Fe Corporation (BNSF), which owns the nation's largest railroad,
to provide management and disposition services for their real property assets.
The assets include approximately 19,000 leases and are located in 28 states and
2 Canadian provinces.
The Company intends to aggressively pursue additional management service
agreements to increase recurring earnings.
Design Build Services
Catellus was the developer on a "design build" basis in partnership with
Charles Pankow Builders, for the construction of the MTA Headquarters building
and the multi-model Patsaouras Transit Plaza at Los Angeles Union Station. The
Company intends to pursue additional design build opportunities to increase
recurring earnings. The Company is concluding final documentation with the
Metropolitan Water District for the development of their new headquarters
facility on a design build basis, again in partnership with Charles Pankow
Builders.
PROPERTY SALES
- --------------
Historically, the Company has sold land to cover some of the costs
associated with pre-development, operating and holding the Company's substantial
real estate assets and paying preferred stock dividends. Sales included
mountain, desert, agricultural and other non-strategic lands, as well as lands
that the Company feels might be developable in the future. The Company has also
sold income-producing properties to cover such costs. The Company's sales
consisted of the following over the past three years (in thousands):
13
<PAGE>
<TABLE>
<CAPTION>
1995 1994 1993
-------- ------- -------
<S> <C> <C> <C>
Non-strategic land
Sales.................. $62,199 $32,298 $26,444
Cost of sales.......... 29,410 22,024 15,993
------- ------- -------
Gain $32,789 $10,274 $10,451
======= ======= =======
Development properties
Sales.................. $ 3,224 $ - $ -
Cost of sales.......... 2,271 - -
------- ------- -------
Gain $ 953 $ - $ -
======= ======= =======
Buildings
Sales.................. $ - $21,330 $30,157
Cost of sales.......... - 18,411 21,547
------- ------- -------
Gain $ - $ 2,919 $ 8,610
======== ======= =======
Ground leases
Sales.................. $ - $ 142 $15,968
Cost of sales.......... - 28 1,864
------- ------- -------
Gain $ - $ 114 $14,104
======== ======= =======
Total
Sales.................. $65,423 $53,770 $72,569
Cost of sales.......... 31,681 40,463 39,404
------- ------- -------
Gain $33,742 $13,307 $33,165
======= ======= =======
</TABLE>
In September 1995, the Company established a goal of selling $200 million
of non-strategic land assets within a 30-month period. Proceeds would be applied
to a combination of debt reduction, in order to reduce interest costs, and
reinvestment in activities that could generate increased operating earnings. The
Company's goal is to complete $100 million of these sales by December 31, 1996.
Sales totaling $47.1 million closed in the fourth quarter of 1995.
ENVIRONMENTAL MATTERS
- ---------------------
Various federal, state and local laws and regulations covering the
discharge of materials into the environment, or otherwise relating to the
protection of the environment, may affect the Company's operations and costs.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations--Environmental Matters." Such regulations can increase the cost of
planning, designing, developing, managing and maintaining the Company's
properties. The Company has expended and will continue to expend significant
financial and managerial resources to comply with environmental regulations and
local permitting requirements. While the Company or outside consultants have
evaluated the environmental liabilities associated with most of the Company's
properties, any evaluation necessarily is based upon then prevailing law and
identified site conditions. In addition, many of the Company's properties are
in the early stages of development and the environmental studies and
investigations which have been performed are preliminary. It is possible that
significant unknown costs and liabilities may arise in the future relating to
these properties and that certain development projects may be significantly
delayed, modified or cancelled as a result of associated remediation costs. In
addition, other properties presently or formerly owned by the Company or its
corporate predecessors have required or may require remediation. Although there
can be no assurance, the Company does not believe that such costs will have a
material adverse effect on its business, financial condition or results of
operations.
The Company has been or may be named a defendant or a potentially
responsible party ("PRP") under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended ("CERCLA"), or analogous
state statutes. At the Marina Bay site in the City of Richmond, the Company
has been sued by the City of Richmond and others in a CERCLA cost recovery
action. This action is more fully described in Item 3 "Legal
14
<PAGE>
Proceedings". With respect to a site in Livermore, California, the Regional
Water Quality Control Board has issued a Tentative Site Cleanup Order naming the
Company as one of 11 responsible parties. In February 1994, the Company reached
a settlement with plaintiffs and all of the other potentially responsible
parties pursuant to which the Company paid $67,650 into a fund covering certain
past and future remediation costs in exchange for a qualified release of
liability. The Company has been named a PRP with respect to several additional
sites. Remediation of those sites has been completed by the Company or is being
completed by third parties at their expense. The Company does not expect to
incur material additional costs with respect to those sites.
COMPETITION
- ------------
Real estate markets are regional, and levels of competition vary by market.
The Company encounters significant competition for leasing and sales of real
estate in each of its market areas, but no one competitor is dominant. The
Company is not dependent on any one customer for a significant portion of its
revenues.
EMPLOYEES
- ----------
At December 31, 1995, the Company had 121 employees, including 22 employees
of the management subsidiary which now manages certain BNSF properties.
The Company engages third parties to manage properties in locations which
are not in close proximity to the Company's regional or field offices. In
addition, the Company engages outside consultants such as architects and design
firms in connection with its pre-development activities. The Company also
employs third party contractors on development projects for infrastructure and
building construction.
RISK FACTORS
- ------------
This Annual Report on Form 10-K contains statements which, to the extent
that they are not recitations of historical fact, constitute "forward looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities and Exchange Act of 1934. All forward looking
statements involve risks and uncertainties. The forward looking statements in
this document are intended to be subject to the safe harbor protection provided
by Sections 27A and 21E. Factors that most typically impact the Company's
operating results include (i) changes in general economic conditions in regions
in which the Company's projects are located, (ii) the availability and cost of
capital and project financing, (iii) the receipt of government approvals and
entitlements for development projects, (iv) land and building material costs,
(v) supply and demand for office, industrial and residential space, (vi)
competition from other property managers, (vii) liability for environmental
remediation at the Company's properties, (viii) ability to sell non-strategic
land assets, and (ix) ability to increase development fees. For discussions
identifying other important factors that could cause actual results to differ
materially from those anticipated in the forward looking statements, see the
Company's Securities and Exchange Commission filings; "Managements's Discussion
and Analysis of Financial Condition and Results of Operations" of this Form 10-K
and Note 14 to the Consolidated Financial Statements included in this Form 10-K.
ITEM 2. PROPERTIES
The Company's real estate projects are generally described in Item 1 above,
which descriptions are incorporated in this Item by reference. Catellus'
principal executive office is located in San Francisco, and it has regional or
field offices in 6 other locations in the United States. Catellus believes that
its property and equipment are generally well maintained, in good condition and
adequate for its present needs.
ITEM 3. LEGAL PROCEEDINGS
Catellus, its subsidiaries and other related companies are named defendants
in several lawsuits arising from normal business activities, are named parties
in certain governmental proceedings (including environmental actions)
15
<PAGE>
and are the subject of various environmental remediation orders of local
governmental agencies arising in the ordinary course of its business. The
matters described below may involve substantial claims for damages. While the
outcome of these lawsuits or other proceedings against the Company and the cost
of compliance with any governmental order cannot be predicted with certainty,
management does not expect any of these matters to have a material adverse
effect on the business or financial condition of the Company.
In City of Richmond, et al. v. United States of America, et al. (United
------------------------------------------------------------
States District Court, Northern District of California; filed August 1989) the
City of Richmond and Richmond Redevelopment Agency (collectively, "Richmond")
and various developers sued the Company and others for more than $48.6 million
in environmental cleanup costs, other damages and related relief arising out of
contamination at property formerly owned by the Company's predecessor, Santa Fe
Land Improvement Company. The United States and United States Maritime
Administration were also named defendants and Kaiser Aluminum & Chemical
Corporation ("Kaiser") and James L. Ferry & Son, Inc. ("Ferry") were named as
third party defendants. All parties asserted indemnity claims against each
other.
In 1992, plaintiffs also filed a related action regarding the same
property, seeking similar relief on similar grounds from Kaiser: The City of
-----------
Richmond, et al. v. Kaiser Aluminum & Chemical Corp., (United States District
- -----------------------------------------------------
Court, Northern District of California). Again, all parties asserted indemnity
claims against each other.
Prior to trial, plaintiffs reached a settlement agreement with the United
States pursuant to which the United States agreed to pay $3.6 million plus 35%
of future cleanup costs.
Trial began March 17, 1995 and concluded on April 28, 1995. On April 13,
1995, the Company reached a settlement agreement with plaintiffs whereby
plaintiffs agreed to release all claims against the Company in exchange for
$3.25 million to be paid over time with the final payment to be made by July 15,
1997.
On December 7, 1995, the Court issued a Final Judgment awarding plaintiffs
$1,703,780 on their claims against Kaiser for past costs and declaring that
Kaiser is liable to plaintiffs for 50% of certain future cleanup costs. The
Court also awarded the Company $506,654 plus attorneys' fees associated with
its contractual indemnity claim against Kaiser. The Court did not grant relief
on any other claim.
On January 8, 1996, the Company filed an appeal of the judgment, and Kaiser
cross-appealed shortly thereafter. On February 5, 1996, the Company filed a
motion to fix the amount of attorney's fees recoverable from Kaiser. It is not
possible now to predict reliably the outcome of either the appeal or the
attorneys' fees motion. Settlement discussions with Kaiser are on-going.
The Company tendered defense of this action to its insurer, Employers
Casualty Insurance Company (Employers). However, on January 6, 1994, Employers
was placed into receivership. The Company, Employers and its receiver entered
into a settlement agreement pursuant to which the Company has received $300,000
and the receiver and Employers stipulated that the Company has a valid claim for
an additional $700,000 for past defense costs against Employers' assets in the
receivership. The Company does not know the extent of other claims which will
be made against the assets in receivership or the extent of the assets which
will be available to satisfy such claims. Therefore, the Company does not know
how much, if any, of the $700,000 or future defense costs will be paid out of
the assets in receivership.
Efforts are being made to recover additional sums from other insurers,
including those who provided excess coverage and insurers who issued policies to
the Company's former tenants, which policies named the Company's predecessor as
an additional insured. The Company has received from insurers payments totaling
$2,635,689 plus commitments to pay 100% of future litigation defense costs. It
is not clear at this time whether or how much additional monies will be obtained
from insurers. Negotiations are continuing.
16
<PAGE>
The Atchison, Topeka & Santa Fe Railway Co. v. The Testate and Intestate
------------------------------------------------------------------------
Successors of Grace Richards, et al. (Superior Court of California, County of
- ------------------------------------
San Diego; filed May 1983) and Herbert Lincoln Hubbard, et al. v. The Atchison,
------------------------------------------------
Topeka & Santa Fe Railway Company, Santa Fe Land Improvement Company, et al.
- ----------------------------------------------------------------------------
(Superior Court of California, County of San Diego; filed January 1988) are
consolidated cases in which both the Company and the opposing litigants claim
title to a 550 foot by 75 foot strip of property located on the Santa Fe Depot
site in San Diego, CA. The opposing litigants also seek damages for alleged
fraud, interference with prospective economic advantage, and inverse
condemnation. The trial court ruled that the Company and some of the opposing
litigants each own an undivided one-half fee interest in the property, subject
to a perpetual railroad easement in favor of The Atchison, Topeka & Santa Fe
Railway Company. The trial court also rejected all of the opposing litigants'
damage claims.
The Company appealed the portion of the trial court's judgment granting the
opposing litigants a one-half undivided fee interest in the property and the
opposing litigants appealed all other aspects of the judgment. In July, 1995
the California Court of Appeal ruled for the Company on every issue.
Specifically, the Court of Appeals determined that the Company's predecessor-in-
interest had acquired fee title to the property in the original condemnation
proceeding (which occurred in 1886). This ruling eliminated the opposing
litigants' claim that the Company's predecessor-in-interest had lost its right
of way by abandonment or extinguishment and this had no interest left to convey
to the Company.
The opposing litigants petitioned the California Supreme Court for review,
which was granted in October, 1995. The Supreme Court has deferred any briefing
and has not scheduled a hearing.
Khachaturian v. Catellus Development Corporation, et al. (Superior Court of
--------------------------------------------------------
California, County of Alameda; filed April 1991) is an action by an auto dealer
who contracted to purchase land from the Company in an auto mall in Fremont,
California, in June 1990. The complaint alleged the Company had reneged on an
oral agreement to pay the plaintiff a 3% commission on each land transaction in
the auto mall, and stated breach of contract, fraud, false promise, bad faith
denial of contract, and quantum meruit causes of action. The Company asserted,
among other things, that no such agreement existed and that it denied
plaintiff's claim in good faith and with probable cause.
In November 1993, a jury found for plaintiff on his breach of contract and
bad faith denial claims, awarding him $441,781 in compensatory damages and $7.6
million in punitive damages on the bad faith claim. The Company believed these
verdicts were not supported by the evidence or the law, and that numerous errors
at trial substantially prejudiced it. The Company filed its notice of appeal on
February 3, 1994, and briefing was completed on February 7, 1995. In September,
the California Supreme Court, in an unrelated lawsuit in which the Company filed
an amicus brief, repudiated California's tort of bad faith denial of contract,
on which punitive damages against the Company were premised.
The parties recently agreed to a settlement pursuant to which the Company
has paid plaintiff $850,000 in complete settlement of all issues.
Truck Insurance Exchange v. City of Ontario, et al. (Superior Court of
---------------------------------------------------
California, San Bernardino County, Case No. RCY050056) involves a subrogation
claim by insurance companies for the Ontario Auto Center dealerships against
adjacent property owners, including the Company, for damages of approximately
$4.5 million caused by sand blowing onto auto dealers' properties. The parties
reached agreement upon a settlement pursuant to which Santa Fe Pacific
Corporation has paid plaintiffs the total amount of $25,000, which represents
the amount of the self-insured retention under the Employers' policy, in
exchange for a release and dismissal of this lawsuit against Santa Fe Pacific
Corporation and the Company.
17
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
quarter ended December 31, 1995.
EXECUTIVE OFFICERS OF THE COMPANY
- ---------------------------------
The following persons are the executive officers of Catellus.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Corporate officers
- ------------------
Nelson C. Rising 54 President and Chief Executive Officer
Stephen P. Wallace 41 Senior Vice President and Chief Financial Officer
Timothy J. Beaudin 37 Senior Vice President Property Operations
Maureen Sullivan 41 Vice President Law, General Counsel and Secretary
Paul A. Lockie 35 Vice President and Controller
Operating officers who are considered
executive officers
- --------------------------------------
Ted Antenucci 31 Vice President
David Friedman 39 President Catellus Resources Group
Don Parker 51 Vice President Bay Area Development
Douglas B. Stimpson 39 Vice President and Chief Financial Officer
Bay Area Development
Ira Yellin 55 Senior Vice President Southern California Development
</TABLE>
Additional information concerning the business background of each executive
officer of Catellus is set forth below:
Mr. Rising has served as President and Chief Executive Officer and a
Director of Catellus since September 1994. For more than five years prior to
joining Catellus, Mr. Rising was a Senior Partner with Maguire Thomas Partners,
a Los Angeles-based commercial developer with projects in Southern California,
Dallas and Philadelphia.
Mr. Wallace was elected as Senior Vice President and Chief Financial
Officer in July 1995. Mr. Wallace was previously the Senior Vice President and
Chief Financial Officer at Castle & Cooke Homes, Inc. from May 1993. Prior to
that Mr. Wallace served as the Chief Financial Officer at A.M. Homes in Newport
Beach, California.
Mr. Beaudin was elected Senior Vice President Property Operations in
January 1996. Prior to this appointment, Mr. Beaudin served as Vice President
Property Operations since February 1995. For more than five years prior to
that, Mr. Beaudin served as Senior Vice President - Managing Officer of the
Financial Services Group at CB Commercial Real Estate Group, a national real
estate brokerage firm.
Ms. Sullivan was elected Vice President Law, General Counsel and Secretary
in March 1990. For five years prior to that, Ms. Sullivan was a partner in the
real estate department of the law firm of Brobeck, Phleger and Harrison.
Mr. Lockie joined Catellus as Vice President and Controller in February
1996. Prior to joining Catellus Mr. Lockie served as the Chief Financial Officer
for Kimball Small Properties, Inc., a San Jose, California real estate
development and management company.
Mr. Antenucci was elected Vice President of Catellus in October 1995. Prior
to joining Catellus, Mr. Antenucci served as Vice President at Omnitrax, a
shortline rail carrier, for two years and as Vice President - Industrial Sales
for CB Commercial Real Estate Group, Inc. for more than seven years.
Mr. Friedman has served as President of Catellus Resources Group since
February 1996. For more than five years prior to joining Catellus, Mr. Friedman
was an Associate Attorney and Partner in the Los Angeles law firm of Tuttle &
Taylor representing, among other clients, major agriculture and resource
interests and was a consultant specializing in California economic development
research.
Mr. Parker was elected Vice President Bay Area Development in March 1995.
From January 1994 to March 1995, Mr. Parker was the Executive Director of the
Alameda Reuse and Redevelopment Authority for the conversion of the naval air
station. For more than five years prior to that, Mr. Parker was a partner and
project director of the Marina Village Mixed-Use Community in Alameda,
California.
Mr. Stimpson was elected Vice President and Chief Financial Officer for Bay
Area Development in January 1996. Prior to this appointment Mr. Stimpson served
as Vice President Finance from February 1992; Assistant Vice President Finance
from February 1990; and Director of Finance and Planning from June 1988.
Mr. Yellin joined Catellus in February 1996, as the Senior Vice President,
Southern California Development. For more than five years prior to joining
Catellus, Mr. Yellin served as President of the Yellin Company, a Los Angeles
real estate investment, development and management company involved in the
acquisition, restoration and redevelopment of historic buildings in the Historic
Core of Downtown Los Angeles.
18
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The common stock commenced trading on December 5, 1990 and is traded on the
New York Stock Exchange, the Chicago Stock Exchange and the Pacific Stock
Exchange under the symbol "CDX." The following table sets forth the high and low
sale prices of the common stock, as reported on the New York Stock Exchange
Composite Tape, during the periods indicated.
<TABLE>
<CAPTION>
High Low
------- -------
<S> <C> <C>
1990
Fourth Quarter (from December 5, 1990)... $10 3/4 $ 8 1/2
1991
First Quarter............................ $15 $ 8 3/4
Second Quarter........................... 14 1/4 11 7/8
Third Quarter............................ 12 3/8 10
Fourth Quarter........................... 10 1/4 7 3/4
1992
First Quarter............................ $11 3/4 $ 9 1/2
Second Quarter........................... 10 3/4 7 7/8
Third Quarter............................ 8 3/8 6 1/8
Fourth Quarter........................... 6 7/8 6 1/8
1993
First Quarter............................ $ 8 1/4 $ 6 3/8
Second Quarter........................... 7 1/8 5 3/4
Third Quarter............................ 8 1/8 6 3/8
Fourth Quarter........................... 9 1/8 7 3/8
1994
First Quarter............................ $ 8 1/2 $ 6 1/4
Second Quarter........................... 7 5/8 6 1/8
Third Quarter............................ 7 7/8 6 1/4
Fourth Quarter........................... 7 1/4 5 3/8
1995
First Quarter............................ $ 6 1/8 $ 5 1/8
Second Quarter........................... 6 7/8 5 1/2
Third Quarter............................ 6 7/8 6 1/8
Fourth Quarter........................... 6 5/8 5 3/8
</TABLE>
No cash dividends have been paid on the Company's common stock and the
Company does not anticipate paying any cash dividends on its common stock in the
foreseeable future. The most restrictive of the Company's loan agreements limit
dividends to $27.6 million per year.
At March 15, 1996, there were approximately 38,271 holders of record of the
Company's common stock.
19
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE DATA)
The following selected income statement and balance sheet data with respect
to each of the years in the five-year period ended December 31, 1995 have been
derived from the annual Consolidated Financial Statements. The operating and
cash flow data have been derived from the Company's underlying financial and
management records and are unaudited. This information should be read in
conjunction with the Consolidated Financial Statements and related Notes
thereto. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" for a discussion of results of operations for 1995, 1994
and 1993.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
RENTAL REVENUE.......................................... $ 108,068 $104,432 $ 109,544 $ 99,471 $ 88,096
PROPERTY OPERATING COSTS................................ 39,576 39,749 41,499 42,806 43,600
GAIN ON SALES OF PROPERTY............................... 33,742 13,307 33,165 40,204 43,661
OTHER INCOME (EXPENSE)
Equity in earnings of joint ventures................... 7,035 7,982 1,818 (2,016) (539)
Management and development fee income.................. 1,924 2,151 2,260 1,733 3,654
General and administrative expense..................... (11,841) (15,550) (13,143) (12,876) (14,333)
Interest expense, net.................................. (21,988) (20,932) (39,839) (52,063) (42,975)
Depreciation and amortization.......................... (27,990) (28,577) (31,117) (29,437) (24,540)
Adjustment to carrying value of property............... (102,400) (24,100) (32,500) - -
Other, net............................................. (1,494) (2,770) (42,049) 175 (1,142)
--------- -------- --------- -------- --------
(156,754) (81,796) (154,570) (94,484) (79,875)
--------- -------- --------- -------- --------
INCOME (LOSS) BEFORE TAXES AND EXTRAORDINARY EXPENSE.... (54,520) (3,806) (53,360) 2,385 8,282
Income taxes (benefit).................................. (21,518) (1,359) (8,008) 1,208 3,259
--------- -------- --------- -------- --------
Income (loss) before extraordinary expense.............. (33,002) (2,447) (45,352) 1,177 5,023
Extraordinary expense related to early retirement
of debt, net of income tax benefits (1)............... - - (7,401) - -
--------- -------- --------- -------- --------
NET INCOME (LOSS) (1)................................... $ (33,002) $ (2,447) $ (52,753) $ 1,177 $ 5,023
Preferred stock dividends............................. (23,813) (23,813) (16,132) $ - -
--------- -------- --------- -------- --------
Net income (loss) applicable to common stockholders... $ (56,815) $(26,260) $ (68,885) $ 1,177 $ 5,023
========= ======== ========= ======== ========
Earnings (loss) per share of common stock:
Before extraordinary expense......................... $(.78) $(.36) $(.87) $.02 $.09
Extraordinary expense (1)............................ - - (.10) - -
--------- -------- --------- -------- --------
Net income (loss).................................... $(.78) $(.36) $(.97) $.02 $.09
========= ======== ========= ======== ========
Average number of common shares outstanding.......... 72,967 72,967 70,834 53,976 53,973
========= ======== ========= ======== ========
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------------------------------------------------
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total properties............................... $1,007,451 $1,087,119 $1,091,832 $1,129,634 $1,108,263
Total assets................................... 1,097,604 1,207,363 1,373,827 1,208,887 1,189,029
Mortgage and other debt........................ 496,180 530,641 663,764 887,185 862,557
Stockholders' equity........................... 442,874 499,689 525,949 145,923 144,686
<CAPTION>
AS OF OR FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CASH FLOW DATA:
Cash provided by (used for):
Operating activities.......................... $ 93,579 $ 51,089 $ 26,643 $ 51,551 $ 53,075
Investing activities.......................... (22,072) (80,389) (14,981) (55,612) (150,422)
Financing activities.......................... (60,684) (100,384) 120,212 7,664 100,866
---------- ---------- ---------- ---------- ----------
Total........................................ $ 10,823 $ (129,684) $ 131,874 $ 3,603 $ 3,519
========== ========== ========== ========== ==========
Capital expenditures:
Financed...................................... $ 20,601 $ 12,616 $ 2,171 $ 22,201 $ 65,103
Not financed.................................. 24,363 37,235 33,296 36,364 49,618
Capitalized interest.......................... 23,559 24,049 25,593 29,337 35,949
---------- ---------- ---------- ---------- ----------
Total....................................... $ 68,523 $ 73,900 $ 61,060 $ 87,902 $ 150,670
========== ========== ========== ========== ==========
OPERATING DATA:
Buildings owned (square feet)(2)............... 14,168 13,609 13,367 14,183 13,190
Leased percentage.............................. 95.1% 95.0% 94.9% 90.4% 84.3%
</TABLE>
- -----------------
(1) Net income in 1993 reflects extraordinary expense relating to a redemption
premium paid to a lender and write-off of deferred financing costs on the
Company's $388.2 million first mortgage loan.
(2) Square feet owned excludes approximately 1.4 million square feet of existing
buildings, primarily at Mission Bay. These buildings will be razed as
development proceeds.
21
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Historically, the aggregate costs of holding and operating the Company's real
estate assets and paying preferred stock dividends have exceeded revenue from
property operations, development and other recurring sources. In addition, the
Company's cash requirements have been increased by the funds necessary to
support the predevelopment and entitlement efforts for its major land
development projects. The resulting cash flow deficits have been funded by
borrowings, the issuance of preferred stock and the sale of sufficient assets to
meet the Company's overall cash requirements.
The Company's short term financial goal is to eliminate the cash flow deficits
resulting from interest and preferred stock dividends exceeding operating cash
flow by the fourth quarter of 1996. To do this, the Company has taken the
following steps:
. In November 1994, the Company implemented significant staff reductions to
reduce costs and reorganized to focus on increasing operating earnings.
These reductions, when combined with other cost-reduction measures, resulted
in annual cost savings for 1995 of approximately $10.1 million. General and
administrative costs declined by $3.7 million; overhead associated with
operating the portfolio declined by $3.4 million and overhead associated with
selling properties declined by $1.5 million. In addition, the Company has
benefited by a $1.5 million reduction in overhead costs associated with the
Company's development activities.
. In October 1995, the Company began the process of substantially increasing
its asset sales activity, with the primary focus on its non-strategic land
assets. Sale proceeds will be applied to a combination of debt reduction, in
order to reduce interest costs, and reinvestment in activities that could
generate increased operating earnings. The Company's goal is to sell $100
million of non-strategic land assets over a 15-month period ending December
31, 1996. Sales totaling $47.1 million closed in the fourth quarter of 1995.
. During 1995, the Company reduced its total debt by a net $34.5 million. This
net reduction represents the difference between $68.5 million of principal
reductions on existing borrowings and $34 million of new borrowings which
funded the development of pre-leased industrial and retail buildings. It is
expected that the debt service on the new borrowings will be covered by the
cash flow from the completed buildings; therefore, the Company's future
operations should be improved by the interest savings on the $68.5 million of
principal reductions.
. During 1995 and continuing into 1996, the Company has placed a greater
emphasis on increasing its development and fee development businesses.
During 1995, the Company commenced construction on 910,000 square feet of new
development, compared to 381,000 in 1994. In addition, at December 31, 1995,
the Company had signed leases for new development totalling 648,000 square
feet for which construction will commence in 1996. In March 1996, the
Company acquired The Akins Companies to better position itself to pursue
existing residential development opportunities on certain of its land
holdings, as well as to pursue fee development opportunities on land not
currently owned by the Company.
. During 1995 and continuing into 1996, the Company has also placed a greater
emphasis on increasing its third party management business. In January 1996,
the Company announced a new five-year contract to manage the non-railroad
real estate assets for the Burlington Northern Santa Fe Corporation.
. Beginning in 1994 and continuing throughout 1995, the Company undertook a
review of its major land development projects with the goal of increasing
profitability, minimizing up front capital requirements and shortening the
time required to develop the properties. As a result of this review, the
decision was made to
22
<PAGE>
modify certain of the entitlements, abandon others and sell one property that
management believed could not be developed in a reasonable time frame. It is
management's expectation that these decisions will both accelerate the time
frame in which the projects will be developed and minimize the up front cash
requirements associated with development.
The Company's long-term financial goal is to increase its return on
stockholder equity. In order to accomplish this, the Company will continue with
the revenue enhancement and cost reduction initiatives discussed above and will
seek opportunities to reduce its capital commitment to projects through joint
ventures, where the Company would seek financial partners to participate in some
of its more capital intensive businesses. In addition, as the Company
completes its disposition program of non-strategic land assets, it will evaluate
opportunities to increase stockholder returns through strategic reinvestment
and/or stock repurchases.
RESULTS OF OPERATIONS
The following table (in thousands) summarizes the Company's operating deficit
after adjustment for fixed charges, leasing costs and joint venture cash flow.
The Company believes that this presentation is meaningful in order to understand
its progress in achieving its near-term goal of eliminating operating cash flow
deficits by the fourth quarter of 1996.
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Operating income
Rental revenue $108,068 $104,432 $109,544
Property operating costs (39,576) (39,749) (41,499)
Equity in earnings of joint ventures 7,035 7,982 1,818
Management and development fee income 1,924 2,151 2,260
General and administrative expenses (11,841) (15,550) (13,143)
Gain on sale of development properties 953 - -
-------- -------- --------
66,563 59,266 58,980
Fixed charges - interest and dividends
Total interest costs, net of interest income (45,547) (44,981) (65,432)
Preferred dividends (23,813) (23,813) (16,132)
Add back non-cash components of interest expense 2,861 3,559 7,834
-------- -------- --------
(66,499) (65,235) (73,730)
Leasing costs
Depreciation on tenant improvements (7,146) (8,198) (9,373)
Amortization of lease commissions (2,504) (2,758) (3,044)
-------- -------- --------
(9,650) (10,956) (12,417)
Difference between earnings and net cash
distributions from joint ventures 1,297 (7,596) (748)
-------- -------- --------
Operating deficit after adjustment for fixed charges,
leasing costs and joint venture cash flow $ (8,289) $(24,521) $(27,915)
======== ======== ========
</TABLE>
23
<PAGE>
Comparison of 1995 to 1994
The Company had 1995 operating income of $66.6 million compared to $59.3
million for 1994. This improvement resulted primarily from the overhead
reduction program initiated at the end of 1994, as well as increased rental
revenue.
The more significant changes in rental revenue and property operating costs
are summarized below (in millions):
<TABLE>
<CAPTION>
Change
-----------------------
Rental Operating
revenue costs
-------- ----------
<S> <C> <C>
Industrial buildings $ .1 $ (.8)
Retail buildings 4.0 .6
Office buildings (1.0) 1.0
Other income producing properties .5 -
Land holdings - (1.0)
----- -----
Total change $ 3.6 $ (.2)
===== =====
</TABLE>
The increase in revenue for industrial buildings was due to new buildings
completed in 1995 and the fourth quarter of 1994, and was partially offset by
reduced rentals from existing properties. Operating costs for the industrial
portfolio decreased due to the staff reductions described earlier. The increase
in revenue and costs for retail buildings was primarily due to the completion of
the East Baybridge shopping center in late 1994. Rental revenue for the
Company's office portfolio decreased primarily due to the expiration of an above
market lease in one building and a reduction in occupancy from 96% at the end of
1994 to 92% at the end of 1995. In addition, the Company's operating costs for
its office portfolio increased $1 million due to increased property taxes
resulting from the reassessment of an office building.
Land holding costs decreased due to the sale of $62.2 million of non-
strategic land assets and the overhead reduction program described above.
Joint venture earnings decreased $.9 million. The decrease consists
principally of $2.5 million in land sales in 1994 from one joint venture,
partially offset by significantly improved operating results from a hotel joint
venture.
General and administrative costs decreased in 1995 due to the staff
reductions described earlier.
Net interest costs increased $.6 million, representing the net effect of
additional borrowings which funded the Company's development activity offset by
a reduction in interest rates in 1995 as compared to 1994. As described
earlier, the Company's future operations should be improved in 1996 by the
interest savings on $68.5 million of principal reductions, $58 million of which
occurred at year-end.
During 1995, the Company capitalized $23.6 million of interest compared to
$24 million in 1994. Of the interest capitalized in 1995, $16.3 million related
to the Company's Mission Bay project. As described below, the Company took an
$84.8 million charge in 1995 resulting from its decision to terminate the
Development Agreement for Mission Bay. In the future, the Company will not
capitalize interest and property taxes relating to Mission Bay until it has
received revised entitlements and commences development.
In October 1995, the Company announced a goal of selling $100 million of
non-strategic land assets over a 15 month period ending December 31, 1996.
Sales totalling $47.1 million closed in the fourth quarter, and the Company had
contracts for the sale of an additional $23.6 million at December 31, 1995.
(One contract for $8 million was cancelled subsequent to year-end; however, the
Company does not believe this will have a material
24
<PAGE>
impact on its ability to meet its sales goals). Total asset sales in 1995 were
$65.4 million, consisting of $62.2 million of non-strategic land assets and $3.2
million of developed industrial property. In 1994, total asset sales were $53.8
million, and included $21.5 million of income producing properties. In addition
to its non-strategic land assets, the Company had open contracts for the sale of
$21.1 million of other properties at December 31, 1995.
During 1995, the Company took a non-cash, pre-tax charge of $102.4 million
to adjust the carrying value of certain property, which included $84.8 million
resulting from the Company's decision to terminate the 1991 Development
Agreement for its Mission Bay project in San Francisco. This agreement provided
for the development of 4.8 million square feet of office space, market rate and
affordable housing, retail and industrial uses. The Company completed an
analysis of the implications of the 1991 Development Agreement in light of
current and anticipated market conditions and projected construction costs and
concluded that the financial obligations imposed by that agreement render the
project uneconomic. Management therefore elected to terminate the 1991
Development Agreement and seek approval of a revised entitlement package which
would include: more housing and retail and less office space; a phased
development approach which would require less upfront investment; and the use of
tax increment financing, as provided by redevelopment law, to finance a
significant portion of the public infrastructure and affordable housing.
The Company has taken an additional charge against earnings of $17.6
million relating to other property where the carrying costs exceed what
management expects to recover through the anticipated sale of such property.
In addition to the charge against earnings discussed above, the 1995
results include income of $6.5 million for the favorable reversal of a
litigation award and a $7.4 million charge to environmental expense as a result
of management's reassessment of potential environmental exposures. The 1994
results included a $3.1 million restructuring charge and a $24.1 million
property write-down.
Comparison of 1994 to 1993
The Company had 1994 operating income of $59.3 million compared to $59
million for 1993. This improvement resulted from increased joint venture
earnings, offset by higher overhead costs.
The more significant changes in rental revenue and property operating costs
are summarized below:
<TABLE>
<CAPTION>
Change
---------------------
Rental Operating
revenue costs
-------- ----------
<S> <C> <C>
Industrial buildings $ (.4) $ (.3)
Office buildings 1.1 .2
Retail buildings .6 -
Land leases (.9) (.3)
Other income producing properties (.8) .2
Land holdings (4.7) (1.6)
----- -----
Total change $(5.1) $(1.8)
===== =====
</TABLE>
Rental revenue for the income producing portfolio decreased primarily due
to the sale of 1.1 million square feet of industrial buildings, .2 million
square feet of office buildings, .1 million square feet of retail buildings and
12 land leases in late 1993 and in 1994. Together, these sales had the impact of
reducing rental income $5.3 million in 1994. The reductions were partially
offset by rental income from industrial and retail buildings completed in 1994
and by an increase in occupancy from 91.6% at the end of 1993 to 95.9% at the
end of 1994 in the office portfolio. Property operating costs for the income
producing portfolio declined slightly due to the building and land lease sales
referred to above.
25
<PAGE>
Rental revenue from land holdings decreased principally due to leases for
temporary rentals in 1993 that expired in 1994. Related operating costs
decreased due to the sale of $32.3 million of non-strategic land assets.
Joint venture earnings increased significantly in 1994 as a result of
property sales by one joint venture and improved operating results of a hotel
joint venture. The increase in general and administrative expenses was caused
by executive severance and search costs, as well as increased use of outside
professional services. Interest expense decreased principally because of the
refinancing of the Prudential loan at a lower interest rate, as well as paydown
of other loans and the conversion of the debenture.
The decrease in the gain on property sales resulted from both lower sales
and higher cost basis in properties sold. Property sales in 1994 included $21.5
million from sales of buildings and land leases, which generated gross profit of
$3 million, and land sales of $32.3 million which generated gross profit of
$10.3 million. For 1993, sales and gross profit for buildings and land leases
were $46.1 million and $22.7 million; land sales of $26.4 million generated
gross profit of $10.5 million.
During 1994, the Company also took a non-cash $24.1 million adjustment to
the carrying value of property and a non-cash $3.1 million restructuring
charge. The 1993 results included a $29.6 million charge for the conversion of
a convertible debenture into common stock, an $11.9 million extraordinary
expense in connection with the Prudential refinancing, an $8.3 million reserve
for a litigation award, and a $32.5 million adjustment to the carrying value of
property.
LIQUIDITY AND FINANCIAL RESOURCES
Cash flow from operating activities
Cash provided by operating activities reflected in the statement of cash
flows in 1995, 1994 and 1993 was $93.6 million, $51.1 million and $26.6 million.
The increase in 1995 is primarily due to a higher level of land sales, an
increase in cash from rental operations, and lower general and administrative
costs. The increase in 1994 is primarily attributable to a decrease in interest
costs from refinancing of the Company's debt.
Cash generated from sales of land was $55.3 million, $21.5 million and
$17.8 million in 1995, 1994 and 1993. Cash generated from rental operations
increased principally because of new buildings. For the five years from 1996
through 2000, leases for 20.1%, 14.0%, 7.4%, 8.7% and 10.1% of total square
footage are scheduled to expire.
Cash flow from investing activities
Net cash flow from investing activities reflected in the statement of cash
flows increased $58.3 million from 1994 to 1995 and decreased $65.4 million from
1993 to 1994. The increase in 1995 resulted primarily from the conversion of
short-term commercial paper and government securities into cash, offset by lower
cash generated by the sale of investment and other properties. The decrease in
1994 is primarily attributable to the investment of cash into short-term
commercial paper and government securities, a reduction in proceeds from sales
of operating properties and an increase in capital expenditures. Net cash used
for investing activities included the following capital expenditures (in
millions):
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Construction and building improvements $16.5 $31.2 $16.6
Tenant improvements 2.4 4.0 3.5
Predevelopment, infrastructure, acquisitions and other 23.5 12.2 12.7
Capitalized interest and property taxes 26.1 26.5 28.3
----- ----- -----
$68.5 $73.9 $61.1
===== ===== =====
</TABLE>
26
<PAGE>
Cash flow from financing activities
Net cash used by financing activities reflected in the statement of cash
flows in 1995 and 1994 was $60.7 million and $100.4 million; net cash provided
by financing activities in 1993 was $120.2 million. These amounts reflect
borrowing and repayment activity relating to operating properties (including
principal amortization), capital expenditures and general corporate purposes.
In 1995, the Company closed a $47 million secured term loan to refinance
properties which were previously financed by loans which matured. The Company
also closed a $33 million secured term loan which refinanced an existing
maturing construction loan and reimbursed the Company for previously expended
costs. In addition, the Company closed construction loans totalling $18.7
million. The 1994 and 1993 amounts reflect principally the net proceeds from
the Series A and B preferred stock offerings, and the use of a part of those
proceeds to repay debt, as described below.
At December 31, 1995, the Company had total outstanding debt of $496.2
million, of which 73% was non-recourse to the Company and secured by the
underlying property only, 25% was recourse to the Company and also secured by
underlying property, and 2% was unsecured. During the next twelve months, $85.1
million of debt matures; 77% of this amount is construction financing or
intermediate term loans, which are expected to be extended, refinanced and
converted into permanent loans or repaid.
Refinancing of Prudential Mortgage Loan
In February 1994, the Company refinanced its $388.2 million mortgage loan
from The Prudential Insurance Company of America with cash generated from the
issuance of preferred stock and a $280 million mortgage loan due March 1, 2004.
In connection with this refinancing, the Company also paid down $10 million of
another mortgage loan from Prudential due January 1, 1996, and incurred an
extraordinary expense of $11.9 million ($7.4 million, net of income tax
benefits). This extraordinary expense consisted of a $10 million redemption
premium paid to Prudential and the write-off of deferred financing costs
associated with the $388.2 million loan. The reduced interest resulting from
the above debt paydowns, as well as other debt paydowns in 1993 and 1994, was
partially offset by the increased dividend requirements of the preferred stock
sold in 1993.
Debt covenants
Certain of the Company's loan agreements contain restrictive financial
covenants and several agreements are cross-defaulted. The most restrictive
covenants limit annual dividends to $27.6 million and require stockholders'
equity to be no less than $425 million. The stockholders' equity covenant was
amended effective December 31, 1995, changing the requirement from $475 million
to $425 million. As a result, at December 31, 1995, the Company had a cushion
of $17.9 million under that covenant.
Cash balances and available borrowings
At December 31, 1995, cash and cash equivalents totalled $27.7 million. In
addition, the Company had available $48 million under its working capital
facility, $33.2 million under its construction facilities, and $.5 million under
its secured term loan facilities.
In December 1995, the Company renewed its unsecured revolving facility
which was due to expire on December 31, 1995. Upon renewal, the facility was
reduced to $48 million from $62.5 million ($75 million at December 31, 1994) and
the revolving period was extended to December 31, 1996.
In January 1995, the Company entered into an $85 million revolving
construction line of credit and in July 1995 increased the line an additional
$15 million. This credit facility renews and increases a $75.5 million credit
line. In July 1995, the Company entered into another $25 million revolving
construction line of credit. The credit facility will be used to fund new
Company development in twelve states in the Southwest.
27
<PAGE>
Income Taxes
At December 31, 1995, the Company's deferred tax liability consisted of
deferred tax assets totalling $136 million and deferred tax liabilities of $226
million. Deferred tax assets included $13 million relating to net operating
loss carryforwards (NOLs) of $35.8 million. NOLs of $12.1 million, $16.9
million, $6.5 million and $.3 million expire in 2006, 2007, 2008 and 2009. The
Company's other deferred tax assets of $123 million relate primarily to
differences between book and tax basis of properties. These deferred tax assets
are not subject to expiration and will likely be realized at the time of taxable
dispositions of the properties. Deferred tax liabilities in excess of deferred
tax assets are often associated with the same property, with the result that the
deferred tax asset will likely be realized in a taxable disposition, without
regard to other taxable income. The Company believes it is more likely than not
that it will realize the benefit of its deferred tax assets, and that no
valuation allowance is required. In making this determination, the Company
considered: the nature of its deferred tax assets (and liabilities); the amounts
and expiration dates of its NOLs; the historical levels of taxable income; the
significant unrealized appreciation of its properties, including surplus
properties likely to be sold during the NOL carryforward periods; and its
ability to control the timing of property sales in order to assure that deferred
tax assets will be offset by deferred tax liabilities or realized appreciation.
ENVIRONMENTAL MATTERS
Many of the Company's properties are in urban and industrial areas and may
have been leased to commercial or industrial tenants who may have discharged
hazardous materials. From 1993 to 1995, expensed and capitalized environmental
costs, including legal fees, totalled $22.5 million. The Company expects to
spend $6.7 million for such costs in 1996. These costs may increase as the
Company develops its major projects.
Future environmental costs are difficult to estimate with certainty. The
Company and outside consultants have evaluated the environmental liabilities
associated with most of the Company's properties, however any evaluation
necessarily is based on the prevailing law and identified site conditions at
that time. Although the Company closely monitors its environmental costs, the
size of the portfolio precludes extensive review of every property on a regular
basis.
Environmental costs incurred in connection with operating properties and
properties previously sold are expensed. At December 31, 1995, management has
provided a reserve of $13.8 million for such costs. These costs are expected to
be incurred over an estimated ten-year period, with a substantial portion
incurred over the next five years.
Costs incurred for properties to be sold are deferred and will be charged
to cost of sales when the properties are sold. Costs relating to undeveloped
properties are capitalized as part of development costs. At December 31, 1995,
the Company's estimate of its potential liability for identified environmental
costs relating to properties to be developed or sold ranged from $18 million to
$59 million. These costs generally will be capitalized as they are incurred,
over the course of the estimated development period of approximately 20 years.
Although an unexpected event could have a material impact on the results of
operations for any period, the Company does not believe that such costs for
identified liabilities will have a material adverse effect on its financial
position, results of operations or cash flow. See Note 2 to the Consolidated
Financial Statements.
SUPPLEMENTAL CURRENT VALUE
Historically, the Company has provided an annual supplemental current value
balance sheet in addition to historical cost financial statements. The Company
discontinued this practice in 1995. In the past, this disclosure was an
attempt to address the difference between the low historical cost of the
Company's assets and their current value. However, the current value process is
expensive and has significant limitations. In particular, short-term values can
fluctuate resulting from changes in interest rates, capitalization rates and
development assumptions that
28
<PAGE>
are not necessarily indicative of the long term value of the Company's
portfolio. Management believes that, over time, a more relevant measure of the
long-term value of the Company is its growth in cash flow.
For 1995, the Company has provided supplemental current value information
on land assets and joint venture investments (along with an appraiser's opinion)
and has also provided expanded financial data so that investors can better
evaluate the performance of its income producing assets. In future years, the
Company expects to discontinue current value reporting altogether.
As of December 31, 1995, the Company's land portfolio and joint venture
portfolio had a current value of $1.039 billion compared to $1.037 billion for
the same assets in 1994. Although the total value was relatively unchanged, the
Company experienced increased values for its joint venture investments and
portions of its industrial development portfolio. These increases were
partially offset by reductions in certain of the Company's larger land parcels.
RISK FACTORS
The statements contained herein which are not historical facts are forward-
looking statements based on economic forecasts, strategic plans and other
factors which, by their nature, involve risk and uncertainties. In particular,
among the factors that could cause actual results to differ materially are the
following: business conditions and general economy; competitive factors;
political decisions affecting land use permits, interest rates and other risks
inherent in the real estate business. For further information on factors which
could impact the Company and the statements, reference is made to the Company's
filings with the Securities and Exchange Commission.
29
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and schedules required under Regulation S-X
promulgated under the Securities Act of 1933 are identified in Item 14 and are
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
30
<PAGE>
PART III
Except for the information relating to the executive officers of the
Company set forth in Part I of this Annual Report on Form 10-K, the information
required by the following items in this Part III is hereby incorporated by
reference to the relevant sections contained in the Company's definitive Proxy
Statement ("1996 Proxy Statement") which will be filed with the Securities and
Exchange Commission in connection with the 1996 Annual Meeting of Stockholders.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information in the section captioned "Election of Directors" in the
1996 Proxy Statement is incorporated herein by reference.
The information in the section captioned "Compliance with Section 16(a) of
the Securities Exchange Act of 1934" in the 1996 Proxy Statement is incorporated
herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information in the sections captioned "Election of Directors--
Directors' Compensation," "Employment and Severance Agreements" and
"Compensation of Executive Officers" included in the 1996 Proxy Statement is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information in the sections captioned "Security Ownership of Directors,
Nominees and Executive Officers" and "Security Ownership of Certain Beneficial
Owners" in the 1996 Proxy Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information in the section captioned "Certain Transactions" in the 1996
Proxy Statement is incorporated herein by reference.
31
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A)(1) AND (A)(2) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
See Index to Financial Statements and Financial Statement Schedules at F-1
herein.
All other Schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
(A)(3) EXHIBITS
Exhibit
No.
- -------
3.1 Form of Restated Certificate of Incorporation of the Registrant (1)
3.1A Amendment to Restated Certificate of Incorporation of the Registrant (8)
3.3 Form of Certificate of Designations, Preferences and Rights of $3.25
Series A Cumulative Convertible Preferred Stock (2)
3.4 By-Laws, as amended*
3.5 Form of Certificate of Designations, Preferences and Rights of $3.625
Series B Cumulative Convertible Exchangeable Preferred Stock (8)
4.1 Form of stock certificate representing Common Stock (1)
4.9 Form of stock certificate representing $3.75 Series A Cumulative
Convertible Preferred Stock (2)
4.10 Form of stock certificate representing $3.625 Series B Cumulative
Convertible Exchangeable Preferred Stock (8)
4.11 Loan Agreement dated as of February 16, 1994 between the Registrant and
The Prudential Insurance Company of America (9)
10.1 Exploration Agreement and Option to Lease dated December 28, 1989
between the Registrant and Santa Fe Pacific Minerals Corporation (1)
10.4 Registration Rights Agreement dated as of December 29, 1989 among the
Registrant, BAREIA, O&Y and Itel (1)
10.4A Letter Agreement dated November 14, 1995 between the Registrant and
California Public Employees' Retirement System
10.6 Restated Tax Allocation and Indemnity Agreement dated December 29, 1989
among the Registrant and certain of its subsidiaries and Santa Fe
Pacific Corporation ("SFP") (1)
10.7 State Tax Allocation and Indemnity Agreement dated December 29, 1989
among the Registrant and certain of its subsidiaries and SFP (1)
10.13 Registrant's Incentive Stock Compensation Plan (3)
10.14 Management Agreement between ATSF and Catellus Management Corporation
dated October 15, 1994 (10)
10.15 Termination, Substitution and Guarantee Agreement between ATSF and the
Registrant dated December 21, 1990 (4)
10.16 Registrant's Stock Option Plan (4)
10.17 Development Agreement dated April 1, 1991 between the Registrant and
the San Francisco Board of Supervisors (5)
10.21 Amended and Restated Executive Stock Option Plan (8)
10.26 Form of First Amendment to Registration Rights Agreement among the
Registrant, BAREIA, O&Y and Itel (6)
10.29 Amended and Restated Executive Employment Agreement dated as of November
29, 1995 between the Registrant and Nelson C. Rising*
32
<PAGE>
10.30 Executive Employment Agreement dated February 10, 1995 between the
Registrant and Timothy J. Beaudin (10)
10.31 Amended and Restated Stock Option Agreement dated March 22, 1996 between
the Registrant and Joseph R. Seiger*
10.32 Special Severance Pay Plan and Summary Plan Description (10)
10.33 Form of Memorandum Regarding Reduction-In-Force Program (10)
10.34 Consulting Agreement dated December 23, 1994 between the Registrant and
James G. O'Gara (10)
10.35 Memorandum of Understanding dated December 22, 1994, addressed to James
W. Augustino (10)
10.36 Memorandum of Understanding dated December 19, 1994, addressed to Thomas
W. Gille (10)
10.37 Employment Agreement dated July 24, 1996 between the Registrant and
Stephen P. Wallace*
10.38 Letter Agreement dated March 24, 1995 between the Registrant and Donald
M. Parker*
10.39 Stock Option Award Agreement dated as of January 1, 1996 between the
Registrant and Joseph R. Seiger*
10.40 Revised Memorandum of Understanding dated November 15, 1995 between the
Registrant and Theodore L. Tanner*
10.41 Memorandum of Understanding dated February 16, 1996 between the
Registrant and Jeffrey K. Gwin*
10.42 Consulting Agreement dated February 25, 1996, between the Registrant and
Jeffrey K. Gwin*
21.1 Subsidiaries of the Registrant*
23.1 Consent of Independent Accountants*
23.2 Consent of Independent Real Estate Appraisers*
24.1 Powers of Attorney from directors with respect to the filing of the
Form 10-K*
27 Financial Data Schedule*
99.1 Report of the Independent Real Estate Appraisers dated March 12, 1996
The Registrant has omitted instruments with respect to long-term debt where
the total amount of the securities authorized thereunder does not exceed 10
percent of the assets of the Registrant and its subsidiaries on a consolidated
basis. The Registrant agrees to furnish a copy of such instrument to the
Commission upon request.
(b) Reports on Form 8-K
None.
- -----------
* Filed with this report on Form 10-K.
(1) Incorporated by reference to Exhibit of the same number of the Registration
Statement on Form 10 (Commission File No. 0-18694) as filed with the
Commission on July 18, 1990 ("Form 10").
(2) Incorporated by reference to Exhibit of the same number on the Form 8
constituting a Post-Effective Amendment No. 1 to the Form 8-A as filed with
the Commission on February 19, 1993.
(3) Incorporated by reference to Exhibit of the same number of the Form 8
constituting Post-Effective Amendment No. 1 to the Form 10 as filed with the
Commission on November 20, 1990.
(4) Incorporated by reference to Exhibit of the same number on the Form 10-K for
the year ended December 31, 1990.
(5) Incorporated by reference to Exhibit of the same number on the Form 10-K for
the year ended December 31, 1990, referred to therein as "Development
Agreement dated February 19, 1991 between the Registrant and the San
Francisco Board of Supervisors".
(6) Incorporated by reference to Exhibit of the same number of Amendment No. 2
to Form S-3 as filed with the Commission on February 4, 1993.
(7) Incorporated by reference to Exhibit of the same number on the Form 10-Q for
the quarter ended September 30, 1993.
(8) Incorporated by reference to Exhibit of the same number on the Form 10-K for
the year ended December 31, 1993.
33
<PAGE>
(9) Incorporated by reference to Exhibit of the same number of Amendment No. 1
to the Form 10-K for the year ended December 31, 1993.
(10) Incorporated by reference to Exhibit of the same number on the Form 10-K
for the year ended December 31, 1994.
34
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Catellus Development Corporation has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
CATELLUS DEVELOPMENT CORPORATION
By _______________________________
Nelson C. Rising
President and Chief
Executive Officer
Dated: March 30, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of Catellus
Development Corporation and in the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
___________________________ President, Chief Executive March 30, 1996
Nelson C. Rising Officer and Director
Principal Executive
Officer
___________________________ Senior Vice President March 30, 1996
Stephen P. Wallace and Chief Financial Officer
Principal Financial
Officer
____________________________ Vice President and Controller March 30, 1996
Paul A. Lockie Principal Accounting
Officer
35
<PAGE>
Signature Title Date
- --------- ----- ----
* Director March 30, 1996
- -----------------------------
Joseph F. Alibrandi
* Director
- -----------------------------
Daryl J. Carter
* Director
- -----------------------------
Christine Garvey
* Chairman of the Board,
- ----------------------------- Director
Joseph R. Seiger
* Director
- -----------------------------
Jacqueline R. Slater
* Director
- -----------------------------
Thomas M. Steinberg
* Director
- -----------------------------
Tom C. Stickel
* Director
- -----------------------------
Beverly Benedict Thomas
By __________________________
Paul A. Lockie March 30, 1996
Attorney-in-fact
36
<PAGE>
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT
SCHEDULES (ITEMS 14(a)(1) AND (a)(2))
-------------------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
(a)(1) FINANCIAL STATEMENTS
Report of Independent Accountants dated February 12, 1996 F-2
Consolidated Balance Sheet at December 31, 1995 and 1994 F-3
Consolidated Statement of Operations
for the years ended December 31, 1995, 1994 and 1993 F-4
Consolidated Statement of Stockholders' Equity
for the years ended December 31, 1995, 1994 and 1993 F-5
Consolidated Statement of Cash Flows for the years ended
December 31, 1995, 1994 and 1993 F-6
Notes to Consolidated Financial Statements F-8
Summarized Quarterly Results (Unaudited) F-22
</TABLE>
(a)(2) FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants dated February 12, 1996 S-1
Schedule II - Valuation and Qualifying Accounts S-2
Schedule III - Real Estate and Accumulated Depreciation S-3
Attachment A to Schedule III S-4
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholders of
Catellus Development Corporation
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of stockholders' equity and of cash
flows present fairly, in all material respects, the financial position of
Catellus Development Corporation and its subsidiaries at December 31, 1995 and
1994 and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles. The financial statements are the responsibility
of the Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of
these statements in accordance with generally accepted auditing standards which
require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
Price Waterhouse LLP
San Francisco, California
February 12, 1996
F-2
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Properties.................................... $1,191,679 $1,248,398
Less accumulated depreciation................. (184,228) (161,279)
---------- ----------
1,007,451 1,087,119
Other assets and deferred charges............. 44,530 49,584
Notes receivable.............................. 7,550 7,961
Accounts receivable, less allowances.......... 10,330 10,712
Restricted cash and short-term investments.... - 35,067
Cash and cash equivalents..................... 27,743 16,920
---------- ----------
Total................................. $1,097,604 $1,207,363
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage and other debt....................... $ 496,180 $ 530,641
Accounts payable and accrued expenses......... 33,913 38,876
Deferred credits and other liabilities........ 34,367 25,495
Deferred income taxes......................... 90,270 112,662
Commitments and contingencies (Note 14)
Stockholders' equity
Preferred stock............................. 322,500 322,500
Common stock, 72,967,236 shares issued at
December 31, 1995 and 1994.............. 730 730
Paid-in capital............................. 196,525 220,338
Accumulated deficit......................... (76,881) (43,879)
---------- ----------
Total stockholders' equity.................. 442,874 499,689
---------- ----------
Total................................. $1,097,604 $1,207,363
========== ==========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
RENTAL REVENUE...................................... $ 108,068 $ 104,432 $109,544
PROPERTY OPERATING COSTS............................ 39,576 39,749 41,499
GAIN ON SALES OF PROPERTY........................... 33,742 13,307 33,165
OTHER INCOME (EXPENSE)
Equity in earnings of joint ventures............... 7,035 7,982 1,818
Management and development fee income.............. 1,924 2,151 2,260
General and administrative expense................. (11,841) (15,550) (13,143)
Interest expense, net.............................. (21,988) (20,932) (39,839)
Depreciation and amortization...................... (27,990) (28,577) (31,117)
Adjustment to carrying value of property........... (102,400) (24,100) (32,500)
Other, net......................................... (1,494) (2,770) (42,049)
--------- --------- --------
(156,754) (81,796) (154,570)
--------- --------- --------
LOSS BEFORE TAXES AND EXTRAORDINARY EXPENSE......... (54,520) (3,806) (53,360)
Income taxes (benefit)
Current............................................ 1,014 186 42
Deferred........................................... (22,532) (1,545) (8,050)
--------- --------- --------
(21,518) (1,359) (8,008)
--------- --------- --------
Loss before extraordinary expense................... (33,002) (2,447) (45,352)
Extraordinary expense related to early retirement
of debt, net of income tax benefit of $4,535...... - - (7,401)
--------- --------- --------
NET LOSS............................................ $ (33,002) $ (2,447) $(52,753)
Preferred stock dividends........................ (23,813) (23,813) (16,132)
--------- --------- --------
Net loss applicable to common stockholders....... $ (56,815) $ (26,260) $(68,885)
========= ========= ========
Loss per share of common stock:
Loss before extraordinary expense.............. $(.78) $(.36) $(.87)
Extraordinary expense.......................... - - (.10)
--------- --------- --------
Net loss....................................... $(.78) $(.36) $(.97)
========= ========= ========
Average number of common shares outstanding..... 72,967 72,967 70,834
========= ========= ========
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
RETAINED
PREFERRED STOCK COMMON STOCK EARNINGS
------------------ ------------------ PAID-IN (ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT)
------ --------- ------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1992.............. - $ - 53,977 $ 540 $117,930 $27,453
Issuance of common stock............... - - 18,990 190 140,810 -
Issuance of Series A preferred stock... 3,450 172,500 - - (8,089) -
Issuance of Series B preferred stock... 3,000 150,000 - - (6,500) -
Series A preferred stock dividends..... - - - - - (13,081)
Series B preferred stock dividends..... - - - - - (3,051)
Net loss............................... - - - - - (52,753)
----- -------- ------ ------- -------- --------
Balance at December 31, 1993.............. 6,450 322,500 72,967 730 244,151 (41,432)
Series A preferred stock dividends..... - - - - (12,938) -
Series B preferred stock dividends..... - - - - (10,875) -
Net loss............................... - - - - - (2,447)
----- -------- ------ ------- -------- --------
Balance at December 31, 1994.............. 6,450 322,500 72,967 730 220,338 (43,879)
Series A preferred stock dividends..... - - - - (12,938) -
Series B preferred stock dividends..... - - - - (10,875) -
Net loss............................... - - - - - (33,002)
----- -------- ------ ------- -------- --------
Balance at December 31, 1995.............. 6,450 $322,500 72,967 $ 730 $196,525 $(76,881)
===== ======== ====== ======= ======== ========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss...................................................... $(33,002) $ (2,447) $(52,753)
Non-cash items included in net loss:
Extraordinary expense related to early retirement of debt,
before income tax benefit................................... - - 11,936
Expense related to conversion of debenture................... - - 29,552
(Recovery) accrual related to litigation..................... (6,450) - 8,300
Adjustment to carrying value of property..................... 102,400 24,100 32,500
Depreciation and amortization................................ 27,990 28,577 31,117
Deferred income taxes........................................ (22,392) (1,667) (12,584)
Interest accrued on convertible debenture.................... - - 1,665
Amortization of deferred loan fees and other costs........... 2,743 2,940 5,560
Equity in earnings of joint ventures......................... (7,035) (7,982) (1,818)
Cost of land sold............................................ 21,617 10,768 9,624
Gain on sale of investment and other properties.............. (953) (3,201) (22,999)
Other-net.................................................... 8,674 3,963 2,925
Changes in:
Accounts and notes receivable................................ 1,306 (2,248) (2,534)
Other assets and deferred charges............................ (5,652) (8,014) (12,693)
Accounts payable and accrued expenses........................ 850 3,145 (1,066)
Other........................................................ 3,483 3,155 (89)
-------- -------- --------
Net cash provided by operating activities 93,579 51,089 26,643
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.......................................... (68,523) (73,900) (61,060)
Net proceeds from sale of investment and other properties..... 3,052 28,192 45,009
Distributions from joint ventures............................. 9,906 7,114 1,324
Contributions to joint ventures............................... (1,574) (6,728) (254)
Reduction (investment) in short-term investments and
restricted cash............................................. 35,067 (35,067) -
-------- -------- --------
Net cash used for investing activities......................... $(22,072) $(80,389) $(14,981)
-------- -------- --------
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS-(CONTINUED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings............................................... $ 99,013 $ 328,408 $ 15,493
Repayment of borrowings.................................. (135,884) (462,002) (126,533)
Dividends paid........................................... (23,813) (24,145) (9,847)
Proceeds from issuance of preferred stock................ - - 322,500
Stock issuance costs..................................... - (55) (13,991)
Investment in restricted cash used for reduction of debt. - 67,410 (67,410)
Redemption premium on early retirement of debt........... - (10,000) -
--------- --------- ---------
Net cash provided by (used for) financing activities........ (60,684) (100,384) 120,212
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ 10,823 (129,684) 131,874
Cash and cash equivalents at beginning of year.............. 16,920 146,604 14,730
--------- --------- ---------
Cash and cash equivalents at end of year.................... $ 27,743 $ 16,920 $ 146,604
========= ========= =========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest (net of amount capitalized)....................... $ 23,208 $ 22,895 $ 36,901
Income taxes............................................... $ 444 $ 324 $ 38
</TABLE>
See notes to consolidated financial statements.
F-7
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF BUSINESS
Headquartered in San Francisco, Catellus Development Corporation (the
Company) is a full service real estate company that manages and develops real
estate for its own account and others. The Company's portfolio of industrial,
retail and office projects, undeveloped land and joint venture interests are
located in major markets in California and 10 other states. The Company's
operating properties consist primarily of industrial facilities, along with a
number of office and retail buildings located in California, Arizona, Illinois,
Texas, Colorado and Oregon. The Company also has substantial undeveloped land
holdings primarily in these same states.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation - The accompanying financial statements include
the accounts of the Company and investees over 50% owned which are controlled by
the Company. All other investees are accounted for using the equity method.
Revenue recognition - Rental revenue, in general, is recognized when due
from tenants; however, revenue from leases with rent concessions is recognized
on a straight-line basis over the initial term of the lease. Direct costs of
negotiating and consummating a lease are deferred and amortized over the initial
term of the related lease.
The Company recognizes revenue from the sale of properties using the
accrual method. Sales not qualifying for full recognition at the time of sale
are accounted for under the installment method. In general, specific
identification is used to determine the cost of sales. Estimated future costs
to be incurred by the Company after completion of each sale are included in cost
of sales.
Cash, restricted cash and short-term investments - The Company considers
all highly liquid investments with a maturity of three months or less at time of
purchase to be cash equivalents. Restricted cash in 1994 represents amounts
held in escrow in connection with a property transaction. Short-term
investments in 1994 represent primarily commercial paper and government
securities which mature within one year from time of purchase and had an average
yield of 5.42%.
Financial instruments - The cost basis of the Company's notes receivable
and debt approximate fair value, based upon current market rates for commercial
real estate loans of similar risks and maturities.
Property and deferred costs - Real estate is stated at the lower of cost or
estimated fair value. In cases where the Company determines that the carrying
costs for properties held for sale exceeds estimated fair value, or that an
impairment has been sustained, a write-down to estimated fair value is recorded.
A property is considered impaired when the property's estimated undiscounted
future cash flow, before interest charges, is less than its book value. This
evaluation is made on a property by property basis. The evaluation of fair
value and undiscounted cash flow requires significant judgement; it is
reasonably possible that a change in the estimate could occur. The adoption of
Statement of Financial Accounting Standard No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" had
no impact on the Company's financial statements.
The Company capitalizes construction and development costs. Costs
associated with financing or leasing projects are also capitalized and amortized
over the period benefitted by those expenditures.
F-8
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Depreciation is computed using the straight-line method. Buildings and
improvements are depreciated using lives of between 20 and 40 years. Tenant
improvements are depreciated over the primary terms of the leases (generally 3-
15 years), while furniture and equipment are depreciated using lives ranging
between 3 and 10 years.
Maintenance and repair costs are charged to operations as incurred, while
significant improvements, replacements and major renovations are capitalized.
Allowance for uncollectible accounts - Accounts receivable are net of an
allowance for uncollectible accounts totalling $1.8 million and $1.9 million at
December 31, 1995 and 1994. The provision for uncollectible accounts in 1995,
1994 and 1993 totalled $.5 million, $1.0 million and $.1 million.
Environmental costs - The Company incurs on-going environmental remediation
costs, including clean-up costs, consulting fees for environmental studies and
investigations, monitoring costs, and legal costs relating to clean-up,
litigation defense, and the pursuit of responsible third parties. Costs
incurred in connection with operating properties and properties previously sold
are expensed. Costs relating to undeveloped land are capitalized as part of
development costs. Costs incurred for properties to be sold are deferred and
will be charged to cost of sales when the properties are sold. Environmental
costs charged to operations, including amounts charged to cost of sales, for
1995, 1994 and 1993 totalled $8.1 million, $4.6 million and $5.5 million.
Environmental costs capitalized in 1995, 1994 and 1993 were $1.7 million, $1.2
million and $1.4 million. The Company maintains a reserve, included in the
caption "deferred credits and other liabilities", for known, probable costs of
environmental remediation to be incurred in connection with operating properties
and properties previously sold. This reserve was $13.8 million and $8.4 million
at December 31, 1995 and 1994. When there is a legal requirement for
environmental remediation of developable land, the Company will accrue for the
estimated cost of remediation and capitalize that amount. Where there is no
legal requirement for remediation, costs will be capitalized, as incurred, as
part of the project costs.
Income taxes - Income taxes are recorded based on the future tax effects of
the difference between the tax and financial reporting basis of the Company's
assets and liabilities. In estimating future tax consequences, expected future
events are considered except for potential income tax law or rate changes.
Loss per share - Net loss per share of common stock is computed by dividing
net loss, after reduction for preferred stock dividends, by the weighted average
number of shares of common stock outstanding during the year. Fully diluted
earnings per share amounts have not been presented because assumed conversion of
the Series A and Series B preferred stock would be anti-dilutive for all
relevant periods. Assuming conversion of the Debenture on January 1, 1993, the
net loss and loss before extraordinary item for 1993 would have been $.93 and
$.84 per share.
Use of estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities, and the
reported amounts of revenue and expenses. Actual results could differ from
those estimates.
Reclassifications - Certain prior year amounts have been reclassified to
conform with the current year financial statement presentation.
F-9
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. RESTRUCTURING OF OPERATIONS
In November 1994, the Company announced a major restructuring to refocus
the Company and to improve the Company's long-term cash position. This
restructuring, which was implemented in 1995, resulted in a $3.1 million non-
recurring operating expense in 1994. Costs associated with the restructuring
included $1.9 million related to employee termination benefits, $.8 million
related to lease cancellation fees and costs attributable to permanently idle
leased facilities, and $.4 million for the consolidation of operations. As of
December 31, 1995, $3 million of the restructuring charges had been paid.
NOTE 4. MORTGAGE AND OTHER DEBT
Mortgage and other debt at December 31, 1995 and 1994 consisted of the
following (in thousands):
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
First mortgage loan, interest at an average rate of 8.71%, due at
various dates through March 1, 2004(a)............................ $267,260 $274,776
First mortgage loans, interest at 7.625% to 10.05%, due at
various dates through March 1, 2009(b)............................ 70,770 115,193
Intermediate secured term loans, interest variable (7.44%
to 9.0% at December 31, 1995), due at various dates
through June 1, 1997(c)........................................... 71,800 64,378
Term loan, unsecured, interest variable (7.75% to 7.94% at
December 31, 1995), due December 31, 1996(d)...................... 7,000 22,000
Construction loans, interest variable (7.28% to 9.0% at
December 31, 1995), due at various dates through
November 8, 1996(e)............................................... 52,851 29,425
Assessment district bonds, interest at 5.0% to 10.43%, due at
various dates through April 10, 2021(f)........................... 23,283 24,492
Other loans, interest at 8.0% to 8.88%, due at various dates
through August 1, 1998............................................ 3,216 377
-------- --------
$496,180 $530,641
======== ========
</TABLE>
(a) The Company refinanced its $388.2 million first mortgage loan with The
Prudential Insurance Company of America (Prudential) on February 18, 1994
with a $280 million first mortgage loan. In connection with this
refinancing, the Company incurred an extraordinary expense of $11.9 million
($7.4 million, net of income tax benefits). This extraordinary expense,
which was recognized in 1993, consisted primarily of a redemption premium
paid to Prudential and the write-off of deferred financing costs associated
with the $388.2 million loan. The loan is collateralized by a majority of
the Company's operating properties and by an assignment of rents generated
by the underlying properties. This loan has a penalty if paid prior to
maturity.
(b) These first mortgage loans are collateralized by certain of the Company's
operating properties and by an assignment of rents generated by the
underlying properties. A majority of these loans have penalties if paid
prior to maturity.
(c) The Company's secured term loans are collateralized by certain operating
properties and by an assignment of rents generated by the underlying
properties. At December 31, 1995, $.5 million was available for future
borrowings.
F-10
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
(d) The Company has a $48 million unsecured revolving facility and a $7 million
unsecured term facility. In December 1995, the Company renewed its
unsecured revolving facility which was due to expire on December 31, 1995.
Upon renewal, the facility was reduced to $48 million from $62.5 million
($75 million at December 31, 1994) and the revolving period was extended to
December 31, 1996. As of December 31, 1995, nothing was outstanding under
the revolving facility, leaving the entire $48 million available for future
borrowings.
(e) The Company's construction loans are used to finance development projects
and are secured by the related land and buildings and by an assignment of
rents generated by the underlying properties. In January 1995, the Company
entered into an $85 million revolving construction line of credit and in
July 1995 increased the line an additional $15 million. This credit
facility renews and increases a $75.5 million credit line. In July 1995,
the Company entered into another $25 million revolving construction line of
credit. The credit facility will be used to fund new Company development
in twelve states in the Southwest. At December 31, 1995, $33.2 million was
available for future borrowings under all construction lines.
(f) The assessment district bonds are issued through local municipalities to
fund the construction of public infrastructure and improvements which
benefit the Company's properties. These bonds are secured by certain of
the Company's properties.
Certain loan agreements contain restrictive financial covenants. The most
restrictive covenants limit annual dividends to $27.6 million and require
stockholders' equity to be no less than $425 million. Other covenants
accelerate payment upon certain change of control events and contain negative
pledges with respect to certain of the Company's properties. The Company was in
compliance with all such covenants at December 31, 1995.
The maturities of mortgage and other debt outstanding as of December 31,
1995 are summarized as follows:
<TABLE>
<S> <C>
1996 $ 85,094
1997 72,052
1998 20,427
1999 9,011
2000 10,089
Thereafter 299,507
--------
$496,180
========
</TABLE>
Interest costs incurred during 1995, 1994 and 1993 relating to mortgage and
other debt totalled $46.5 million, $45.8 million and $64 million. Total
interest costs, which also includes loan fee amortization and other interest
costs, amounted to $49.3 million, $48.7 million and $69.6 million in 1995, 1994
and 1993. Of these amounts, $23.6 million, $24 million and $25.6 million were
capitalized during 1995, 1994 and 1993.
F-11
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
NOTE 5. INCOME TAXES
Total income taxes (benefit) reflected in the consolidated statement of
operations differs from the amounts computed by applying the federal statutory
rate of 35% to income (loss) before extraordinary item as follows (in
thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---------- --------- ---------
<S> <C> <C> <C>
Federal income tax at statutory rate................. $(19,082) $(1,332) $(18,676)
Increase (decrease) in taxes resulting from:
State income taxes, net of federal impact.......... (2,460) 72 (1,318)
Non-recurring expense related to conversion
of a debenture................................... - - 9,013
Increase in federal rate applied to prior years'
temporary differences............................ - - 2,970
Other 24 (99) 3
-------- ------- --------
$(21,518) $(1,359) $ (8,008)
======== ======= ========
</TABLE>
Deferred income taxes are provided for the temporary differences between
the financial reporting basis and the tax basis of the Company's assets and
liabilities and for operating loss and tax credit carryforwards. Significant
components of the Company's net deferred tax liability as of December 31, 1995
and 1994 are as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1994
-------- ---------
<S> <C> <C>
Deferred tax liabilities:
Involuntary conversions (condemnations) of property... $ 91,226 $ 84,354
Capitalized interest and taxes........................ 93,135 87,341
Like-kind property exchanges.......................... 20,169 20,319
Investments in partnerships........................... 16,599 12,135
Other................................................. 5,219 5,038
-------- --------
226,348 209,187
-------- --------
Deferred tax assets:
Operating loss carryforwards.......................... 13,257 17,230
Intercompany transactions (prior to spin-off)......... 16,522 16,644
Capitalized rent...................................... 23,194 20,543
Adjustment to carrying value of property.............. 63,376 22,692
Depreciation and amortization......................... 7,028 6,376
Environmental reserve................................. 4,687 2,560
Other................................................. 8,014 10,480
-------- --------
136,078 96,525
Deferred tax assets valuation allowance............... - -
-------- --------
136,078 96,525
-------- --------
Net deferred tax liability............................ $ 90,270 $112,662
======== ========
</TABLE>
During 1994 and 1993, the Company generated net operating loss
carryforwards of $.3 million and $6.5 million for tax purposes which expire in
2009 and 2008. Deferred income tax expense was reduced to reflect the benefit
of these amounts.
F-12
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
The Company increased its tax expense and related deferred tax liability by
$3 million in 1993 as a result of legislation enacted in August 1993 increasing
the federal tax rate from 34% to 35% commencing January 1, 1993.
NOTE 6. JOINT VENTURE INVESTMENTS
The Company is involved in a variety of real estate-oriented joint venture
activities. At December 31, 1995, these included two hotels, one office
building, a 900,000 square foot trade mart center for the contract and home
furnishing industries, an apartment complex and other projects in the early
stages of development.
The Company had a loan outstanding to one of its joint ventures in the
amount of $1.7 million at December 31, 1995 and 1994. The loan bears interest
at one percentage point over the rate payable under the joint venture's note to
its creditor bank (10.25% at December 31, 1995) and is secured by a second lien
on the joint venture property. Principal and interest were due on or before
February 1, 1996. The Company expects to convert this note to joint venture
equity. At December 31, 1993, the Company had outstanding a loan and related
accrued interest to a joint venture partner in the aggregate amount of $.6
million. During 1994, this amount was exchanged for additional ownership in the
related joint venture.
The Company guarantees a portion of the debt and interest of certain of its
joint ventures. At December 31, 1995, these guarantees totalled $8.9 million.
The condensed combined balance sheets and statements of income of the joint
ventures, along with the Company's proportionate share, are summarized as
follows (in thousands):
<TABLE>
<CAPTION>
COMBINED PROPORTIONATE SHARE
------------------------ -----------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Assets, primarily real estate.............. $ 304,018 $320,270 $127,181 $130,669
========= ======== ======== ========
Liabilities, primarily debt................ $ 415,775 $408,802 $168,247 $170,986
Venturers' deficit......................... (111,757) (88,532) (41,066) (40,317)
--------- -------- -------- --------
Total liabilities and venturers' deficit... $ 304,018 $320,270 $127,181 $130,669
========= ======== ======== ========
</TABLE>
The Company's proportionate share of venturers' deficit is an aggregate
amount for all ventures. Because the Company's ownership percentage differs
from venture to venture, and certain ventures have accumulated deficits while
others have accumulated equity, the Company's percentage of venturers' deficit
is not reflective of the Company's ownership percentage of the ventures.
<TABLE>
<CAPTION>
COMBINED PROPORTIONATE SHARE
------------------------------ ---------------------------
1995 1994 1993 1995 1994 1993
-------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Revenue........................... $133,413 $138,810 $114,353 $35,410 $36,941 $30,561
Operating and interest expenses... 109,401 113,487 95,337 24,629 25,067 24,823
Depreciation and amortization..... 14,287 15,583 15,595 3,746 3,892 3,920
-------- -------- -------- ------- ------- -------
Net earnings before taxes......... $ 9,725 $ 9,740 $ 3,421 $ 7,035 $ 7,982 $ 1,818
======== ======== ======== ======= ======= =======
</TABLE>
F-13
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. PROPERTY
Net book value by property type at December 31, 1995 and 1994 consisted of
the following (in thousands):
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Income producing properties:
Industrial buildings $ 279,838 $ 281,891
Office buildings 113,095 122,106
Retail buildings 84,595 85,100
Land development 317,727 377,506
Land leases 10,069 10,123
---------- ----------
805,324 876,726
Land holdings:
Developable properties 150,339 145,744
Natural resources 1,788 8,658
Properties held for sale 84,232 92,048
---------- ----------
236,359 246,450
Other (including proportionate share
of joint ventures' net deficits of
$41,066 and $40,317) (34,232) (36,057)
---------- ----------
$1,007,451 $1,087,119
========== ==========
</TABLE>
During 1995, the Company took a charge of $102.4 million to adjust the
carrying value of certain property, which included $84.8 million resulting from
the Company's decision to terminate the 1991 Development Agreement for its
Mission Bay project in San Francisco. The Company completed an analysis of the
implications of the 1991 Development Agreement in light of current and
anticipated market conditions and projected construction costs and concluded
that the financial obligations imposed by that agreement render the project
uneconomic. Management therefore elected to terminate the 1991 Development
Agreement and seek approval of a revised entitlement package. The revised
carrying value of Mission Bay represents management's best estimate of its fair
value, assuming the Company is successful in re-entitling the property, and
approximates the amount included in the Company's current value reporting for
December 31, 1994, less anticipated costs of obtaining new entitlements.
The Company has taken an additional charge against earnings of $17.6
million relating to other property where the carrying value exceeded what
management expects to recover through the anticipated sale of such property.
The Company also took charges of $24.1 million and $32.5 million in 1994
and 1993 to adjust the carrying value of certain property.
F-14
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8. LEASES
The Company, as lessor, has entered into noncancelable operating leases
expiring at various dates through 2052. Rental revenue under these leases
totalled $106.8 million in 1995, $102.3 million in 1994 and $105.1 million in
1993. Included in this revenue are rentals contingent on lease operations of
$2.1 million in 1995, $2.8 million in 1994 and $3.2 million in 1993. Future
minimum rental revenue under existing noncancelable operating leases as of
December 31, 1995 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
1996......... $ 78,138
1997......... 64,777
1998......... 54,958
1999......... 47,877
2000......... 41,035
Thereafter... 322,268
--------
$609,053
========
</TABLE>
The book value of the Company's properties under operating leases or held
for rent are summarized as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1994
---------- ----------
<S> <C> <C>
Buildings....................... $ 501,030 $ 475,615
Land and improvements........... 164,492 164,719
--------- ---------
665,522 640,334
Less accumulated depreciation... (172,934) (149,237)
--------- ---------
$ 492,588 $ 491,097
========= =========
</TABLE>
The Company, as lessee, has entered into noncancelable operating leases
expiring at various dates through 2023. Rental expense under these leases
totalled $1.7 million in 1995 and $2.8 million in 1994, rental expense and
related sublease income totalled $4 million and $1.3 million in 1993. Future
minimum lease payments as of December 31, 1995 are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
MINIMUM
PAYMENTS
--------
<S> <C>
1996......... $1,051
1997......... 939
1998......... 772
1999......... 694
2000......... 687
Thereafter... 3,638
------
$7,781
======
</TABLE>
F-15
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9. RENTALS, COSTS AND NET OPERATING INCOME BY PROPERTY TYPE
Net operating income before interest and depreciation is summarized by
property type as follows (in thousands):
<TABLE>
<CAPTION>
NET
RENTAL PROPERTY OPERATING
1995 REVENUE OPERATING COSTS INCOME
--------- ---------------- ----------
<S> <C> <C> <C>
Income producing properties
Industrial buildings........ $ 50,716 $(11,012) $39,704
Office buildings............ 28,662 (12,179) 16,483
Retail buildings............ 11,363 (2,940) 8,423
Land development............ 4,886 (3,310) 1,576
Land leases................. 7,200 (1,026) 6,174
-------- -------- -------
102,827 (30,467) 72,360
Land holdings
Developable properties...... 2,770 (3,685) (915)
Natural resources........... 1,320 (2,256) (936)
Properties held for sale.... 1,151 (3,168) (2,017)
-------- -------- -------
5,241 (9,109) (3,868)
-------- -------- -------
$108,068 $(39,576) $68,492
======== ======== =======
<CAPTION>
NET
RENTAL PROPERTY OPERATING
1994 REVENUE OPERATING COSTS INCOME
--------- --------------- ---------
<S> <C> <C> <C>
Income producing properties
Industrial buildings........ $ 50,650 $(11,837) $38,813
Office buildings............ 29,619 (11,220) 18,399
Retail buildings............ 7,339 (2,315) 5,024
Land development............ 4,164 (3,201) 963
Land leases................. 7,414 (1,037) 6,377
-------- -------- -------
99,186 (29,610) 69,576
Land holdings
Developable properties...... 3,133 (3,967) (834)
Natural resources........... 911 (2,374) (1,463)
Properties held for sale.... 1,202 (3,798) (2,596)
-------- -------- -------
5,246 (10,139) (4,893)
-------- -------- -------
$104,432 $(39,749) $64,683
======== ======== =======
</TABLE>
F-16
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
<TABLE>
<CAPTION>
NET
RENTAL PROPERTY OPERATING
1993 REVENUE OPERATING COSTS INCOME
--------- ---------------- ----------
<S> <C> <C> <C>
Income producing properties
Industrial buildings........ $ 51,003 $(12,113) $38,890
Office buildings.......... 28,470 (11,063) 17,407
Retail buildings.......... 6,748 (2,298) 4,450
Land development.......... 5,010 (2,939) 2,071
Land leases............... 8,362 (1,381) 6,981
-------- -------- -------
99,593 (29,794) 69,799
Land holdings
Developable properties.... 3,493 (3,916) (423)
Natural resources......... 3,352 (3,981) (629)
Properties held for sale.. 3,106 (3,808) (702)
-------- -------- --------
9,951 (11,705) (1,754)
-------- -------- -------
$109,544 $(41,499) $68,045
======== ======== =======
</TABLE>
NOTE 10. PROPERTY SALES
The Company's sales consist of the following (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
--------- ---------------- ----------
<S> <C> <C> <C>
Non-strategic land
Sales...................... $ 62,199 $ 32,298 $26,444
Cost of sales.............. 29,410 22,024 15,993
-------- -------- -------
Gain $ 32,789 $ 10,274 $10,451
======== ======== =======
Development properties
Sales....................... $ 3,224 $ - $ -
Cost of sales............... 2,271 - -
-------- -------- -------
Gain $ 953 $ - $ -
======== ======== =======
Buildings
Sales....................... $ - $ 21,330 $30,157
Cost of sales............... - 18,411 21,547
-------- -------- -------
Gain $ - $ 2,919 $ 8,610
======== ======== =======
Ground leases
Sales....................... $ - $ 142 $15,968
Cost of sales............... - 28 1,864
-------- -------- -------
Gain $ - $ 114 14,104
======== ======== =======
Total
Sales....................... $ 65,423 $ 53,770 $72,569
Cost of sales............... 31,681 40,463 39,404
-------- -------- -------
Gain $ 33,742 $ 13,307 $33,165
======== ======== =======
</TABLE>
F-17
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
NOTE 11. OTHER INCOME (EXPENSE)
Other income (expense) is summarized as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Litigation recovery (accrual)........... $ 6,450 $ - $ (8,300)
Environmental (expense) recovery, net... (7,411) 246 (4,337)
Restructuring costs..................... - (3,100) -
Conversion of debenture................. - - (29,552)
All other............................... (533) 84 140
------- ------- --------
$(1,494) $(2,770) $(42,049)
======= ======= =========
</TABLE>
NOTE 12. EMPLOYEE BENEFIT AND STOCK OPTION PLANS
The Company has a profit sharing and savings plan for all employees.
Funding consists of employee contributions along with matching and discretionary
contributions by the Company. Total expense for the Company under this plan was
$.2 million, $.6 million and $.6 million in 1995, 1994 and 1993.
The Company has various plans through which employees may purchase common
stock of the Company.
The Incentive Stock Compensation Plan (Substitute Plan) was adopted to
provide substitute awards to employees whose awards under certain plans of the
former parent company, Santa Fe Pacific Corporation (SFP) were forfeited as a
result of the Company's spin-off from SFP in 1990. The number of shares,
exercise price and expiration dates of these awards were set so the participant
retained the full unrealized potential value of the original SFP grant. Options
became exercisable after March 5, 1992 and expire from 1997 through 1999. The
Company also has two stock option plans under which the Board of Directors may
issue options to purchase up to 500,000 shares of common stock at a price not
less than the fair market value at the date of grant. Options are exercisable
no earlier than six months from the date of grant and generally expire ten years
after the date of grant. All options granted to date are exercisable in
installments on a cumulative basis at a rate of 25% each year commencing on the
first anniversary of the date of grant.
Under the Executive Stock Option Plan, the Board of Directors may issue
non-qualified stock options to officers and directors to purchase up to
4,250,000 shares of common stock at a price not less than fair market value at
the date of grant. Options are exercisable no earlier than six months from the
date of grant and generally expire ten years after the date of grant. Each non-
management director is automatically granted an option, upon initial election to
the Board of Directors, to purchase 5,000 shares of common stock at a price of
127.63% of the fair market value on the date of grant, increasing 5% on each
anniversary of the grant date commencing on the sixth anniversary. These
options are exercisable in installments on a cumulative basis at a rate of 20%
each year. The exercise price for all other options will be no less than the
fair market value on the date of grant. Certain of these options are
exercisable in increments based on stock price performance benchmarks, and
others are exercisable based upon time vesting requirements.
F-18
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
Transactions under these plans during 1994 and 1995 are summarized below:
<TABLE>
<CAPTION>
EXECUTIVE
SUBSTITUTE STOCK STOCK
PLAN OPTION PLANS OPTION PLAN
------------- ------------ -----------
<S> <C> <C> <C>
Outstanding at December 31, 1993............ 385,155 74,000 1,036,000
Granted..................................... - 18,000 2,088,500
Expired..................................... (257,435) 40,500 1,524,000
------------- ------------ -----------
Outstanding at December 31, 1994............ 127,720 51,500 1,600,500
Granted..................................... - 205,886 1,099,330
Expired..................................... (2,414) (9,500) (195,500)
------------- ------------ -----------
Outstanding at December 31, 1995............ 125,306 247,886 2,504,330
============= ============ ============
Exercise price range at December 31, 1995... $10.70-$19.18 $5.475-$12.25 $5.58-$13.78
Exercisable at December 31, 1995............ 125,306 35,625 116,000
Available for grant at December 31, 1995.... - 252,114 1,745,670
</TABLE>
The Company intends to adopt the disclosure requirements of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" beginning in 1996.
NOTE 13. CAPITAL STOCK
The Company has authorized the issuance of 50 million shares of $.01 par
value preferred stock. As of December 31, 1995 and 1994, the Company has
outstanding 3,449,999 shares of $3.75 Series A Cumulative Convertible Preferred
Stock (Series A preferred stock). The Series A preferred stock has an annual
dividend of $3.75 per share, a stated value of $50 per share and a liquidation
preference of $50 per share plus accrued and unpaid dividends. It is
convertible into common stock at a price of $9.06 per common share, subject to
adjustment in certain events. It is also redeemable, at the option of the
Company, at any time after February 16, 1996, at $52.625 per share and
thereafter at prices declining to $50 per share on or after February 16, 2003.
Concurrently with the issuance of the Series A preferred stock, the Company
converted a convertible debenture (which had an accreted value of $111.4
million) into common stock with a value of $141 million. This was treated as a
non-cash item in the 1993 statement of cash flows. At the time, the Company
incurred a non-recurring non-cash expense of $29.6 million ($28.3 million net of
income tax benefit) representing the excess of the value of the common stock
issued over the accreted value of the debenture at the date of conversion.
The Company also has outstanding 3,000,000 shares $3.625 Series B
Cumulative Convertible Exchangeable Preferred Stock (Series B preferred stock).
The Series B preferred stock has an annual dividend of $3.625 per share, a
stated value of $50 per share and a liquidation preference of $50 per share plus
accrued and unpaid dividends. It is convertible into the Company's common
stock at a price of $9.80 per common share, subject to adjustment in certain
events. The Series B preferred stock is exchangeable, at the Company's option,
at any time after November 15, 1995, into 7.25% Convertible Subordinated
Debentures due November 15, 2018, at a rate of $50 of debentures for each share
of Series B preferred stock. It is also redeemable, at the option of the
Company, at any time after November 15, 1996, at $52.5375 per share and
thereafter at prices declining to $50 per share on or after November 15, 2003.
F-19
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
The Company has authorized the issuance of 150 million shares of $.01 par
value common stock. As of December 31, 1995 and 1994, the Company has
72,967,236 shares outstanding. The Company has reserved 19,040,000 and
15,306,000 shares of common stock for conversion of the Series A and Series B
preferred stock, 8,875,000 shares pursuant to various compensation programs,
and 2,000,000 shares for acquisitions.
NOTE 14. COMMITMENTS AND CONTINGENCIES
In April 1991, a lawsuit was brought against the Company alleging breach of
contract for a finder's fee in connection with an August 1990 sale of land in
Fremont, California. On November 1, 1993, the jury returned a verdict in favor
of the plaintiff and made an award of approximately $440,000 which, together
with pre-judgment interest, totalled approximately $600,000. Additionally, the
jury awarded approximately $7.7 million in punitive damages for what it found
was the Company's bad faith denial of an alleged contract. While the Company
was vigorously pursuing an appeal, it provided $8.3 million as an other expense
in the 1993 consolidated statement of operations. In December 1995, the Company
reached a settlement with the plaintiff and reversed $7.5 million of the expense
in the 1995 consolidated statement of income.
The Company has obtained standby letters of credit and surety bonds in favor
of local municipalities or financial institutions to guarantee performance on
real property improvements or financial obligations. As of December 31, 1995,
$21.3 million was outstanding, including a $12.4 million surety bond related to
the lawsuit described above.
The Company, as a partner in certain joint ventures, has made certain
financing guarantees (Note 6).
The Company is a party to a number of legal actions arising in the ordinary
course of business. While the Company cannot predict with certainty the final
outcome of these proceedings, considering the substantial legal defenses
available, management believes that none of these actions, when finally
resolved, will have a material adverse effect on the consolidated financial
position, results of operations or cash flows of the Company.
Inherent in the operations of the real estate business is the possibility
that environmental pollution conditions may relate to properties owned or
previously owned. The Company may be required in the future to take action to
correct or reduce the environmental effects of prior disposal or release of
hazardous substances by third parties, the Company, or its corporate
predecessors. Future environmental costs are difficult to estimate due to such
factors as the unknown magnitude of possible contamination, the unknown timing
and extent of the corrective actions which may be required, the determination of
the Company's liability in proportion to other responsible parties, and the
extent to which such costs are recoverable from insurance.
F-20
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
At December 31, 1995, management estimates that future costs for remediation
of identified or suspected environmental contamination which will be treated as
an expense will be approximately $13.8 million, and has provided a reserve for
that amount. It is anticipated that such costs will be incurred over the next
ten years. Management also estimates that similar costs relating to the
Company's properties to be developed or sold may range from $18 million to $59
million. These amounts will be capitalized as components of development costs
when incurred, which is anticipated to be over a period of twenty years, or will
be deferred and charged to cost of sales when the properties are sold. These
estimates were developed based on extensive reviews which took place over
several years based upon then prevailing law and identified site conditions.
Because of the breadth of its portfolio, the Company is unable to review
extensively each property on a regular basis. Such estimates are not precise
and are always subject to the availability of further information about the
prevailing conditions at the site, the future requirements of regulatory
agencies and the availability of other parties to pay some or all of such costs.
NOTE 15. SUBSEQUENT EVENT
In March 1996, the Company acquired The Akins Companies, a residential real
estate company involved in home building, community development and project
management services, primarily in Southern California. The acquisition price
will be paid in the form of Catellus common stock with a market value of
approximately $9 million, and is expected to be accounted for as a pooling of
interests.
The Company will form a new entity, Catellus Residential Group, that will
develop the Company's residential land holdings, projects previously started by
Akins, and new development activities on property owned by others.
F-21
<PAGE>
SUMMARIZED QUARTERLY RESULTS (UNAUDITED)
The Company's earnings and cash flow are determined to a large extent by
property sales. Sales and net income have fluctuated significantly from quarter
to quarter, as evidenced by the following summary of unaudited quarterly
consolidated results of operations. Property sales fluctuate from quarter to
quarter, reflecting general market conditions and the Company's intent to sell
property when it can obtain attractive prices. Cost of sales may also vary
widely because it is determined by the Company's historical cost basis in the
underlying land.
<TABLE>
<CAPTION>
1995 1994
--------------------------------------------- ---------------------------------------------
FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH
--------- --------- --------- ---------- --------- --------- --------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rental revenues.................... $ 26,898 $ 26,831 $ 27,181 $ 27,158 $ 25,933 $ 26,899 $ 25,448 $ 26,152
Property operating costs........... 9,166 9,685 9,535 11,190 10,026 9,510 9,993 10,220
Gain on sales of property.......... 5,574 1,626 1,702 24,840 155 4,929 7,280 943
Adjustment to carrying value of
property.......................... - - - (102,400) - - - (24,100)
Other income (expense)............. (14,360) (13,498) (14,687) (11,809) (13,511) (10,837) (14,872) (18,476)
Net income (loss).................. 5,358 3,143 2,756 (44,259) 1,469 6,598 5,035 (15,549)
Net income (loss) per common share. $ (.01) $ (.04) $ (.04) $ (.69) $ (.06) $ .01 $ (.01) $ (.30)
</TABLE>
F-22
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Board of Directors
and Stockholders of Catellus
Development Corporation
Our audits of the consolidated financial statements referred to in our report
dated February 12, 1996, appearing on page F-2 of this Form 10-K of Catellus
Development Corporation, also included an audit of the Financial Statement
Schedules listed in Item 14(a)(2) of this Form 10-K. In our opinion, these
Financial Statement Schedules present fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements.
Price Waterhouse LLP
San Francisco, California
February 12, 1996
S-1
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
----------------------
BALANCE AT CHARGED TO CHARGED TO
BEGINNING COSTS AND OTHER BALANCE AT
OF YEAR EXPENSES ACCOUNTS DEDUCTIONS END OF YEAR
---------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Allowance for doubtful receivables... $3,349 $ 50 $ - $1,511/(1)/ $ 1,888
Reserve for abandoned projects....... 404 732 - 852/(2)/ 284
Reserve for environmental costs...... 3,836 2,272 143 632/(3)/ 5,619
Year ended December 31, 1994..........
Allowance for doubtful receivables... 1,888 1,001 - 1,026/(1)/ 1,863
Reserve for abandoned projects....... 284 732 - 39/(2)/ 977
Reserve for environmental costs...... 5,619 890 1,886 - 8,395
Year ended December 31, 1995
Allowance for doubtful receivables... 1,863 504 - 616/(1)/ 1,751
Reserve for abandoned projects....... 977 407 - 38/(2)/ 1,346
Reserve for environmental costs...... 8,395 5,389 - 5/(3)/ 13,779
</TABLE>
- ---------------------
Notes:
(1) Balances written off as uncollectible.
(2) Costs of unsuccessful projects written off.
(3) Environmental costs incurred.
S-2
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COST CAPITALIZED
INITIAL COST TO SUBSEQUENT
CATELLUS TO ACQUISITION
------------------------- --------------------------
BUILDINGS & CARRYING
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS IMPROVEMENTS COSTS
- ----------- ------------ --------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Income Producing Properties:
Mission Bay, San Francisco,
CA......................... $ - $ 80,587/(6)/ $ 3,952 $ (4,713)/(7)/ $ 59,282
Other properties
less than 5% of total...... 456,565 150,018 43,191 502,133 144,422
-------- -------- -------- -------- --------
456,565 230,605 47,143 497,420 203,704
-------- -------- -------- -------- --------
Land Holdings................ 29,690 152,796 11,697 44,758 30,872
-------- -------- -------- -------- --------
Total........................ $486,255 $383,401 $ 58,840 $542,178 $234,576
======== ======== ======== ======== ========
<CAPTION>
GROSS AMOUNT AT WHICH
CARRIED LIFE ON WHICH
AT CLOSE OF PERIOD DEPRECIATION
(f)(2)(3)(4) IN LATEST
-------------------------------------- DATE OF INCOME
BUILDINGS AND ACCUMULATED COMPLETION OF DATE STATEMENT IS
DESCRIPTION LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED COMPUTED
- ----------- --------- ------------ --------- ------------ ------------ -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Income Producing Properties:
Mission Bay, San Francisco,
CA......................... $ 80,587 $ 58,521 $ 139,108 $ 2,527 N/A various (5)
Other properties
less than 5% of total...... 150,018 689,746 839,764 171,021 various various (5)
-------- -------- ---------- --------
230,605 748,267 978,872 173,548
-------- -------- ---------- --------
Land Holdings................ 152,796 87,327 240,123 3,764 N/A various (5)
-------- -------- ---------- --------
Total........................ $383,401 $835,594 $1,218,995 $177,312
======== ======== ========== ========
</TABLE>
- ----------------------
Notes:
(1) A reserve of $1,346,000 against predevelopment has been established for
projects to be abandoned.
(2) The aggregate cost for Federal income tax purposes is approximately
$972,000,000.
(3) See Attachment A to Schedule III for reconciliation of beginning of period
total to total at close of period.
(4) Excludes investments in joint ventures and furniture and equipment.
(5) Reference is made to Note 2 to the Consolidated Financial Statements for
information related to depreciation.
(6) Reflects inclusion of an additional parcel into Mission Bay.
(7) Net incremental revenues.
S-3
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
ATTACHMENT A TO SCHEDULE III
RECONCILIATION OF COST OF REAL ESTATE AT BEGINNING OF PERIOD
WITH TOTAL AT END OF PERIOD
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Balance at January 1............................ $1,276,955 $1,259,803 $1,276,334
---------- ---------- ----------
Additions during period:
Acquisitions through foreclosure............. - - 523
Other acquisitions........................... 9,326 - 15
Improvements................................. 58,967 71,096 57,360
Reclassification from other accounts......... 270 591 -
---------- ---------- ----------
Total additions................................. 68,563 71,687 57,898
---------- ---------- ----------
Deductions during period:
Cost of real estate sold..................... 23,716 39,883 34,554
Other:
Write-down of properties to estimated net
realizable value.......................... 102,400 11,800 32,500
Direct write-off of costs................... - - 1,261
Contribution to joint venture............... - 2,120 -
Write-down of property due to purchase
price adjustments......................... - - 2,796
Reclassification due to demolition.......... - - 1,952
Reclassification to personal property
and other accounts......................... - - 217
Increase reserve for abandoned projects..... 407 732 732
Other....................................... - - 417
---------- ---------- ----------
Total deductions.......................... 126,523 54,535 74,429
---------- ---------- ----------
Balance at December 31.......................... $1,218,995 $1,276,955 $1,259,803
========== ========== ==========
</TABLE>
RECONCILIATION OF REAL ESTATE ACCUMULATED DEPRECIATION
AT BEGINNING OF PERIOD WITH TOTAL AT END OF PERIOD
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Balance at January 1.......... $154,002 $133,923 $113,055
-------- -------- --------
Additions during period:
Charged to expense......... 24,342 24,706 26,850
-------- -------- --------
Deductions during period:
Cost of real estate sold... 795 4,549 4,030
Other...................... 237 78 1,952
-------- -------- --------
Total deductions.......... 1,032 4,627 5,982
-------- -------- --------
Balance at December 31........ $177,312 $154,002 $133,923
======== ======== ========
</TABLE>
S-4
<PAGE>
EXHIBIT 3.4
ADOPTED BY THE BOARD OF DIRECTORS OF CATELLUS DEVELOPMENT
CORPORATION AT A MEETING HELD ON AUGUST 1, 1990, AND
AMENDED BY THE BOARD OF DIRECTORS AT MEETINGS HELD ON
MAY 2, 1991, FEBRUARY 27, 1992, OCTOBER 16, 1992,
APRIL 20, 1994 AND JANUARY 31, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BY-LAWS
OF
CATELLUS DEVELOPMENT CORPORATION
A DELAWARE CORPORATION
______________________________
<PAGE>
INDEX
PAGE
----
ARTICLE 1 -- Meetings of Stockholders........... 1
Section 1.1. Annual Meeting..................... 1
Section 1.2. Special Meetings................... 1
Section 1.3. Place and Time of Meetings......... 1
Section 1.4. Notice of Meetings; Waiver of
Notice........................... 1
Section 1.5. Quorum............................. 2
Section 1.6. Voting; Proxies.................... 2
Section 1.7. List of Stockholders............... 2
Section 1.8. Action by Consent Without a Meeting 3
ARTICLE 2 -- Board of Directors................. 3
Section 2.1. Number, Qualification, Election
and Term of Directors............ 3
Section 2.2. Quorum and Manner of Acting........ 4
Section 2.3. Place of Meetings.................. 4
Section 2.4. Annual and Regular Meetings........ 4
Section 2.5. Special Meetings................... 4
Section 2.6. Notice of Meetings; Waiver of
Notice........................... 4
Section 2.7. Board or Committee Action
Without a Meeting................ 5
Section 2.8. Participation in Board or
Committee Meetings by Conference
Telephone........................ 5
Section 2.9. Resignation and Removal of
Directors........................ 5
Section 2.10. Vacancies.......................... 5
Section 2.11. Compensation....................... 5
ARTICLE 3 -- Committees......................... 5
Section 3.1. Committees of the Board............ 5
Section 3.2. Rules Applicable to Committees..... 6
ARTICLE 4 -- Officers........................... 6
Section 4.1. Number; Security................... 6
Section 4.2. Election; Term of Office........... 6
Section 4.3. Subordinate Officers............... 6
Section 4.4. Resignation and Removal of
i
<PAGE>
Officers......................... 6
Section 4.5. Vacancies.......................... 7
Section 4.6. Chairman of the Board.............. 7
Section 4.7. President.......................... 7
Section 4.8. Vice President..................... 7
Section 4.9. Treasurer.......................... 7
Section 4.10. Secretary.......................... 7
Section 4.11. Salaries........................... 8
ARTICLE 5 -- Shares............................. 8
Section 5.1. Certificates....................... 8
Section 5.2. Transfers.......................... 8
Section 5.3. Determination of Stockholders
of Record........................ 8
ARTICLE 6 -- Indemnification.................... 8
ARTICLE 7 -- Miscellaneous...................... 9
Section 7.1. Seal............................... 9
Section 7.2. Fiscal Year........................ 9
Section 7.3. Voting of Shares in Other
Corporations..................... 9
Section 7.4. Amendments......................... 9
ii
<PAGE>
BY-LAWS
OF
CATELLUS DEVELOPMENT CORPORATION
1. MEETINGS OF STOCKHOLDERS.
------------------------
1.1. ANNUAL MEETING. The annual meeting of stockholders shall be
--------------
held during the month of May in each year, or as soon thereafter as practicable,
and shall be held at a place and time determined by the board of directors (the
"Board").
1.2. SPECIAL MEETINGS. Special meetings of the stockholders may be
----------------
called by resolution of the Board or by the chairman of the board or the
president and shall be called by the president or secretary upon the written
request (stating the purpose or purposes of the meeting) of the holder or
holders of 10% or more of the then outstanding voting capital stock of the
corporation or a majority of the directors then in office. Only business
related to the purposes set forth in the notice of the meeting may be transacted
at a special meeting.
1.3. PLACE AND TIME OF MEETINGS. Meetings of the stockholders may be
--------------------------
held in or outside Delaware at the place and time specified by the Board or the
directors or stockholders requesting the meeting.
1.4. NOTICE OF MEETINGS; WAIVER OF NOTICE. Written notice of each
------------------------------------
meeting of stockholders shall be given to each stockholder entitled to vote at
the meeting, except that (a) it shall not be necessary to give notice to any
stockholder who submits a signed waiver of notice before or after the meeting,
and (b) no notice of an adjourned meeting need be given except when required
under Section 1.5 of these by-laws or by law. Each notice of a meeting shall be
given, in writing, personally, via facsimile or by mail, not less than 10 nor
more than 60 days before the meeting and shall state the time and place of the
meeting, and unless it is the annual meeting, shall state at whose direction or
request the meeting is called and the purposes for which it is called. Notice
shall be deemed duly given when (i) delivered personally, (ii) sent via
facsimile (with receipt confirmed) or (iii) mailed to a stockholder at his
address on the corporation's records. The attendance of any stockholder at a
meeting, without protesting at the beginning of the meeting that
<PAGE>
the meeting is not lawfully called or convened, shall constitute a waiver of
notice by him.
1.5. QUORUM. At any meeting of stockholders, the presence in person
------
or by proxy of the holders of a majority of the shares entitled to vote shall
constitute a quorum for the transaction of any business. In the absence of a
quorum a majority in voting interest of those present or, if no stockholders are
present, any officer entitled to preside at or to act as secretary of the
meeting, may adjourn the meeting until a quorum is present. At any adjourned
meeting at which a quorum is present any action may be taken which might have
been taken at the meeting as originally called. No notice of an adjourned
meeting need be given if the time and place are announced at the meeting at
which the adjournment is taken except that, if adjournment is for more than
thirty days or if, after the adjournment, a new record date is fixed for the
meeting, notice of the adjourned meeting shall be given pursuant to Section 1.4.
1.6. VOTING; PROXIES. Each stockholder of record shall be entitled
---------------
to one vote for every share registered in his name. Corporate action to be
taken by stockholder vote, other than the election of directors, shall be
authorized by a majority of the votes cast at a meeting of stockholders, except
as otherwise provided by the corporation's Restated Certificate of Incorporation
or by law or by Section 1.8 of these by-laws. Directors shall be elected in the
manner provided in Section 2.1 of these by-laws. Voting, including election of
directors, need not be by written ballot unless requested by a stockholder at
the meeting or ordered by the chairman of the meeting. Each stockholder
entitled to vote at any meeting of stockholders or to express consent or to
dissent from corporate action in writing without a meeting may authorize another
person to act for him by proxy. Every proxy must be signed by the stockholder
or his attorney-in-fact. No proxy shall be valid after three years from its
date unless it provides otherwise.
1.7. LIST OF STOCKHOLDERS. Not less than 10 days prior to the date
--------------------
of any meeting of stockholders, the secretary of the corporation shall prepare a
complete list of stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in his name. For a period of not less than 10 days prior to
the meeting, the list shall be available during ordinary business hours for
inspection by any stockholder for any purpose germane to the meeting. During
this period, the list shall be kept either (a) at a place within the city where
the
2
<PAGE>
meeting is to be held, if that place shall have been specified in the notice of
the meeting, or (b) if not so specified, at the place where the meeting is to be
held. The list shall also be available for inspection by stockholders at the
time and place of the meeting.
1.8. ACTION BY CONSENT WITHOUT A MEETING.
-----------------------------------
(a) Subject to compliance with the procedures set forth in Section
1.8(b) of these by-laws, if required, any action required or permitted to be
taken at any meeting of stockholders may be taken without a meeting, and without
a vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voting.
Prompt notice of the taking of any such action shall be given to those
stockholders who did not consent in writing.
(b) So long as any of the corporation's securities are listed on the
New York Stock Exchange, action by the holders of any class of security so
listed may not be taken by consent in writing pursuant to this Section 1.8
except with the prior approval of the New York Stock Exchange, and otherwise in
accordance with this Section 1.8(b). A record date for the determination of
stockholders entitled to express consent to or dissent from the action to be
taken shall be established in accordance with Section 5.3 of these by-laws, and
material soliciting the written consent of stockholders shall be sent to each
stockholder who would be entitled to vote on the action to be taken if such
action were being considered at a meeting of stockholders. Such solicitation
materials shall include the form of written consent, which shall set forth the
action to be taken, and shall otherwise comply with the proxy statement
disclosure standards then applicable to the corporation. The solicitation
materials shall be deemed duly given when (i) delivered personally, (ii) sent
via facsimile (with receipt confirmed) or (iii) mailed to a stockholder at his
address on the corporation's records. The solicitation period, from the date
the solicitation materials are first given to stockholders until and including
the date by which stockholders must return such written consent, shall be not
less than 30 days. Notwithstanding anything to the contrary contained in these
by-laws, no action to be taken by written consent may be taken until the
expiration of the solicitation period, whether or not the requisite consents
have been signed prior to such expiration.
3
<PAGE>
2. BOARD OF DIRECTORS.
------------------
2.1. NUMBER, QUALIFICATION, ELECTION AND TERM OF DIRECTORS. The
-----------------------------------------------------
business of the corporation shall be managed by the Board, which shall consist
of nine directors. The number of directors may be changed by resolution of a
majority of the entire Board or by the stockholders, but no decrease may shorten
the term of any incumbent director. Directors shall be elected at each annual
meeting of stockholders by a plurality of the votes cast and shall hold office
until the next annual meeting of stockholders and until the election and
qualification of their respective successors, subject to the provisions of
Section 2.9. As used in these by-laws, the term "entire Board" means the total
number of directors which the corporation would have if there were no vacancies
on the Board.
2.2. QUORUM AND MANNER OF ACTING. A majority of the entire Board
---------------------------
shall constitute a quorum for the transaction of business at any meeting, except
as provided in Section 2.10 of these by-laws. Action of the Board shall be
authorized by the vote of a majority of the directors present at the time of the
vote if there is a quorum, unless otherwise provided by law or these by-laws.
In the absence of a quorum a majority of the directors present may adjourn any
meeting from time to time until a quorum is present.
2.3. PLACE OF MEETINGS. Meetings of the Board may be held in or
-----------------
outside Delaware.
2.4. ANNUAL AND REGULAR MEETINGS. Annual meetings of the Board, for
---------------------------
the election of officers and consideration of oth er matters, shall be held
either (a) without notice immediately after the annual meeting of stockholders
and at the same place, or (b) as soon as practicable after the annual meeting of
stockholders, on notice as provided in Section 2.6 of these by-laws. Regular
meetings of the Board may be held without notice at such times and places as the
Board determines. If the day fixed for a regular meeting is a legal holiday,
the meeting shall be held on the next business day.
2.5. SPECIAL MEETINGS. Special meetings of the Board may be called
----------------
by the chairman of the board, the president or by a majority of the directors.
Only business related to the purposes set forth in the notice of meeting may be
transacted at a special meeting.
4
<PAGE>
2.6. NOTICE OF MEETINGS; WAIVER OF NOTICE. Notice of the time and
-------------------------------------
place of each special meeting of the Board, and of each annual meeting not held
immediately after the annual meeting of stockholders and at the same place,
shall be given to each director by mailing it to him at his residence or usual
place of business at least three days before the meeting or by delivering notice
to him personally (including by telephone) or via facsimile at least one day
before the meeting. Notice shall be deemed duly given when (a) delivered
personally, (b) sent via facsimile (with receipt confirmed) or (c) mailed to a
director's residence or usual place of business. Notice of a special meeting
shall also state the purpose or purposes for which the meeting is called.
Notice need not be given to any director who submits a signed waiver of notice
before or after the meeting or who attends the meeting without protesting at the
beginning of the meeting the transaction of any business because the meeting was
not lawfully called or convened. Notice of any adjourned meeting need not be
given, other than by announcement at the meeting at which the adjournment is
taken.
2.7. BOARD OR COMMITTEE ACTION WITHOUT A MEETING. Any action
-------------------------------------------
required or permitted to be taken by the Board or by any committee of the Board
may be taken without a meeting if all of the members of the Board or of the
committee consent in writing to the adoption of a resolution authorizing the
action. The resolution and the written consents by the members of the Board or
the committee shall be filed with the minutes of the pro ceedings of the Board
or of the committee.
2.8. PARTICIPATION IN BOARD OR COMMITTEE MEETINGS BY CONFERENCE
----------------------------------------------------------
TELEPHONE. Any or all members of the Board or of any committee of the Board may
- ---------
participate in a meeting of the Board or of the committee by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other. Participation by such means
shall constitute presence in person at the meeting.
2.9. RESIGNATION AND REMOVAL OF DIRECTORS. Any director may resign
------------------------------------
at any time by delivering his resignation in writing to the president or
secretary of the corporation, to take effect at the time specified in the
resignation; the acceptance of a resignation, unless required by its terms,
shall not be necessary to make it effective. Any or all of the directors may be
removed at any time, either with or without cause, by vote of the stockholders.
5
<PAGE>
2.10. VACANCIES. Any vacancy in the Board, including one created by
---------
an increase in the number of directors, may be filled for the unexpired term by
a majority vote of the remaining directors, though less than a quorum.
2.11. COMPENSATION. Directors shall receive such compensation as the
------------
Board determines, together with reimbursement of their reasonable expenses in
connection with the performance of their duties. A director may also be paid
for serving the corporation, its affiliates or subsidiaries in other capacities.
3. COMMITTEES.
----------
3.1. COMMITTEES OF THE BOARD. The Board, by resolution adopted by a
-----------------------
majority of the entire Board, may designate committees of directors of one or
more directors, which shall serve at the Board's pleasure and have such powers
and duties as the Board determines. No director who is also an officer of the
Corporation shall be eligible to serve as a member of the Audit, Compensation
and Benefit or Nominating Committee of the Board, or any committee performing a
similar function.
3.2. RULES APPLICABLE TO COMMITTEES. The Board may designate one or
------------------------------
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of any member of a committee, the member or members present at
a meeting of the committee and not disqualified, whether or not a quorum, may
unanimously appoint another director to act at the meeting in place of the
absent or disqualified member. All action of a committee shall be reported to
the Board at its next meeting. Each committee may adopt rules of procedure and
shall meet as provided by those rules or by resolutions of the Board.
4. OFFICERS.
--------
4.1. NUMBER; SECURITY. The executive officers of the corporation
----------------
shall be the chairman of the board, the president, one or more vice presidents
(which may include one or more executive or senior vice presidents, if the Board
so determines), a secretary and a treasurer. Any two or more offices may be
held by the same person. Unless otherwise required by law, the Board shall not
be required to fill a vacancy in an executive office. The Board may require any
officer, agent or employee to give security for the faithful performance of his
duties.
6
<PAGE>
4.2. ELECTION; TERM OF OFFICE. The executive officers of the
------------------------
corporation shall be elected annually by the Board and each such officer shall
hold office until the next annual meeting of the Board and until the election of
his successor, subject to the provisions of Section 4.4.
4.3. SUBORDINATE OFFICERS. The Board or the president may appoint
--------------------
subordinate officers (including assistant secretaries and assistant treasurers),
agents or employees, each of whom shall hold office for such period and have
such powers and duties as the Board or the president determines. The Board may
delegate to any other executive officer or to any committee the power to appoint
and define the powers and duties of any subordinate officers, agents or
employees. The president or the chief financial officer may designate in
writing any employee with the position of "Director" to execute and deliver, and
any other employee to attest, agreements, certificates and other documents on
behalf of the corporation in connection with any transaction authorized by the
Board of Directors, whether by specific resolution or pursuant to a delegation
of authority.
4.4. RESIGNATION AND REMOVAL OF OFFICERS. Any officer may resign at
-----------------------------------
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by its terms, shall not be
necessary to make it effective. Any officer appointed by the Board or appointed
by an executive officer or by a committee may be removed by the Board either
with or without cause, and in the case of an officer appointed by an executive
officer or by a committee, by the officer or committee who appointed him or by
the president.
4.5. VACANCIES. A vacancy in any office may be filled for the
---------
unexpired term in the manner prescribed in Sections 4.2 and 4.3 of these by-laws
for election or appointment to the of fice.
4.6. CHAIRMAN OF THE BOARD. The chairman of the board shall preside
---------------------
at all meetings of the Board and of the stockholders and shall have such powers
and duties as the Board assigns to him.
4.7. PRESIDENT. The president shall be the chief executive officer
---------
of the corporation and shall, in the absence of the chairman of the board,
preside at all meetings of the Board and of the stockholders. Subject to the
control of the Board, he
7
<PAGE>
shall have general supervision over the business of the corporation and shall
have such other powers and duties as presidents of corporations usually have or
as the Board assigns to him.
4.8. VICE PRESIDENT. Each vice president shall have such powers and
--------------
duties as the Board or the president assigns to him.
4.9. TREASURER. The treasurer shall be in charge of the
---------
corporation's books and accounts. Subject to the control of the Board, he shall
have such other powers and duties as the Board or the president assigns to him.
The Board may designate the treasurer or any other officer as the chief
financial officer of the corporation.
4.10. SECRETARY. The secretary shall be the secretary of, and keep
---------
the minutes of, all meetings of the Board and of the stockholders, shall be
responsible for giving notice of all meetings of stockholders and of the Board,
and shall keep the seal and apply it to any instrument requiring it. Subject to
the control of the Board, he shall have such powers and duties as the Board or
the president assigns to him. In the absence of the secretary from any meeting,
the minutes shall be kept by the person appointed for that purpose by the
presiding officer.
4.11. SALARIES. The Board may fix the officers' salaries, if any, or
--------
it may authorize the president to fix the salary of any other officer.
5. SHARES.
------
5.1. CERTIFICATES. The corporation's shares shall be represented by
------------
certificates in the form approved by the Board. Each certificate shall be signed
by the chairman of the board, the president or a vice president and by the
secretary or an assistant secretary, or the treasurer (or chief financial
officer) or an assistant treasurer, and shall be sealed with the corporation's
seal or a facsimile of the seal. Any or all of the signatures on the
certificate may be a facsimile.
5.2. TRANSFERS. Shares shall be transferable only on the
---------
corporation's books, upon surrender of the certificate for the shares, properly
endorsed. The Board may require satisfac tory surety before issuing a new
certificate to replace a certif icate claimed to have been lost or destroyed.
8
<PAGE>
5.3. DETERMINATION OF STOCKHOLDERS OF RECORD. The Board may fix, in
---------------------------------------
advance, a date as the record date for the determination of stockholders
entitled to notice of or to vote at any meeting of the stockholders, or to
express consent to or dissent from any proposal without a meeting, or to receive
pay ment of any dividend or the allotment of any rights, or for the purpose of
any other action. The record date may not be more than 60 or less than 10 days
before the date of the meeting or more than 60 days before any other action.
6. INDEMNIFICATION.
---------------
The corporation shall, to the fullest extent permitted by the General
Corporation Law of Delaware, as such law may be amended and supplemented from
time to time (the "Delaware law"), indemnify any director, officer or trustee
(each, an "indemnitee") which it shall have power to indemnify under Delaware
law against expenses, liabilities or other matters referred to in or covered by
Delaware law; provided, however, that the corporation shall not be required to
indemnify any indemnitee in connection with any proceeding initiated by such
indemnitee where such proceeding is not authorized by the Board. The
indemnification provided for in this Article 6 (a) shall not be deemed exclusive
of any other rights to which an indemnitee may be entitled under these by-laws,
by agreement or vote of stockholders or disinterested directors or otherwise,
both as to action in their official capacities and as to action in another
capacity while holding such office, (b) shall continue as to a person who has
ceased to be a director, officer or trustee and (c) shall inure to the benefit
of the heirs, executors and administrators of such a person. The corporation's
obligation to provide indemnification under this Article 6 shall be offset to
the extent of any other source of indemnification or any otherwise applicable
insurance coverage under a policy maintained by the corporation or any other
person.
Expenses incurred by a director or officer of the corporation in
defending a civil or criminal action, suit or proceeding by reason of the fact
that he is or was a director or officer of the corporation (or was serving at
the corporation's request as a director or officer of another corporation) shall
be paid by the corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the corporation as authorized by
Delaware law. Notwithstanding the foregoing, the corporation shall not be
9
<PAGE>
required to advance such expenses to any person who is a party to an action,
suit or proceeding brought by the corporation and approved by the majority of
the Board which alleges willful misappropriation of corporation assets by such
person, disclosure of confidential information in violation of such person's
fiduciary or contractual obligations to the corporation or any other willful or
deliberate breach in bad faith of such agent's duty to the corporation or its
stockholders.
7. MISCELLANEOUS.
-------------
7.1. SEAL. The Board shall adopt a corporate seal, which shall be in
----
the form of a circle and shall bear the cor poration's name and the year and
state in which it was incor porated.
7.2. FISCAL YEAR. The Board may determine the corporation's fiscal
-----------
year. Until changed by the Board, the cor poration's fiscal year shall be the
calendar year.
7.3. VOTING OF SHARES IN OTHER CORPORATIONS. Shares in other
--------------------------------------
corporations which are held by the corporation may be represented and voted by
the president or a vice president of this corporation or by proxy or proxies
appointed by one of them. The Board may, however, appoint some other person to
vote the shares.
7.4. AMENDMENTS. By-laws may be amended, repealed or adopted by the
----------
stockholders or by a majority of the entire Board, but any by-law adopted by the
Board may be amended or repealed by the stockholders.
10
<PAGE>
NOTES TO AMENDMENTS
-------------------
Section 1.2: Amended on August 1, 1990 to permit stockholders meeting to
-----------
be called at the request of holders.
Section 1.8: Added on August 1, 1990.
-----------
Section 2.1:
-----------
Amended on May 2, 1991 to reduce the number of directors from ten to nine.
Amended on October 16, 1992 to increase the number of directors from nine to
thirteen.
Amended on April 20, 1994 to reduce the number of directors from thirteen to
eleven.
Amended on January 31, 1996 to reduce the number of directors from eleven to
nine.
Section 3.1: Amended on October 16, 1992 to add the final sentence.
-----------
Section 4.3: Amended on February 27, 1992 to add the final sentence.
-----------
11
<PAGE>
California Public Employees'
Retirement Systems
Lincoln Plaza, 400 "P" Street
Sacramento, California 95814
November 14, 1995
Mr. Nelson C. Rising
President and Chief Executive Officer
Catellus Development Corporation
201 Mission Street
San Francisco, California 94105
Dear Mr. Rising:
Reference is made to the Agreement dated as of January 14, 1993 between
Catellus Development Corporation (the "Company") and Bay Area Real Estate
Investment Associates L.P. ("BAREIA"), and Amendment No. 1 thereto dated as of
January 14, 1993 (as so amended, the "BAREIA Agreement"), the Stockholders
Agreement dated as of January 29, 1993 by and among BAREIA, Olympia & York SF
Holdings Corporation ("O&Y"), Itel Corporation ("Itel") and the Company (the
"Stockholders Agreement"), and the Registration Rights Agreement dated as of
December 29, 1989 by and among the Company, O&Y, Itel, and BAREIA, and the First
Amendment to such Agreement dated as of January 29, 1993 (as so amended, the
"Registration Rights Agreement").
This will confirm that BAREIA is being liquidated and dissolved as of
November 14, 1995, and that the California Public Employees' Retirement System
("CalPERS"), as the sole limited partner of BAREIA, will become the sole holder
of the 29,999,605 shares of the Company's Common Stock and the 1,405,702 shares
of the Company's $3.7 Series A Cumulative Convertible Preferred Stock
(collectively, the "Shares") which currently are held by BAREIA. This also will
confirm our understanding that since Itel and O&Y each have ceased to own 5% of
the outstanding shares of the Company's Common Stock, those companies no longer
are parties which are bound by the Stockholders Agreement.
This further will confirm that CalPERS agrees to be bound by the terms of
the Registration Rights Agreement in accordance with Section 13 thereof.
This will confirm our understanding and agreement that effective as of the
date of this letter the BAREIA Agreement and the Stockholders Agreement will
have been terminated and will be of no further force and effect, and CalPERS
will be a Holder of Registrable Securities under the Registration Rights
Agreement and be entitled to the benefits of such Agreement with respect to the
Shares.
<PAGE>
Please sign and return the enclosed copy of the letter agreement to us if
the foregoing accurately reflects our understanding and agreement.
Very truly yours,
CALIFORNIA PUBLIC EMPLOYEES'
RETIREMENT SYSTEM
By: /s/ Sheryl Pressler
__________________________
Accepted and Confirmed:
CATELLUS DEVELOPMENT CORPORATION
By: /s/ Nelson C. Rising
__________________________________
<PAGE>
EXHIBIT 10.29
CATELLUS DEVELOPMENT CORPORATION
Amended and Restated
Employment Agreement
with
Nelson C. Rising
November 29, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Performance of Services.............................................. 2
- -----------------------
(a) Position............................................................ 2
- --------
(b) Commitment.......................................................... 2
- ----------
(c) Authority........................................................... 3
- ---------
(d) Annual Performance Review........................................... 4
- -------------------------
(e) Relocation.......................................................... 5
- ----------
(f) Disability.......................................................... 5
- ----------
(g) Agreement Term...................................................... 5
- --------------
(h) Subsidiary.......................................................... 5
- ----------
2. Compensation......................................................... 6
- ------------
(a) Salary.............................................................. 6
- ------
(b) Bonus............................................................... 6
- -----
(c) Stock Option........................................................ 6
- ------------
(d) Disability.......................................................... 7
- ----------
(e) Vacation............................................................ 7
- --------
(f) Benefits and Perquisites............................................ 8
- ------------------------
(g) Expenses............................................................ 8
- --------
3. Termination.......................................................... 8
- -----------
(a) Death............................................................... 8
- -----
(b) Permanently Disabled................................................ 8
- -------------------
(c) Cause............................................................... 9
- -----
(d) Constructive Discharge.............................................. 10
- ----------------------
(e) Termination by Executive............................................ 13
- ------------------------
(f) Mutual Agreement.................................................... 13
- ----------------
(g) Termination by Company Without Cause................................ 13
- ------------------------------------
(h) Notice of Termination............................................... 14
- ---------------------
(i) Date of Termination................................................. 14
- -------------------
4. Rights Upon Termination.............................................. 14
- -----------------------
5. Duties on Termination................................................ 18
- ---------------------
6. Mitigation and Set-Off............................................... 19
- ----------------------
7. Confidential Information............................................. 19
- ------------------------
8. Non-Disparagement.................................................... 20
- -----------------
9. Defense of Claims.................................................... 21
- -----------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
10. Lump Sum Payment to Executive in the Event of a Change of Control... 21
-----------------------------------------------------------------
11. Remedies............................................................ 26
--------
12. Nonalienation....................................................... 26
-------------
13. Amendment; Other.................................................... 27
----------------
14. Applicable Law...................................................... 27
--------------
15. Severability........................................................ 27
------------
16. Waiver of Breach.................................................... 27
----------------
17. Successors.......................................................... 28
----------
18. Notices............................................................. 28
-------
19. Arbitration of All Disputes......................................... 30
---------------------------
20. Costs of Enforcement................................................ 31
--------------------
21. Survival of Agreement............................................... 31
---------------------
22. Title and Headings.................................................. 31
------------------
23. Enforceability...................................................... 31
--------------
24. Indemnity........................................................... 31
---------
25. Acknowledgement by Executive........................................ 32
----------------------------
</TABLE>
<PAGE>
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-----------------------------------------
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement"), made and
entered into as of November 29, 1995 (the "Effective Date"), by and between
Nelson C. Rising (the "Executive") and Catellus Development Corporation, a
Delaware corporation having its principal executive offices in San Francisco,
California (the "Company");
WITNESSETH THAT:
---------------
WHEREAS, the Company is engaged in the business of developing, managing and
marketing commercial, industrial and other real estate; and
WHEREAS, the Executive has substantial experience and expertise in the
field of real estate development;
WHEREAS, the Company and Executive entered into an Employment Agreement
(the "Employment Agreement") on July 27, 1994 (the "Effective Date") under which
the Company agreed to secure the services of the Executive as President and
Chief Executive Officer of the Company and the Executive agreed to perform
services for the Company; and
1
<PAGE>
WHEREAS, the Company and the Executive desire to amend the Employment
Agreement and desire that this Agreement set forth all of the terms and
conditions of the Executive's employment by the Company.
NOW, THEREFORE, in consideration of the mutual agreements set forth below,
the Executive and the Company hereby agree as follows:
1. Performance of Services. The Executive shall be employed by the
-----------------------
Company in accordance with the following:
(a) Position. Subject to the terms of this Agreement, the Company hereby
--------
agrees to employ the Executive as the President and Chief Executive
Officer of the Company and each of its principal Subsidiaries during the
Agreement Term (both as defined below), and the Executive hereby agrees to
accept and remain in such employment during the Agreement Term. During the
Agreement Term, while the Executive is employed by the Company, the Board
shall use its best efforts to cause the Executive to continue to be
elected as a member of the Board.
(b) Commitment. At all times during the Agreement Term while the Executive is
----------
employed by the Company, the Executive shall devote his full time,
energies and talents to serving as the President and Chief Executive
Officer of the Company. Notwithstanding the foregoing, the Executive may
devote reasonable time to activities
2
<PAGE>
other than those required under this Agreement, including the supervision
of his personal investments and activities involving professional,
charitable, educational, religious and similar types of organizations,
speaking engagements, membership on the boards of directors of other
organizations, and similar activities, to the extent that such other
activities do not in the judgment of the Board inhibit the performance of
the Executive's duties under this Agreement, or conflict with the business
of the Company or any Subsidiary; provided, however, that the Executive
-----------------
shall not serve on the board of directors of any business, or hold any
other position with any business without the consent of the Board. The
Company has consented to the Executive retaining his ownership interest in
Maguire/Thomas Partners Master Investments, a California limited
partnership, which holds interests in various Maguire/Thomas projects, and
certain other business positions or interests, all as described in two
separate letters dated July 27, 1994 and identified by reference hereto.
(c) Authority. The Executive shall have the responsibility and authority for
---------
the overall conduct of the business of the Company and the Subsidiaries,
including responsibility for the management and operation of those
entities, and such additional responsibilities, powers and duties,
consistent with the foregoing, as the Board, and the respective boards of
directors of each of the Subsidiaries of which the Executive shall be an
officer, may from time to time prescribe. In the performance of his
duties, the Executive shall only be required to report to the Board as a
whole and not to the Chair thereof and, with respect to his positions as
an officer of Subsidiaries of the Company,
3
<PAGE>
the separate boards of directors of each such Subsidiary. The Executive
shall perform his duties faithfully and efficiently, subject to the
overall policies and directions of the Board and such other respective
boards of directors. The Company agrees that the duties which may be
assigned to the Executive shall be the usual and customary duties of the
offices to which he may from time to time be elected and shall not be
inconsistent with the provisions of the charter documents of the Company
or applicable law (both as in effect from time to time). The Executive
shall not, without his consent, be assigned tasks that would be
inconsistent with those of the President and Chief Executive Officer of
the Company. The Executive shall have the corporate authority that shall
reasonably be required to enable the discharge of duties in any of the
offices that he may hold. The Executive, as President and Chief Executive
Officer of the Company, shall be the senior executive, "leader" and
spokesperson for the Company, and he will use his best efforts to work in
"partnership" with the Chair of the Board, which position is, under
current Board policy and unless the Board otherwise determines, to be held
by a person other than the person serving as the President and Chief
Executive Officer, and shall not, in the event the current Board policy is
changed, be held by any full-time employee of the Company other than the
Executive.
(d) Annual Performance Review. The Board shall review the performance by the
-------------------------
Executive of his responsibilities as President and Chief Executive Officer
of the Company no less frequently than annually and shall communicate the
Board's assessment of such performance to the Executive by January 31 of
each year.
4
<PAGE>
(e) Relocation. In connection with his employment hereunder, and subject to
----------
the following provisions of this paragraph 1(e), the Executive shall not
be required, without his prior written consent, to relocate the Company
headquarters or to be based anywhere other than within 50 miles from the
site of the current headquarters of the Company.
(f) Disability. The Executive shall not be required to perform services under
----------
this Agreement during any period that he is Disabled. The Executive shall
be considered "Disabled" during any period in which he has a physical or
mental disability which renders him incapable, after reasonable
accommodation, of performing his duties under this Agreement. In the event
of a dispute as to whether the Executive is Disabled, the Company may
refer the same to a licensed practicing physician of the Company's choice,
and the Executive agrees to submit to such tests and examinations as such
physician shall deem appropriate.
(g) Agreement Term. For purposes of this Agreement, the term "Agreement Term"
--------------
means the period beginning on the Effective Date and ending on December
31, 2000.
(h) Subsidiary. For purposes of this Agreement, the term "Subsidiary" means
----------
any corporation, partnership, joint venture or other entity during any
period in which more than a fifty percent interest in such entity is
owned, directly or indirectly, by the Company (or a successor to the
Company), except to the extent that the Company is
5
<PAGE>
unable, whether by contractual restriction or otherwise, to exercise
control over any such entity.
2. Compensation. During the Agreement Term, while the Executive is
------------
employed by the Company, the Company shall compensate the Executive for his
services as follows:
(a) Salary. The Executive shall receive, in substantially equal monthly or
------
more frequent installments, a base salary of a minimum of $350,000
("Salary"), which shall be increased by 5% in 1996 and by 5% more each
year compounded annually.
(b) Bonus. The Executive shall be entitled to receive annual bonuses from the
-----
Company with an annual maximum bonus opportunity of 200% of the
Executive's then Salary ("Maximum Bonus Potential"). On or before January
31 of each year, commencing January 1, 1996, the Board shall establish
performance objectives for each year for the determination of the
Executive's bonus awards for such year, which objectives may include both
individual and corporate objectives and may include both qualitative and
quantitative standards.
(c) Stock Option. Concurrently with the execution of this Agreement, the
------------
Executive shall receive a stock option award, with a grant date of
November 29, 1995, to purchase 300,000 shares of stock of the Company in
accordance with the provisions of the Company's existing Amended and
Restated Executive Stock Option Plan, and the terms
6
<PAGE>
set forth in Exhibit A attached hereto (in addition to the options
covering 700,000 shares which the Executive now holds which shall be
modified as provided for in Exhibit B attached hereto).
(d) Disability. The Executive shall receive from the Company disability
----------
income replacement coverage which will provide for replacement of income,
to the extent available at a commercially reasonable rate of premiums,
during any period in which the Executive is Disabled if the disability
arose during the Agreement Term and prior to the Executive's Date of
Termination. During any period while the Executive is Disabled, and is
otherwise entitled to receive Salary under this Agreement, any Salary
payments to the Executive shall be reduced by the amount of any benefits
paid for the same period of time pursuant to such disability income
replacement coverage.
(e) Vacation. The Executive shall be entitled to four weeks paid vacation per
--------
year. The Executive shall be entitled to take such vacation at such time
or times (without regard to the accrual thereof) as he shall choose during
the first year of the Agreement Term and within each year thereafter, but
for purposes of calculation of amounts payable pursuant to Section
4(a)(ii) hereof, such vacation entitlement shall accrue solely in
accordance with the terms of the Company's vacation policy for executive
officers generally as in effect from time to time.
7
<PAGE>
(f) Benefits and Perquisites. The Executive shall be entitled to receive
------------------------
benefits to such extent as, and on terms no less favorable to the
Executive than, those benefits provided by the Company from time to time
to the Company's other senior management employees and consistent with the
memorandum (the "Benefits Memorandum") attached hereto as Exhibit C. The
Executive shall also be entitled to receive the perquisites that are set
forth in the Benefits Memorandum.
(g) Expenses. The Executive shall be authorized to incur reasonable expenses
--------
for entertainment, travel, meals, lodging and similar items in the conduct
of the Company's business. The Company shall reimburse the Executive for
all reasonable expenses so incurred from the Effective Date through the
expiration of the Agreement Term.
3. Termination. The Executive's employment with the Company during the
-----------
Agreement Term may be terminated by the Company or the Executive without any
breach of this Agreement only under the circumstances described in the following
paragraphs 3(a) through 3(i):
(a) Death. The Executive's employment hereunder will terminate upon his
-----
death.
(b) Permanently Disabled. The Company may terminate the Executive's
--------------------
employment with the Company during any period in which the Executive is
Permanently Disabled. The
8
<PAGE>
Executive shall be considered "Permanently Disabled" during any period in
which (i) he has a physical or mental disability which renders him
incapable, after reasonable accommodation, of performing his duties under
this Agreement; (ii) such disability is determined by the Board to be of a
long-term nature; and (iii) the Executive is eligible for income
replacement benefits under the Company's long-term disability plan during
such period of disability. In the event of a dispute as to whether the
Executive is Permanently Disabled, the Company may refer the same to a
licensed practicing physician of the Company's choice, and the Executive
agrees to submit to such tests and examinations as such physician shall
deem appropriate.
(c) Cause. The Company may terminate the Executive's employment hereunder at
-----
any time for Cause. For purposes of this Agreement, the term "Cause" shall
mean:
(i) the willful and continued failure by the Executive substantially to
perform his material duties with the Company (other than any such
failure resulting from the Executive's being Disabled), after a
written demand for substantial performance of such duties is
delivered to the Executive by the Board, which demand identifies the
manner in which the Board believes that the Executive has not
substantially performed his duties and the Executive has been given a
reasonable period of time (but in no event more than 60 days) to
correct his deficient performance; or
9
<PAGE>
(ii) the engaging by the Executive in egregious misconduct involving
serious moral turpitude to such an extent that, in the reasonable
judgment of the Board, such misconduct substantially impairs the
Executive's ability effectively to perform his duties with the
Company.
For purposes of this Agreement, no act, or failure to act, on the
Executive's part shall be deemed "willful" unless done, or omitted to be
done, by the Executive without reasonable belief that the Executive's
action or omission was in the best interest of the Company.
(d) Constructive Discharge. If the Company materially breaches its
----------------------
obligations to the Executive under this Agreement, and:
(i) the Executive provides written notice to the Company of the
occurrence of such breach, which identifies the manner in which the
Executive believes that the breach has occurred, and which is
delivered to the Company within a reasonable period (but in no event
more than 90 days) after the Executive has actual knowledge of the
events asserted to give rise to the breach; and
(ii) the Company fails to correct any such breach within a reasonable
period (but in no event more than 60 days) after receipt of the
notice described in paragraph (d)(i);
10
<PAGE>
then, for purposes of this Agreement, the Executive shall be
considered to have been dismissed by the Company for reasons other
than Cause. A material breach of this Agreement by the Company shall
include, without limitation:
(I) assigning duties to the Executive that are inconsistent in any
substantial respect with the position, authority, or
responsibilities associated with the position of President and
Chief Executive Officer of the Company or, after a Change of
Control of the Company (as defined in paragraph 10(c) hereof)
in which the Company is not the surviving entity, the
Executive is not permitted to serve as the chief executive
officer and a member of the board of directors of the
successor entity to the Company;
(II) assigning additional duties to the Executive that
substantially impair his ability to function as President and
Chief Executive Officer of the Company;
(III) the failure by the Company to accord to the Executive the
title, authority and responsibilities of President and Chief
Executive Officer of the Company;
(IV) the failure of the Executive to be elected a member of the
Board;
(V) a reduction by the Company in the Executive's Salary from that
provided for in Section 2(a) of this Agreement or a reduction
in the Maximum Bonus Potential
11
<PAGE>
provided for in Section 2(b) hereof, provided that nothing
herein shall limit or affect the Board's authority and
discretion to determine the actual bonus award earned by the
Executive based upon the Board's evaluation of the Executive's
performance during the applicable year;
(VI) a requirement for the relocation of the Executive imposed by
the Board in violation of this Agreement;
(VII) the intentional failure of the Company, without the
Executive's consent, to pay to the Executive any portion of
his Salary, earned bonus or other current compensation (if
any), or to pay to the Executive any portion of any
installment of deferred compensation under any deferred
compensation program of the Company, within 10 business days
of the date such compensation is due or to issue shares of
common stock of the Company in accordance with the terms of
stock options granted to the Executive upon valid exercise
thereof;
(VIII) in the event that there is a successor to the Company, the
failure of the Company to obtain a satisfactory agreement from
any such successor to assume and to perform the obligations of
the Company under this Agreement; or
(IX) the failure of the Company to fulfill any of its other
material obligations to the Executive under this Agreement.
12
<PAGE>
(e) Termination by Executive. The Executive may terminate his employment
------------------------
hereunder at any time by giving the Company prior written Notice of
Termination (as defined in paragraph 3(h)), which Notice of Termination
shall be effective not less than 30 days after it is given to the Company,
provided that nothing in this Agreement shall require the Executive to
specify a reason for any such termination. However, to the extent that the
procedures specified in paragraph 3(d) are required, the procedures of
this paragraph 3(e) may not be used in lieu of the procedures required
under paragraph 3(d).
(f) Mutual Agreement. This Agreement may be terminated at any time by the
----------------
mutual agreement of the parties. Any termination of the Executive's
employment by mutual agreement of the parties shall be memorialized in an
agreement reduced to writing and signed by the Executive and a duly
appointed officer of the Company.
(g) Termination by Company Without Cause. The Company may terminate the
------------------------------------
Executive's employment hereunder at any time for any reason and without
Cause, and the Company shall not be required to specify a reason for such
termination, provided that termination of the Executive's employment by
the Company shall be deemed to have occurred under this paragraph 3(g)
only if it is not for reasons described in paragraph 3(a), 3(b), 3(c),
3(d), 3(e) or 3(f).
13
<PAGE>
(h) Notice of Termination. Any termination of the Executive's employment by
---------------------
the Company or the Executive (other than a termination pursuant to
paragraph 3(a) (relating to termination by death) or paragraph 3(f)
(relating to termination by mutual agreement)) must be communicated by a
written Notice of Termination to the other party hereto. For purposes of
this Agreement, a "Notice of Termination" means a dated notice which (i)
indicates the specific termination provision in this Agreement relied on
and (ii) sets forth in reasonable detail the facts and circumstances, if
any, claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(i) Date of Termination. For purposes of this Agreement, the "Date of
-------------------
Termination" means the last day the Executive is employed by the Company;
provided, that (i) the Executive's employment is terminated in accordance
with the foregoing provisions of this paragraph 3, and (ii) in the event
of termination for Cause as defined in paragraph 3(c)(ii) hereof such Date
of Termination shall not be less than two business days after the
Executive has received written notice of the intention to so terminate the
Executive.
4. Rights Upon Termination. The Executive's right to payment and
-----------------------
benefits under this Agreement upon or for periods after his Date of Termination
shall be determined in accordance with the following provisions of this
paragraph 4:
14
<PAGE>
(a) Basic Payments to Executive Upon Termination For Any Reason Through the
-----------------------------------------------------------------------
Date of Termination. If the Executive's Date of Termination occurs during
-------------------
the Agreement Term for any reason, the Company shall pay to the Executive:
(i) The Executive's Salary for the period through the Date of
Termination.
(ii) An amount in respect of unused vacation days as of the Date of
Termination, as determined in accordance with Company policy as in
effect from time to time.
(iii) Except in the case of termination pursuant to paragraph 3(c)
(relating to termination of the Executive for Cause) or paragraph
3(e) (relating to the Executive's resignation), a pro rata bonus
payment, which shall be an amount equal to the product of:
(A) the bonus the Executive would have received for the Company's fiscal year
which includes his Date of Termination (determined as though he remained in
the employ of the Company through the end of such year and that the
performance levels required for the award of a target bonus to the Executive
were met);
Multiplied By
15
<PAGE>
(B) a fraction, the numerator of which is the number of days in the fiscal
year which includes the Executive's Date of Termination, but excluding the
days following such Date of Termination, and the denominator of which is 365
(or, for the fiscal year in which the Effective Date occurs, the number of
days during which the Executive would have been employed by the Company
during that year if he had remained in the employ until the end of such
year).
(iv) Any other payments or benefits to be provided to the Executive by
the Company pursuant to any employee benefit plans or arrangements
adopted by the Company, to the extent such amounts are due from the
Company.
Except as may otherwise be expressly provided to the contrary in this
Agreement, nothing in this Agreement shall be construed as requiring the
Executive to be treated as employed by the Company for purposes of any
employee benefit plan or arrangement following the Executive's Date of
Termination.
(b) No Payment Obligations to Executive in Certain Circumstances After the
---------------------------------------------------------------------
Date of Termination. If the Executive's Date of Termination occurs under
-------------------
circumstances described in paragraph 3(a) (relating to the Executive's
death), paragraph 3(b) (relating to the Executive's being Permanently
Disabled), paragraph 3(c) (relating to termination of the Executive for
Cause), paragraph 3(e) (relating to the Executive's resignation) or
paragraph 3(f) (relating to termination by mutual agreement), or if the
Executive's
16
<PAGE>
employment with the Company terminates after the end of the Agreement
Term, then, except as otherwise expressly provided in this Agreement or
otherwise agreed in writing between the Executive and the Company, the
Company shall have no obligation to make payments under this Agreement for
periods after the Executive's Date of Termination.
-----
(c) Payments to Executive After Date of Termination in the Event of
---------------------------------------------------------------
Constructive Discharge or Termination Without Cause. If the Executive's
---------------------------------------------------
Date of Termination occurs under circumstances described in paragraph 3(d)
(relating to Constructive Discharge) or paragraph 3(g) (relating to
termination by the Company without Cause), then, in addition to the
amounts payable in accordance with paragraph 4(a), the Executive shall
receive from the Company for the period continuing through the end of the
Agreement Term, but not to exceed two years, an amount equal to the
product obtained by multiplying the average of the Executive's annual
salary and annual bonus for the prior two years times two, or, if the
Executive has not served the Company for 24 months, then an amount equal
to the product obtained by multiplying the average annual salary and
average annual bonus for such shorter period, times two. The Company's
obligation to make payments under this paragraph 4(c) shall cease with
respect to periods after the earlier to occur of the date of the
Executive's death, or a date, if any, of the breach by the Executive of
the provisions of paragraph 7 or paragraph 8. Further, in the event of
termination of Executive under this paragraph 4(c), the stock options held
by Executive shall become fully vested.
17
<PAGE>
(d) Payments in Lieu of Benefits Under Severance Agreements. Except as may be
-------------------------------------------------------
otherwise specifically provided in an amendment of this paragraph (d)
adopted in accordance with paragraph 13, payments under this paragraph 4
shall be in lieu of any benefits that may be otherwise payable to or on
behalf of the Executive pursuant to the terms of any severance pay
arrangement of the Company or any Subsidiary or any other, similar
arrangement of the Company or any Subsidiary providing benefits upon
involuntary termination of employment.
5. Duties on Termination. Subject to the terms and conditions of this
---------------------
Agreement, during the period beginning on the date of delivery of a Notice of
Termination and ending on the Date of Termination, the Executive shall continue
to perform his duties as set forth in this Agreement, and shall also perform
such services for the Company as are necessary and appropriate for a smooth
transition to the Executive's successor, if any. Notwithstanding the foregoing
provisions of this paragraph 5, the Company may suspend the Executive from
performing his duties under this Agreement following (i) the delivery of a
Notice of Termination by the Executive providing for the resignation by the
Executive of his positions with the Company provided for herein, or (ii)
delivery by the Company of a Notice of Termination providing for the Executive's
termination of employment for any reason, or (iii) notification to the Executive
of the intention to terminate the Executive for Cause as defined in paragraph
3(c)(ii); provided, however, that during the period of suspension in any of the
-------- -------
foregoing cases (which shall in each such case end on the Date of Termination),
the
18
<PAGE>
Executive shall continue to be treated as employed by the Company for all other
purposes, and his rights to compensation or benefits shall not be reduced by
reason of the suspension.
6. Mitigation and Set-Off. The Executive shall not be required to
----------------------
mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise. The Company shall not be entitled to set off
against the amounts payable to the Executive under this Agreement any amounts
owed to the Company by the Executive, any amounts earned by the Executive in
other employment after termination of his employment with the Company, or any
amounts which might have been earned by the Executive in other employment had he
sought such other employment.
7. Confidential Information. Except as may be required by the lawful
------------------------
order of a court or agency of competent jurisdiction, or except to the extent
that the Executive has express authorization from the Company, the Executive
agrees, both while he is employed by the Company and thereafter, to keep secret
and confidential all non-public information (including, without limitation,
information regarding litigation and pending litigation) concerning the Company
and the Subsidiaries which was acquired by or disclosed to the Executive during
the course of his employment with the Company, or during the course of his
consultation with the Company following his termination of employment
(regardless of whether consultation is pursuant to paragraph 9), and not to
disclose the same, either directly or indirectly, to any other person, firm or
business entity, or to use it in any way. The Executive agrees that, to the
extent that any court or agency seeks to have him disclose
19
<PAGE>
Confidential Information, the Executive shall promptly inform the Company and
shall take such reasonable steps as are available to the Executive to prevent
disclosure of such Confidential Information until the Company has been informed
of such requested disclosure, and the Company has an opportunity to respond to
such court or agency; provided, that the Executive shall not be required hereby
--------
to do so if and to the extent that the Executive would thereby incur personal
financial or other risk. To the extent that the Executive obtains information
on behalf of the Company or any of the Subsidiaries that may be subject to
attorney-client privilege as to the Company's or any Subsidiaries' attorneys,
the Executive shall take reasonable steps to maintain the confidentiality of
such information and to preserve such privilege. Nothing in the foregoing
provisions of this paragraph 7 shall be construed so as to prevent the Executive
from using, in connection with his employment for himself or an employer other
than the Company or any of the Subsidiaries, knowledge which was acquired by him
during the course of his employment with the Company and the Subsidiaries that
is generally known to persons of his experience in other companies in the same
industry. Nothing in this paragraph 7 or in paragraph 8 shall be construed as
limiting the Executive's duty of loyalty to the Company while he is employed by
the Company, or any other duty he may otherwise have to the Company while he is
employed by the Company or thereafter.
8. Non-Disparagement. The Executive agrees that both while he is
-----------------
employed by the Company and after his Date of Termination he shall not make any
false, defamatory or disparaging statements about the Company, the Subsidiaries,
or the officers or directors of the Company or the Subsidiaries. Both while the
Executive is employed by the Company and
20
<PAGE>
after his Date of Termination, the Company agrees, on behalf of itself and the
Subsidiaries, that neither the officers nor the directors of the Company or the
Subsidiaries shall make any false, defamatory or disparaging statements about
the Executive.
9. Defense of Claims. The Executive agrees that, for the period
-----------------
beginning on the Effective Date and continuing after his Date of Termination,
the Executive will cooperate with the Company in defense of any claims that may
be made against the Company, and will cooperate with the Company in the
prosecution of any claims that may be made by the Company, to the extent that
such claims may relate to services performed by the Executive for the Company.
The Executive agrees promptly to inform the Company if he becomes aware of any
lawsuits involving such claims that may be filed against the Company. The
Company agrees to reimburse the Executive for all of the Executive's reasonable
out-of-pocket expenses associated with such cooperation, including travel
expenses. The Executive also agrees promptly to inform the Company if he is
asked to assist in any investigation of the Company (or its actions) that may
relate to services performed by the Executive for the Company, regardless of
whether a lawsuit has then been filed against the Company with respect to such
investigation.
10. Lump Sum Payment to Executive in the Event of a Change of Control.
-----------------------------------------------------------------
In the event that a Change of Control (as defined in paragraph 10(c) hereof)
occurs during the Agreement Term, while the Executive is employed by the
Company:
21
<PAGE>
(a) If, within twelve months after the occurrence of the Change of Control,
the Executive's employment by the Company or its successor is terminated
pursuant to paragraph 3(d) (relating to Constructive Discharge) or
paragraph 3(g) (relating to termination by the Company without Cause),
then the Executive shall be entitled to receive from the Company or such
successor, in lieu of, and not in addition to, the amounts otherwise
payable to the Executive pursuant to paragraph 4(c) hereof, a lump sum
payment in an amount which is equal to three times the "base amount" in
respect of the Executive as defined in section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), or any successor to that
provision. In addition, the stock options held by Executive at that time
shall become fully vested in such event.
(b) If any payments under this Agreement, after taking into account all other
payments to which the Executive is entitled from the Company, or any
affiliate thereof, are more likely than not to result in a loss of a
deduction to the Company by reason of Section 280G of the Code or any
successor provision to that section, such payments shall be reduced to the
extent required to avoid such loss of deduction. The Executive shall be
entitled to select the order in which payments are to be reduced in
accordance with the preceding sentence. If requested by the Company, the
Executive shall provide complete compensation and tax data on a timely
basis to the Company and to an accounting or law firm designated by the
Company in order to enable the Company to determine the extent to which
payments from the Company and its affiliates may result in a loss of a
deduction. If the Executive incurs fees or costs in accumulating such
22
<PAGE>
information, the Company shall reimburse the Executive for any reasonable
fees and expenses so incurred. If the Executive and the Company disagree
as to whether a payment under this Agreement is more likely than not to
result in the loss of a deduction, the matter shall be resolved by an
opinion of tax counsel chosen by the Company's independent auditors. The
Company shall pay the fees and expenses of such counsel, and shall make
available such information as may be reasonably requested by such counsel
to prepare the opinion. If, by reason of the limitations of this paragraph
10(b), the maximum amount payable to the Executive cannot be determined
prior to the due date for such payment, the Company shall pay on the due
date the minimum amount which it in good faith determines to be payable
and shall pay the remaining amount, with interest at a rate, compounded
semi-annually, equal to 120% of the applicable Federal rate determined
under section 1274(d) of the Code, as soon as such remaining amount is
determined in accordance with this paragraph 10(b).
(c) A "Change of Control" of the Company shall be deemed to have occurred upon
the happening of any of the following events:
(1) the acquisition or holding, other than in or as a result of a
transaction approved by the Continuing Directors (as defined in
paragraph (b) below) of the Company, by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) (an "Acquiror") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange
23
<PAGE>
Act) of 25% or more of the combined voting power of the then
outstanding shares of common stock and other stock of the Company
entitled to vote generally in the election of directors, but excluding
for this purpose:
(i) any such acquisition (or holding) by the California Public
Employees' Retirement System ("CalPERS") that holds
approximately 41% of the issued and outstanding common stock of
the Company or while CalPERS is the beneficial owner of shares
having a greater percentage of such combined voting power than
the shares held by the Acquiror;
(ii) any such acquisition (or holding) by the Company or any of its
Subsidiaries, or any employee benefit plan (or related trust) of
the Company or such Subsidiaries; or
(iii) any such acquisition (or holding) by any corporation with
respect to which, following such acquisition, more than 50% of,
respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners,
respectively, of the common stock and other voting securities of
the Company
24
<PAGE>
immediately prior to such acquisition in substantially the same
proportion as their ownership, immediately prior to such
acquisition, of the then outstanding shares of common stock of
the Company and of the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors;
(2) individuals who, as of the date hereof, constitute the Board
(the "Continuing Directors") cease for any reason to constitute
at least a majority of the Board, provided that any individual
becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of
the persons then comprising the Continuing Directors shall be
considered a Continuing Director, but excluding, for this
purpose, any such individual whose initial election as a member
of the Board is in connection with an actual or threatened
"election contest" relating to the election of the directors of
the Company (as such term is used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act); or
(3) approval by the Company's stockholders of (i) a reorganization,
merger or consolidation of the Company, with respect to which in
each case all or substantially all of the individuals and
entities who were the respective beneficial owners of the common
stock and voting securities of the Company immediately prior to
such reorganization, merger or consolidation do not,
25
<PAGE>
following such reorganization, merger or consolidation,
beneficially own, directly and indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, of the corporation or other entity resulting from
such reorganization, merger or consolidation, or (ii) of a
complete liquidation or dissolution of the Company, or (iii) the
sale or other disposition of all or substantially all of the
assets of the Company.
11. Remedies. The Executive acknowledges that the Company would be
--------
irreparably injured by a violation of paragraph 7 or 8, and agrees that the
Company, in addition to any other remedies available to it for such breach or
threatened breach, shall be entitled to a preliminary injunction, temporary
restraining order, or other equivalent relief, restraining the Executive from
any actual or threatened breach of paragraph 7 or paragraph 8. If a bond is
required to be posted in order for the Company to secure an injunction or other
equitable remedy, the parties agree that said bond need not be more than a
nominal sum.
12. Nonalienation. The interests of the Executive under this Agreement
-------------
are not subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of the
Executive or the Executive's beneficiary.
26
<PAGE>
13. Amendment; Other. This Agreement may be amended or cancelled only by
----------------
mutual agreement of the parties in writing and may be amended without the
consent of any other person. So long as the Executive lives, no person, other
than the parties hereto, shall have any rights under or interest in this
Agreement or the subject matter hereof. All judgments made and actions taken by
the parties to this Agreement shall be made or taken, as the case may be, in
good faith.
14. Applicable Law. The provisions of this Agreement shall be construed
--------------
in accordance with the laws of the State of California without regard to the
conflict of law provisions of any state.
15. Severability. The invalidity or unenforceability of any provision of
------------
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, and this Agreement shall be construed as if such
invalid or unenforceable provision were omitted (but only to the extent that
such provision cannot be appropriately reformed or modified).
16. Waiver of Breach. No waiver by any party hereto of a breach of any
----------------
provision of this Agreement by any other party, or of compliance with any
condition or provision of this Agreement to be performed by such other party,
shall operate or be construed as a waiver of any subsequent breach by such other
party or any similar or dissimilar provisions and conditions at the same or any
prior or subsequent time. The failure of any party hereto to take
27
<PAGE>
any action by reason of such breach shall not deprive such party of the right to
take action at any time while such breach continues.
17. Successors. This Agreement shall be binding upon, and inure to the
----------
benefit of, the Company and its successors and assigns and upon any person
acquiring, whether by merger, consolidation, purchase of assets or otherwise,
all or substantially all of the Company's assets and business. The rights of
the Executive to receive payment of amounts of compensation provided for in this
Agreement shall inure to the benefit of, and may be enforced by, the Executive's
estate in the event of his death.
18. Notices. Notices and all other communications provided for in this
-------
Agreement shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid, or sent
by facsimile or prepaid overnight courier to the parties at the addresses set
forth below (or at such other addresses as shall be specified by the parties by
like notice). Such notices, demands, claims and other communications shall be
deemed given:
(a) in the case of delivery by overnight service with guaranteed next day
delivery, such next day or the day designated for delivery;
(b) in the case of certified or registered U.S. mail, five days after deposit
in the U.S. mail; or
28
<PAGE>
(c) in the case of facsimile, the date upon which the transmitting party
received confirmation of receipt by facsimile, telephone or otherwise;
provided, however, that in no event shall any such communications be deemed to
be given later than the date they are actually received. Communications that
are to be delivered by the U.S. mail or by overnight service are to be delivered
to the addresses set forth below:
to the Company:
Catellus Development Corporation
201 Mission Street, 3rd Floor
San Francisco, California 94105
Attention: General Counsel
to the Executive:
Nelson C. Rising
435 Georgian Road
La Canada, California 91011
29
<PAGE>
Each party, by written notice furnished to the other party, may modify the
applicable delivery address, except that notice of change of address shall be
effective only upon receipt.
19. Arbitration of All Disputes. Any controversy or claim arising out of
---------------------------
or relating to this Agreement (or the breach thereof) shall be settled by
binding and non-appealable arbitration in San Francisco, California by an
arbitrator. The Executive and the Company shall initially confer and attempt to
reach agreement on the individual to be appointed as such arbitrator. If no
agreement is reached, the parties shall request from the San Francisco office of
the Judicial Arbitration and Mediation Services ("JAMS") a list of five retired
judges affiliated with JAMS. The Executive and the Company shall each
alternately strike names from such list until only one name remains and such
person shall thereby be selected as the arbitrator. Except as otherwise
provided for herein, such arbitration shall be conducted in conformity with the
procedures specified in the California Arbitration Act (Cal. C.C.P. (S)(S) 1280
et seq.) The arbitrator shall not be authorized to award punitive damages with
- -- ---
respect to any claim, disputes or controversy. The parties intend that this
paragraph 19 shall be valid, binding, enforceable and irrevocable and shall
survive the termination of this Agreement and that any arbitration proceeding
hereunder shall be concluded within 60 days after the initiation thereof. The
Company and the Executive shall jointly so instruct the Arbitrator chosen to
arbitrate any dispute arising hereunder and agree that the criteria used by them
to select such arbitrator shall include his or her availability to act
expeditiously within not more than the 60-day period referred to herein. The
parties hereto agree that the final decisions of the arbitrator so chosen may be
enforced by a court of competent jurisdiction.
30
<PAGE>
20. Costs of Enforcement. In the event any legal action is brought or
--------------------
that arbitration is commenced in connection with any dispute relating to the
rights and obligations of the parties hereunder the prevailing party or parties
shall be entitled to recover reasonable attorneys' fees and other costs incurred
in such action or proceeding in addition to any other relief to which such party
may be entitled.
21. Survival of Agreement. Except as otherwise expressly provided in
---------------------
this Agreement, the rights and obligations of the parties to this Agreement
shall survive the termination of the Executive's employment with the Company.
22. Title and Headings. Titles and headings in this Agreement are for
------------------
ease of reference and convenience only, and shall not be construed to affect the
meaning of any provision of this Agreement.
23. Enforceability. Except as otherwise noted herein, the enforceability
--------------
of this Agreement shall not cease or otherwise be adversely affected by the
termination of the Executive's employment with the Company.
24. Indemnity. To the fullest extent permitted by applicable law and the
---------
bylaws of the Company as from time to time in effect, the Company shall
indemnify the Executive and hold the Executive harmless against and from any
acts or decisions made in good faith while performing services for the Company,
and the Company shall use its best efforts to obtain
31
<PAGE>
coverage for the Executive under any liability insurance policy or policies now
in force or hereafter obtained during the term of this Agreement. To the same
extent, the Company will, upon receipt of such undertaking from the Executive as
may be required by applicable law, pay as incurred all expenses, including
reasonable attorneys' fees and costs of court approved settlements, actually and
reasonably incurred by the Executive in connection with defense of or settlement
of any action, suit or proceeding and in connection with any appeal thereon,
which has been brought against the Executive by reason of the Executive's
service as an officer or agent of the Company or of a Subsidiary of the Company.
25. Acknowledgement by Executive. The Executive represents to the
----------------------------
Company that he is knowledgeable and sophisticated as to business matters,
including the subject matter of this Agreement, that he has read this Agreement
and that he understands its terms. The Executive acknowledges that, prior to
assenting to terms the terms of this Agreement, he has been given a reasonable
time to review it, to consult with counsel of his choice, and to negotiate at
arm's-length with the Company as to its contents. The Executive and the Company
agree that the language used in this Agreement is the language chosen by the
parties to express their mutual intent, and that no rule of strict construction
is to be applied against any party hereto.
32
<PAGE>
IN WITNESS WHEREOF, the Executive has hereunto set his hand, and the
Company has caused these presents to be executed in its name and on its behalf,
all as of the Effective Date.
___________________________________
Nelson C. Rising
Catellus Development Corporation
By _______________________________
JOSEPH R. SEIGER
Chairman of the Board
of Directors
33
<PAGE>
Exhibit A
---------
1. Stock Option Award to Executive - 300,000 shares
-------------------------------------------------
Shares Term Initial Exercise Price
- ------ ---- ----------------------
300,000 10 years $6.00
The terms and conditions of the stock option award to be granted to
the Executive shall be set forth in a separate agreement with the stock option
having a term of ten years. The agreement shall provide that the option covered
thereby will vest and become exercisable in accordance with two schedules, a
schedule based upon the achievement of certain price levels for the Common Stock
of the Company (the "Pricing Schedule") and a schedule based upon the expiration
of various time periods (the "Time Schedule"). The Pricing Schedule shall be
operative in the following manner in conjunction with the Time Schedule:
commencing November 29, 1996 (a) if the average stock price of the Company's
Common Stock is $8.50 or more for a period of 30 consecutive trading days, then
25% of the option shares shall vest and become exercisable; (b) if such price is
$10.50 or more for a period of 30 consecutive trading days, then 50% of such
shares shall vest and become exercisable; (c) if such price is $12.50 or more
for a period of 30 consecutive trading days, then 75% of such shares shall vest
and become exercisable; and (d) if such price for a period
34
<PAGE>
of 30 consecutive trading days is $15.00 or more, then 100% of such shares shall
become exercisable. In any event, all such shares shall vest on November 29,
2003, which is 8 years from that date that the Board approved this stock option
award. Notwithstanding the foregoing, under the Timing Schedule, the option
shares may not vest any earlier than November 29, 1996 and by not more than 25%
during each successive 12 month period from November 29, 1995 through November
29, 1999. Assuming the Pricing Schedule conditions are fulfilled, then 25% of
the option shares shall vest as of November 29, 1996; a total of 50% of such
shares shall vest as of November 29, 1997; a total of 75% of such shares shall
vest as of November 29, 1998; and a total of 100% of such shares shall vest as
of November 29, 1999; provided, that such options shall become immediately
--------
exercisable in full in the event that the Executive is terminated pursuant to
paragraph 3(d) of the Amended and Restated Employment Agreement to which this
Exhibit A is attached (relating to "Constructive Discharge", as defined in the
Employment Agreement), or that the Executive is terminated pursuant to paragraph
3(g) (relating to termination by the Company without Cause) (the "Employment
Agreement") or that the Executive is terminated pursuant to the Employment
Agreement at any time within 12 months following a "Change of Control" of the
"Company" (both as defined in the Employment Agreement); (ii) the exercise price
of the option indicated above shall be $6.00 per share. The option shall
otherwise conform to the requirements of the Company's existing Amended and
Restated Executive Stock Option Plan and the terms of this Employment Agreement.
35
<PAGE>
Exhibit B
---------
Prior Stock Option Awards to Executive - 700,000 shares
- -------------------------------------------------------
<TABLE>
<CAPTION>
Shares Term Initial Exercise Price
- ---------- -------- ----------------------
<S> <C> <C>
350,000 10 years $6.975
350,000 7 years $6.975
</TABLE>
The existing stock option award agreements documenting the Executive's
options to purchase 700,000 shares of the Company's common stock (as described
above) shall be modified and restated so as to (a) eliminate the 5% exercise
price escalator, and (b) provide that the option covered thereby will vest and
become exercisable in accordance with two schedules, a schedule based upon the
achievement of certain price levels for the Common Stock of the Company (the
"Pricing Schedule") and a schedule based upon the expiration of various time
periods (the "Time Schedule"). The Pricing Schedule shall be operative in the
following manner in conjunction with the Time Schedule: (a) if the average stock
price of the Company's Common Stock is $8.50 or more for a period of 30
consecutive trading days, then 25% of the option shares shall vest and become
exercisable; (b) if such price is $10.50 or more for a period of 30 consecutive
trading days, then 50% of such shares shall vest and
36
<PAGE>
become exercisable; (c) if such price is $12.50 or more for a period of 30
consecutive trading days, then 75% of such shares shall vest and become
exercisable; and (d) if such price for a period of 30 consecutive trading days
is $15.00 or more, then 100% of such shares shall become exercisable. In any
event, all shares subject to the option which has a term of 10 years shall vest
on July 27, 2002, which is 8 years from the date of the stock option agreement,
and all shares subject to the option which has a term of 7 years shall vest on
July 27, 2000, which is 6 years from the date of the stock option agreement.
Notwithstanding the foregoing, under the Timing Schedule, the option shares may
not vest by more than 33 1/3% during each successive 12 month period from
January 1, 1996 (the original vesting date) through January 1, 1998. Assuming
the Pricing Schedule conditions are fulfilled, 33 1/3% of such option shares
shall vest as of January 1, 1996; 66 2/3% of such option shares shall vest as of
January 1, 1997; and a total of 100% of such option shares shall vest as of
January 1, 1998; provided, that such options shall become immediately
exercisable in full in the event that the Executive is terminated pursuant to
paragraph 3(d) of the Amended and Restated Employment Agreement to which this
Exhibit B is attached (relating to "Constructive Discharge", as defined in the
Employment Agreement), or that the Executive is terminated pursuant to paragraph
3(g) (relating to termination by the Company without Cause) (the "Employment
Agreement") or that the Executive is terminated pursuant to the Employment
Agreement at any time within 12 months following a "Change of Control" of the
Company (both as defined in the Employment Agreement); (ii) the exercise price
of the option indicated above shall be $6.975 per share. The option shall
otherwise conform to the requirements of the Company's
37
<PAGE>
existing Amended and Restated Executive Stock Option Plan and the terms of
this Employment Agreement.
38
<PAGE>
Exhibit C
---------
Benefits Memorandum
-------------------
. Auto Allowances (both Northern and Southern California automobiles)
. Car phones and/or portable phones (installation and operating costs) in
both Northern and Southern California automobiles
. Business equipment (in both office and home)
. Medical
- Choice of Prudential (Point of Service) or Prudential HMO
. Dental
- Phoenix Home Life
. Short-Term/Long-Term Disability
39
<PAGE>
. Life Insurance
- $15 million of life insurance for Executive (Supplemental also
available for family members)
. All intrastate travel expenses (other than travel for vacation purposes)
including travel between San Francisco and Los Angeles
. Club Memberships - Monthly fees for membership in one golf club and three
luncheon clubs in California
40
<PAGE>
Exhibit 10.31
E x e c u t i o n C o p y
CATELLUS DEVELOPMENT CORPORATION
AMENDED AND RESTATED STOCK OPTION AGREEMENT
This Amended and Restated Stock Option Agreement (this "Agreement") is
entered into as of March 22, 1996 between Catellus Development Corporation, a
Delaware corporation ("Catellus"), and
Joseph R. Seiger
(the "Optionee") with reference to the following facts:
A. The Optionee is an existing director of Catellus who has agreed to
become the Chairman of the Catellus Board of Directors (the "Board") and thereby
to assume substantial additional responsibilities and time commitments for the
benefit of Catellus.
B. In consideration of the foregoing and to further the identity of
interests of the Optionee with those of the stockholders of Catellus, the Board
wishes to grant to the Optionee an option to purchase shares of the common stock
of Catellus, par value $0.01 per share (the "Common Stock"), on the terms set
forth herein.
NOW, THEREFORE, Catellus and the Optionee agree as follows:
1. GRANT OF OPTION. Catellus hereby grants an option (the "Option")
to the Optionee to purchase, from time to time, an aggregate of
100,000
shares of Common Stock (the "Option Shares") during the period commencing July
27, 1994 and ending July 27, 2004 (the "Option Period"), on the terms and
subject to the conditions set forth in this Agreement. The exercise price of
the Option shall be $6.975 per share (the "Option Purchase Price").
2. EXERCISE OF OPTION. Subject to the provisions of Sections 10 and
11 of this Agreement, the Option shall become exercisable (a) as to the entire
number of the Option Shares on and after July 27, 2002 or (b) if earlier, in the
following installments on and after January 1, 1997 (the "Vesting Date")
provided the specified conditions are met:
1
<PAGE>
(i) The Option may be exercised as to 25% of the Option Shares on
and after the Vesting Date provided the average of the Closing Price of
a share of Common Stock for any 30 consecutive trading days following
the Date of Grant is at least $8.50;
(ii) The Option may be exercised as to 50% of the Option Shares on
and after the Vesting Date provided the average of the Closing Price of
a share of Common Stock for any 30 consecutive trading days following
the Date of Grant is at least $10.50;
(iii) The Option may be exercised as to 75% of the Option Shares
on and after the Vesting Date provided the average of the Closing Price
of a share of Common Stock for any 30 consecutive trading days
following the Date of Grant is at least $12.50; and
(iv) The Option may be exercised as to the entire number of the
Option Shares on and after the Vesting Date provided the average of the
Closing Price of a share of Common Stock for any 30 consecutive trading
days following the Date of Grant is at least $15.00;
provided, however, that the Option shall not be exercisable following the
- -------- -------
expiration of the Option Period or the earlier lapse or termination of the
Option as provided in this Agreement.
For purposes of this Section 2, the term "Closing Price" shall mean, for
any trading day, the closing price of a share of Common Stock on such day (i) on
the New York Stock Exchange ("NYSE"), if the Common Stock is then listed on such
exchange, (ii) if the Common Stock is not listed on the NYSE, on the principal
national stock exchange on which the Common Stock is then listed, or (iii) if
not listed on any national stock exchange, as reported by NASDAQ. If the Common
Stock is not then listed on any national stock exchange or reported by NASDAQ,
then the Closing Price shall be determined in any reasonable manner approved by
the Committee.
3. PROCEDURE FOR EXERCISE OF OPTION.
a. The Option may be exercised in whole or in part, when vested
as provided in Section 2 above, by delivery of a written notice of such
exercise, which notice shall state the number of Option Shares in respect of
which the Option is being exercised, and shall be delivered to the Secretary of
Catellus or mailed, addressed to the Secretary of Catellus at its offices
located at 201 Mission Street, San Francisco, California 94105.
2
<PAGE>
b. Any such notice of exercise shall be accompanied by payment
in full of the Option Purchase Price for the Option Shares in respect of which
the election is made. Such payment may be made in cash, Common Stock of
Catellus held by the Optionee for at least six months or such other property as
the Compensation and Benefits Committee of the Board (the "Committee") shall
determine. If shares of Common Stock are tendered as payment, such shares shall
be valued at the Fair Market Value thereof as of the date of exercise of the
Option. An election to exercise the Option, whether in whole or in part, shall
be irrevocable when made.
c. For purposes of this Agreement, the "Fair Market Value" of
shares of the Common Stock at any date shall be deemed to be the average of the
closing prices, or the average of the closing bid and asked quotations, as
applicable, of the Common Stock for the five trading days immediately preceding
the applicable date on (i) the New York Stock Exchange ("NYSE") , if shares of
the Common Stock are then listed on the NYSE, or (ii) if shares of the Common
Stock are not then listed on the NYSE, then on the principal stock exchange on
which the Common Stock is then listed, or (iii) if shares of the Common Stock
are not then listed on any stock exchange, then as reported by the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"). If the
Common Stock is not then listed on any stock exchange or reported by NASDAQ,
then the Fair Market Value of shares of the Common Stock shall be determined in
such reasonable manner as shall be approved by the Committee.
4. FRACTIONAL SHARES. No fractional shares, or cash in lieu thereof,
shall be issued pursuant to this Agreement.
5. TAXES. Catellus may withhold any federal, state or local taxes
required by applicable law to be withheld upon any exercise of the Option
through retention of such number of whole shares of Common Stock otherwise
issuable upon such exercise as shall have a Fair Market Value at least equal to
such amount as shall be required to comply with such withholding requirements.
6. ASSIGNMENT OF OPTION. The Option is not assignable or transferable
by the Optionee, other than by will or the laws of descent and distribution or
pursuant to a "qualified domestic relations order" as defined by the Internal
Revenue Code of 1986, as amended or Title I of the Employee Retirement Income
Security Act of 1974, or rules thereunder, and, subject to the foregoing, may be
exercised during the lifetime of the Optionee only by the Optionee, or if the
Optionee is disabled, by his legal representative.
7. EXERCISE ON DEATH OF OPTIONEE. If the Optionee ceases to be a
director of Catellus by reason of death, and the Option has theretofore become
vested, any unexercised portion of the Option remaining as of the date of his
death may be exercised by the Optionee's personal representative, or by the
person to whom such
3
<PAGE>
rights shall pass by will or the laws of descent and distribution, at any time
within a period of up to one year after such death, but not after the expiration
of the Option Period.
8. EXERCISE ON TERMINATION OF SERVICE. Subject to Section 7 above, in
the event of termination of the Optionee's service as a director of Catellus
after the Option has become vested, any portion of the Option which has not
theretofore been exercised but is then vested may be exercised by the Optionee
within three months following such termination; provided that, if the Optionee
-------------
ceases to be a director of Catellus by reason of disability or death prior to
July 27, 1995, a fraction of the Option shall vest upon the date of such
termination, which fraction shall be equal to the number of months elapsed from
the date of grant of the Option (July 27, 1994) to the date of such termination,
divided by 12.
9. ADJUSTMENTS FOR CERTAIN EVENTS. In the event of a change in the
capitalization of Catellus due to a stock split, stock dividend,
recapitalization, merger, consolidation, or other event, the Option Shares
subject to this Agreement shall be ' appropriately adjusted by the Committee to
reflect such change.
10. SHAREHOLDER APPROVAL. The grant of the Option to the Optionee
set forth herein is subject to the approval of the stockholders of Catellus as
required under the rules of the NYSE or receipt by Catellus of confirmation from
the NYSE that such stockholder approval will not be required. In the event that
neither such approval nor such confirmation is obtained within one year from the
date of this Agreement or, if later, the date of the first annual meeting of
Catellus stockholders held after the date hereof, then the Option shall not
become exercisable to any extent and shall terminate upon the expiration of such
period.
11. CHANGE OF CONTROL.
a. Notwithstanding the provisions of Section 2 above, the Option
shall vest, and shall thereupon become exercisable in whole or in part from time
to time at the election of the Optionee, immediately upon the occurrence of a
Change of Control of Catellus.
b. For purposes of this Agreement, a "Change of Control" of
Catellus shall be deemed to have occurred upon the happening of any of the
following events:
(i) the acquisition or holding, other than in or as a result of a
transaction approved by the Continuing Directors (as defined in
paragraph (ii) below) of Catellus, by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934) (an
4
<PAGE>
"Acquiror") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934) of 25% or more
of the combined voting power of the then outstanding shares of Common
Stock and other stock of Catellus entitled to vote generally in the
election of directors, but excluding for this purpose:
(A) any such acquisition (or holding) by the California Public
Employees' Retirement System ("CalPERS"), which as of the date hereof
holds approximately 41% of the issued and outstanding Common Stock of
Catellus, or while CalPERS is the beneficial owner of shares having a
greater percentage of such combined voting power than the shares held
by the Acquiror;
(B) any such acquisition (or holding) by Catellus or any of
its subsidiaries, or any employee benefit plan (or related trust) of
Catellus or such subsidiaries; or
(C) any such acquisition (or holding) by any corporation with
respect to which, following such acquisition, more than 50% of,
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Common Stock and
other voting securities of Catellus immediately prior to such
acquisition in substantially the same proportion as their ownership,
immediately prior to such acquisition, of the then outstanding shares
of Common Stock of Catellus and of the combined voting power of the
then outstanding voting securities of Catellus entitled to vote
generally in the election of directors;
(ii) individuals who, as of the date hereof, constitute the Board
(the "Continuing Directors") cease for any reason to constitute at
least a majority of the Board, provided that any individual becoming a
director subsequent to the date hereof whose election, or nomination
for election by the stockholders of Catellus, was approved by a vote of
at least a majority of the persons then comprising the Continuing
Directors shall be considered a Continuing Director, but excluding, for
this purpose, any such individual whose initial election as a member of
the Board is in connection with an actual or threatened "election
contest" relating to the election of the directors of Catellus (as such
term is used in Rule 14a-11 of Regulation 14A promulgated under the
Securities Exchange Act of 1934); or
5
<PAGE>
(iii) approval by the stockholders of Catellus of (A) a
reorganization, merger or consolidation of Catellus, with respect to
which in each case all or substantially all of the individuals and
entities who were the respective beneficial owners of the common stock
and other voting securities of Catellus immediately prior to such
reorganization, merger or consolidation will not, immediately following
such reorganization, merger or consolidation, beneficially own,
directly and indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors, of the corporation or other entity resulting
from such reorganization, merger or consolidation, or (B) of a complete
liquidation or dissolution of Catellus, or (C) the sale or other
disposition of all or substantially all of the assets of Catellus.
12. VIOLATION OF LAW. Notwithstanding any other provision of this
Agreement, the Optionee agrees that Catellus shall not be obligated to deliver
any Option Shares if counsel to Catellus determines that exercise of the Option
or delivery of such Option Shares would then not be in compliance with any law
or regulation of any governmental authority or any agreement between Catellus
and any national securities exchange upon which the Common Stock is listed;
provided that, Catellus shall use its best efforts in any such event to take all
- -------------
action required to achieve such compliance as promptly as practicable.
13. RIGHTS AS A STOCKHOLDER. The Optionee shall have no rights as a
stockholder with respect to any Common Stock covered by the Option until he
shall have become the holder of record of such shares of Common Stock, and,
except for stock dividends as provided in Section 9, no adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights in respect of such shares for which
the record date is prior to the date on which he shall become the holder of
record thereof.
14. HEADINGS. The headings used in this Agreement are for convenience
only and are not, and shall not be deemed, a part of this Agreement.
15. AMENDMENT. This Agreement may be amended only by a writing signed by
both the Optionee and Catellus.
16. GOVERNING LAW. This Agreement shall be governed by and enforced in
accordance with the laws of the State of California, without giving effect to
the choice of law principles thereof.
17. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be deemed an original document, with the same
effect as if the signatures thereto and hereto were all set forth on the same
document.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
"CATELLUS"
CATELLUS DEVELOPMENT CORPORATION
By: /s/ Nelson C. Rising
______________________________
Nelson C. Rising,
Chief Executive Officer
ATTEST:
/s/ Barbara Zeyen
___________________________
Assistant Secretary
"EXECUTIVE"
/s/ Joseph R. Seiger
_____________________________________
Joseph R. Seiger
c/o Catellus Development Corporation
201 Mission Street
San Francisco, California 94105
7
<PAGE>
Exhibit 10.37
EMPLOYMENT AGREEMENT
BETWEEN
CATELLUS DEVELOPMENT CORPORATION
AND
STEPHEN P. WALLACE
DATED AS OF
JULY 24, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE I
<S> <C> <C>
EMPLOYMENT RELATIONSHIP.................................... 2
1.1 Employment............................................................ 2
----------
1.2 Term.................................................................. 3
----
1.3 Base Salary........................................................... 3
-----------
1.4 Bonuses............................................................... 4
-------
1.5 Stock Option.......................................................... 5
------------
1.6 Place of Performance and Relocation Costs............................. 6
-----------------------------------------
1.7 Termination of Employment............................................. 7
-------------------------
1.8 Benefits Upon Termination............................................. 10
-------------------------
1.9 Benefits.............................................................. 12
--------
1.10 Indemnity............................................................. 14
---------
ARTICLE II
COVENANTS.................................................. 15
2.1 Covenant Against Competition.......................................... 15
----------------------------
2.2 Trade Secrets and Other Confidential Information...................... 15
------------------------------------------------
ARTICLE III
CHANGE OF CONTROL.......................................... 17
3.1 Change of Control Payments............................................ 17
--------------------------
ARTICLE IV
ADMINISTRATION, ENFORCEMENT AND OTHER MATTERS.............. 22
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
4.1 Integration........................................................... 22
-----------
4.2 Confidential Information.............................................. 23
------------------------
4.3 Severability; Governing Law........................................... 23
---------------------------
4.4 Title and Headings.................................................... 24
------------------
4.5 Notices............................................................... 24
-------
4.6 Nonassignability...................................................... 24
----------------
4.7 Attorneys' Fees and Costs for Proceedings............................. 25
-----------------------------------------
4.8 Full Settlement....................................................... 25
---------------
4.9 Waiver................................................................ 25
------
4.10 Arbitration of All Disputes........................................... 26
---------------------------
4.11 Confirmation of Consulting Relationship............................... 27
---------------------------------------
</TABLE>
EXHIBIT A STOCK OPTION AGREEMENT FOR EXECUTIVE
EXHIBIT B CATELLUS DEVELOPMENT CORPORATION BENEFITS
SUMMARY 1995
ii
<PAGE>
EMPLOYMENT AGREEMENT
BETWEEN
CATELLUS DEVELOPMENT CORPORATION
AND
STEPHEN P. WALLACE
This Employment Agreement (the "Agreement") is made and entered into as of
the 24th day of July, 1995 by and between Stephen P. Wallace ("Executive") and
Catellus Development Corporation, a Delaware corporation, with its principal
office located in San Francisco, California (the "Company").
RECITALS
A. The Company is engaged in the business of developing, managing and
marketing real estate.
B. Executive has substantial experience and expertise in the field of real
estate.
C. The Company desires to secure the services of Executive as Senior Vice
President and Chief Financial Officer of the Company and Executive desires to
perform such services for the Company on the terms and conditions hereinafter
set forth.
1
<PAGE>
A G R E E M E N T:
NOW, THEREFORE, Executive and the Company hereby agree as follows:
ARTICLE I
EMPLOYMENT RELATIONSHIP
1.1 Employment.
----------
(a) The Company hereby employs Executive as Senior Vice President and
Chief Financial Officer of the Company, with a term of service to commence on
July 24, 1995. Executive shall report to the Chief Executive Officer of the
Company and shall have such duties as may be prescribed by the Chief Executive
Officer, including managerial and administrative duties assigned by the Chief
Executive Officer and shall be part of the senior management group of the
Company.
(b) During the term of this Agreement, and subject to the provisions
hereof, Executive shall devote his full-time best efforts to his employment.
Executive shall not engage in any other activities which would represent a
material conflict with his duties to the Company. Executive may make and manage
personal business investments of his choice, provided that such activities and
services do not substantially interfere or
2
<PAGE>
conflict with the performance of duties hereunder or create any conflict of
interest with such duties.
(c) Paid vacations of three weeks every 12 months shall be permitted
and such vacation time shall vest immediately; provided, however, that for the
period from July 21, 1995 through June 30, 1996, Executive shall be entitled to
5 weeks of paid vacation.
1.2 Term.
----
This Agreement shall commence on July 24, 1995, and shall continue in
effect through June 30, 1998, subject to the termination provisions contained in
Section 1.7 hereof; provided, however, that unless the Company gives notice of
termination to Executive by June 30, 1997, the term of this Agreement shall be
automatically extended for an additional 12 months.
1.3 Base Salary.
-----------
Executive shall receive a minimum annual base salary (the "Base
Salary") payable in substantially equal installments no less than twice monthly,
with the first payment to occur on or about August 1, 1995 for corporate officer
services commencing on July 24, 1995. The Base Salary shall be reviewed every 12
months by the Chief Executive Officer of the Company and, as a result of that
review, shall be subject to possible increases based upon
3
<PAGE>
the attainment of operating goals as mutually determined by Executive and the
Chief Executive Officer of the Company. Any increase to Base Salary which
results from that review will be effective on each January 1st by the amount
which results from that review and such revised base salary shall thereafter
represent the minimum annual base salary. Executive's initial annual Base Salary
under this Agreement shall be $285,000.
1.4 Bonuses.
-------
(a) Executive acknowledges receipt of a bonus in the amount of
$62,500, which has been paid to Executive in cash with appropriate withholding
amounts deducted therefrom.
(b) Executive shall participate in the Company's annual bonus program,
which program is in the process of being implemented, with an annual target
bonus equal to 30% of Base Salary and a maximum bonus of 60% of Base Salary with
a potential bonus in a prorated amount for the period ending December 31, 1995.
All bonus payments shall be subject to appropriate withholding payments deducted
therefrom. The standards of performance for bonus payments for Executive for
1995 will be negotiated with Executive by the Chief Executive Officer of the
Company on or before August 31, 1995.
4
<PAGE>
1.5 Stock Option.
------------
On the date hereof, Executive will be granted non-qualified stock
options covering an aggregate of 330,000 shares of Common Stock of the Company
in accordance with the Company's existing Amended and Restated Executive Stock
Option Plan and the Option Agreement shall be in the form of Exhibit A attached
hereto, which option shall be effective as of the date hereof. Such stock option
shall be granted with the initial per share exercise price set at the average
closing market price for such Common Stock for the five trading days prior to
the date of this Agreement. Such option will have a mandatory withholding
feature whereby the Company will withhold such number of shares at the time of
any exercise of the option which will satisfy the estimated amount of federal
and state taxes applicable to the exercise.
Executive acknowledges that he has received and reviewed the form of
an engagement letter between the Company and Strategic Compensation Associates
and that the form of that letter is acceptable to Executive. Such letter
requests a study concerning total compensation for senior executives in
corporations which are comparable to the Company as well as a study on base
salary compensation, cash bonus compensation, equity incentive compensation,
including stock options, and the frequency of stock option grants.
5
<PAGE>
1.6 Place of Performance and Relocation Costs.
-----------------------------------------
In connection with his employment hereunder, Executive shall be based
at the current headquarters of the Company, except for required business travel
for the Company. For up to 120 days or until Executive finds permanent housing
in Northern California, whichever is earlier, Executive shall be entitled to the
use of an apartment in San Francisco on a tax free basis.
Executive shall attempt to sell his home in Newport Beach, California
for a price equal to or above $670,000 (the "Purchase Price"). If and only if he
cannot enter into a contract of sale of the home at or above the Purchase Price
by October l, 1995, then the Company shall purchase his home for the Purchase
Price. The purchase of Executive's home is designed to enable Executive to
promptly complete his relocation from his current home in Newport Beach to San
Francisco.
After acquisition, Executive's home will be owned by the Company and
subsequent disposition will be the responsibility of the Company. Executive
agrees that he and his family will cooperate in connection with the appraisal
and acquisition of his home, including permitting prospective buyers to enter
the home with reasonable notice of such visits. Executive may make routine
repairs of up to $2,000 in preparation of his home for sale and such repairs
will be at the expense of the Company.
6
<PAGE>
Executive will receive a lump sum payment of $45,000 within 30 days
from the date hereof to cover relocation costs, reimbursement for commuting
costs from Southern California to San Francisco and return trips for a 90-day
period from the date hereof and no more.
1.7 Termination of Employment.
-------------------------
(a) If at any time during the term of this Agreement, (i) Executive
involuntarily ceases to be an employee of the Company for any reason other than
Termination for Cause, disability (as defined below), death, or normal
retirement under the Company's pension plan or a qualified retirement plan of
the Company or (ii) Executive terminates employment with the Company for Good
Reason (as defined below), then Executive shall be entitled to the benefits
provided in Section 1.8 below.
(b) For purposes of this Agreement, the following definitions are set
forth below:
(i) Executive shall be "disabled" if Executive is receiving disability
benefits under a long-term disability plan or disability insurance
provided by the Company on the date his employment terminates; and
(ii) Termination by the Company for "Cause" shall mean termination upon the
willful and continued misconduct
7
<PAGE>
by Executive to substantially perform his duties with the Company
(other than any such failure resulting from his incapacity due to
physical or mental illness) after the issuance of a Notice of
Termination as set forth in this Section 1.7(b)(ii) is delivered to
Executive by the Chief Executive Officer of the Company, which Notice
specifically identifies the manner in which the Board believes that
Executive has not substantially performed his duties. For purposes of
this Section, no act, or failure to act, on Executive's part shall be
deemed "willful" unless done, or omitted to be done, by Executive not
in good faith and without reasonable belief that Executive's action or
omission was in the best interest of the Company.
Notwithstanding the foregoing, Executive shall not be terminated
for Cause pursuant to clause (ii) of Section 1.7(b) unless and until
Executive (a) has received notice of a proposed termination for cause
with a written explanation of the grounds for such proposed
termination, (b) Executive has had an opportunity to confer with the
Chief Executive Officer of the Company, and (c) Executive has had
sixty days after receipt of such notice to cure any alleged
non-performance of his duties. If at the end of such sixty-day period
the non-performance has not been cured to the satisfaction of the
Chief Executive Officer,
8
<PAGE>
then the Company, upon the determination of the Compensation Committee
of the Board of Directors of the Company, may terminate this Agreement
for Cause.
(iii) "Good Reason" shall exist if, without Executive's express written
consent, any of the following occurs:
(a) a reduction by the Company in Executive's annual base salary as in
effect on the date hereof or as the same may be increased from time to
time; or
(b) a demotion from the position or title of Chief Financial Officer
or an assigning of duties to Executive that are inconsistent in any
substantial respect with or are a reduction in any substantial respect from
the position, authority, or responsibilities associated with the position
of Chief Financial Officer of the Company; or
(c) a relocation of the Company headquarters or requirement for
Executive to be based anywhere other than within 50 miles from the site of
the current headquarters of the Company; or
(d) the failure of the Company to fulfill its obligations under this
Agreement.
9
<PAGE>
(iv) For purposes of this Agreement, "Date of Termination" shall mean the
effective date specified in the Notice of Termination as of which
Executive's employment terminates (which shall not be less than 60
days after the date such Notice of Termination is given).
1.8 Benefits Upon Termination.
-------------------------
(a) If Executive's employment is terminated for reasons other than for
Cause as described under Section 1.7(b)(ii) (i.e., disability, death or normal
retirement), then the amount of such benefits shall be equal to the sum of:
(i) the number of full months remaining in this Agreement multiplied by
Executive's monthly base salary (determined without regard to amounts
payable under any bonus program, or other forms of extraordinary
compensation) as of the Date of Termination;
(ii) the number of full months remaining in this Agreement multiplied by
Executive's target annual bonus for the year in which the termination
occurred divided by 12; and
(iii) unpaid salary with respect to any vacation days accrued but not taken
as of the Date of Termination.
10
<PAGE>
provided, however, that the amount of such benefits shall be reduced by any
- -------- -------
other benefits provided upon termination of employment to which Executive may be
entitled under any severance agreement with the Company.
Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise. The
Company shall not be entitled to set off against the amounts payable to
Executive under this Agreement any amounts owed to the Company by Executive, any
amounts earned by Executive in other employment after termination of his
employment with the Company, or any amounts which might have been earned by
Executive in other employment had he sought such other employment.
The Company shall pay Executive, no later than the fifth day following
the Date of Termination, a lump sum payment, in cash, equal to the amount due
under Section 1.8(a) of this Agreement; provided, however, Executive may elect
any time prior to the Date of Termination to receive the amounts due under
Section 1.8(a) on an installment basis as may be mutually agreed by the Company
and Executive.
(b) During the remainder of the term of this Agreement, Executive
shall continue to be treated as an employee for purposes of the Company's group
health and dental programs, but not for purposes of life, dependent care
reimbursement, health
11
<PAGE>
care reimbursement, business travel accident insurance, or long-or short-term
disability programs, tax-qualified retirement plans, or any other employee
benefit plan or program of the Company, and shall receive benefits substantially
comparable to those in effect on the day before Executive's Date of Termination.
1.9 Benefits.
--------
Executive shall be entitled to receive employee benefits (including,
but not limited to, pension, medical, insurance and disability benefits) and
perquisites appropriate for executives with comparable duties, including the use
of an automobile. Executive shall be entitled to reimbursement for all other
reasonable business expenses, including an automobile allowance of $749.92 per
month and $.1504 per mile.
With respect to medical coverage, Executive shall be entitled to
coverage for his family, for the term of this Agreement unless Executive is
terminated for Cause in which case coverage shall terminate on the Date of
Termination except for any applicable COBRA coverage. If, at any time during the
term of this Agreement, Executive involuntarily ceases to be employed by the
Company for any reason other than Termination for Cause or Executive terminates
employment with the Company for Good Reason, then Executive shall be entitled
to medical insurance for the full term of this Agreement as provided in
Section 1.8(b).
12
<PAGE>
Executive shall receive from the Company disability income replacement
coverage which will provide for replacement of 80% of base salary, to the extent
available at a commercially reasonable rate of premium, during any period in
which Executive is disabled if the disability arose during the term of this
Agreement and prior to Executive's Date of Termination. During any period while
Executive is disabled, and is otherwise entitled to receive salary under this
Agreement, any salary payments to Executive shall be reduced by the amount of
any benefits paid for the same period of time pursuant to such disability income
replacement coverage.
Executive also will be entitled to ample office space and all other
customary supplies and equipment to fulfill the requirements of his corporate
position as well as a full-time secretary.
In addition to the benefits named above, Executive shall be entitled
to a retirement program under the Company's 401-K Plan.
The Company's current benefit programs are described on Exhibit B and
such benefits and the benefits described in this Section 1.9 shall not be
materially altered except for across the board modifications applicable to all
Company executives.
13
<PAGE>
Executive shall be entitled to reimbursement for legal fees of up to
$10,000 for services of legal counsel in reviewing and negotiating this
Agreement.
1.10 Indemnity.
---------
To the fullest extent permitted by applicable law and the Bylaws of
the Company, as the same now exist or may hereafter be amended (but, in the case
of any amendment, only to the extent that such amendment permits the Company to
provide broader indemnification rights than said law or Bylaws permitted the
Company to provide prior to such amendment), the Company shall indemnify
Executive and hold Executive harmless for any acts or decisions made in good
faith while performing services for the Company, and the Company shall use its
best efforts to obtain coverage for Executive under any liability insurance
policy or policies now in force or hereafter obtained during the term of this
Agreement that cover other officers of the Company having comparable or lesser
status and responsibility. To the same extent, the Company will pay and advance
all expenses, including reasonable attorneys' fees and costs of court approved
settlements, actually and necessarily incurred by Executive in connection with
the defense of or settlement of any action, suit or proceeding and in connection
with any appeal thereon, which has been brought against Executive by reason of
Executive's service as an officer or agent of the Company or of a subsidiary of
the Company.
14
<PAGE>
ARTICLE II
COVENANTS
2.1 Covenant Against Competition. Executive agrees that for the
----------------------------
period ending on the earlier of the expiration of the term of this Agreement or
when employment is terminated hereunder, Executive will not, without the prior
written approval of the Chair of the Board of the Company, directly or
indirectly, as owner, partner, officer or employee, engage in any business which
is substantially competitive with any business then actively conducted by the
Company or by any of its subsidiaries or undertake to consult with or advise any
such competitive business, or otherwise, directly or indirectly, engage in any
activity which is substantially competitive with or in any way adversely and
substantially affecting any activity of the Company or any of its subsidiaries;
provided, however, that ownership by Executive of not more than 5 percent of the
outstanding shares of stock of any such business listed on any national stock
exchange or quoted on an automated quotation system, or of not more than 15
percent of the stock of any such business not so listed or quoted, shall not be
deemed a violation of this covenant.
2.2 Trade Secrets and Other Confidential Information. In further
------------------------------------------------
consideration of the payments to be made to Executive hereunder, Executive
agrees that:
15
<PAGE>
(a) During the term of his employment under this Agreement and for a
period of 5 years thereafter, he will not divulge to anyone, other than to
persons designated by the Company in writing or as may be required by law, any
trade secrets or other confidential information (including, without limitation
any inventions, formulae, methods or products whether or not patented or
patentable) directly or indirectly useful in any aspect of the Company's
business, as conducted from time to time, as to which Executive at any time
during his consultancy period as described in Section 4.11 or his employment
shall become, informed and which is not then generally known to the public or
recognized as standard practice; and
(b) During the employment period, upon termination of employment under
this Agreement or at any subsequent time upon request, Executive will return
promptly to the Company as its property, all corporate documents and records in
whatever form they may exist, which are then in his custody, possession or
control, including those related to trade secrets or other confidential
information.
16
<PAGE>
ARTICLE III
CHANGE OF CONTROL
3.1 Change of Control Payments.
--------------------------
In the event that a Change of Control (as defined in paragraph 3.1(c)
hereof) occurs during the term of this Agreement while the Executive is employed
by the Company, Executive shall be entitled to certain payments as follows:
(a) If, following the execution of an agreement providing for a Change
of Control or within twelve months after the occurrence of the Change of
Control, the Executive's employment by the Company or its successor is
terminated by the Company without Cause (as defined in Section 1.7(b)(ii) or by
Executive pursuant to Section 1.7(b)(iii) (relating to Termination for Good
Reason), then the Executive shall be entitled to receive from the Company or
such successor, in lieu of, and not in addition to, the amounts otherwise
payable to the Executive pursuant to Section 1.8 hereof, a lump sum payment in
an amount which is equal to three times the "base amount" in respect of
Executive as defined in Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), or any successor to that provision. In addition, the stock
option described in Section 1.5 hereto shall become fully vested in such event.
17
<PAGE>
(b) If any payments under this Agreement, after taking into account
all other payments to which Executive is entitled from the Company, or any
affiliate thereof, are more likely than not to result in a loss of a deduction
to the Company by reason of Section 280G of the Code or any successor provision
to that section, such payments shall be reduced to the extent required to avoid
such loss of deduction. Executive shall be entitled to select the order in which
payments are to be reduced in accordance with the preceding sentence.
If requested by the Company, Executive shall provide complete
compensation and tax data on a timely basis to the Company and to an accounting
or law firm designated by the Company in order to enable the Company to
determine the extent to which payments from the Company and its affiliates may
result in a loss of a deduction. If Executive incurs fees or expenses in
accumulating such information, the Company shall reimburse the Executive for any
reasonable fees and expenses so incurred.
If Executive and the Company disagree as to whether a payment under
this Agreement is more likely than not to result in the loss of a deduction, the
matter shall be resolved by an opinion of tax counsel chosen by the Company's
independent auditors. The Company shall pay the fees and expenses of such
counsel, and shall make available such information as may be reasonably
requested by such counsel to prepare the opinion.
18
<PAGE>
If, by reason of the limitations of this Section 3.1(b), the maximum
amount payable to the Executive cannot be determined prior to the due date for
such payment, the Company shall pay on the due date the minimum amount which it
in good faith determines to be payable and shall pay the remaining amount, with
interest at a rate, compounded semi-annually, equal to 120% of the applicable
Federal rate determined under Section 1274(d) of the Code, as soon as such
remaining amount is determined in accordance with this Section 3.1(b).
(c) A "Change of Control" of the Company shall be deemed to have
occurred upon the happening of any of the following events:
(1) the acquisition or holding, other than in or as a result of a
transaction approved by the Continuing Directors (as defined in paragraph
(b) below) of the Company, by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (an
"Acquiror") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 25% or more of the combined voting
power of the then outstanding shares of common stock and other stock of the
Company entitled to vote generally in the election of directors, but
excluding for this purpose:
19
<PAGE>
(i) any such acquisition (or holding) by Bay Area Real Estate
Investment Associates L.P., a limited partnership that as of the
Effective Date holds approximately 40% of the issued and outstanding
common stock of the Company (together with the limited partner
thereof, "BAREIA"), or while BAREIA is the beneficial owner of shares
having a greater percentage of such combined voting power than the
shares held by he Acquiror;
(ii) any such acquisition (or holding) by the Company or any of
its Subsidiaries, or any employee benefit plan (or related trust) of
the Company or such Subsidiaries; or
(iii) any such acquisition (or holding) by any corporation with
respect to which, following such acquisition, more than 50% of,
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the common
stock and other voting securities of the Company immediately prior to
such acquisition in substantially
20
<PAGE>
the same proportion as their ownership, immediately prior to such
acquisition, of the then outstanding shares of common stock of the
Company and of the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors;
(2) individuals who, as of the date hereof, constitute the Board (the
"Continuing Directors") cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
the Company's stockholders, was approved by a vote of at least a majority
of the persons then comprising the Continuing Directors or who was
nominated for such election by BAREIA, shall be considered a Continuing
Director, but excluding, for this purpose, any such individual whose
initial election as a member of the Board is in connection with an actual
or threatened "election contest" relating to the election of the directors
of the Company (as such term is used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act); or
(3) approval by the Company's stockholders of (i) a reorganization,
merger or consolidation of the Company, with respect to which in each case
all or substantially all of
21
<PAGE>
the individuals and entities who were the respective beneficial owners of
the common stock and voting securities of the Company immediately prior to
such reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own, directly and
indirectly, more than 50% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, of the
corporation or other entity resulting from such reorganization, merger of
consolidation, or (ii) of a complete liquidation or dissolution of the
Company, or (iii) the sale or other disposition of all or substantially all
of the assets of the Company.
ARTICLE IV
ADMINISTRATION, ENFORCEMENT AND OTHER MATTERS
4.1 Integration.
-----------
With respect to the matters covered herein, this Agreement contains
the entire agreement and understanding between Executive and the Company and
supersedes all prior oral and written agreements, understandings, commitments
and practices between the parties, whether or not fully performed by Executive
before the effective date of this Agreement, between Executive
22
<PAGE>
and the Company. No amendments to this Agreement may be made except by a writing
signed by both parties.
4.2 Confidential Information.
------------------------
Executive acknowledges and stipulates that, in the performance of his
duties hereunder, the Company may disclose to and entrust Executive with
confidential, proprietary information. Executive agrees that all such
confidential, proprietary information may be used by Executive only in the
performance of his duties hereunder. Executive agrees that he will disclose such
information only in the furtherance of his duties under this Agreement, and that
he will use reasonable precautions to ensure that any such information remains
confidential.
4.3 Severability; Governing Law.
---------------------------
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect. This Agreement shall be
interpreted under, and governed by, the laws of the State of California.
23
<PAGE>
4.4 Title and Headings.
------------------
Title and headings are for ease of reference and convenience only and
shall not be construed to affect the meaning of any provision of this Agreement.
4.5 Notices.
-------
Any notices to the Company required or permitted hereunder shall be
given in writing to the Company, either by personal service or by registered or
certified mail, postage prepaid, duly addressed to the secretary of the Company
at its then principal place of business. Any such notice to Executive shall be
given in like manner, and if mailed shall be addressed to Executive at his home
address as recorded in the employment records of the Company. For the purpose of
determining compliance with any time limit herein, a notice shall be deemed
given at the time of postmark date.
4.6 Nonassignability.
----------------
This Agreement shall not be transferable or assignable by either
Executive or the Company, except to the successor of the Company in the event of
its reorganization, merger or consolidation, approved in writing by Executive.
The terms, covenants and conditions of this Agreement shall be binding upon the
Company and its successors in the event of dissolution,
24
<PAGE>
reorganization, consolidation or merger of the Company, approved in writing by
Executive.
4.7 Attorneys' Fees and Costs for Proceedings.
-----------------------------------------
If any action at law or in equity, or any proceeding pursuant to
Section 3.10, is commenced to enforce or interpret the terms of this Agreement,
the prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which he may be
entitled.
4.8 Full Settlement.
---------------
The Company's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against Executive or others.
4.9 Waiver.
------
Either party's failure to enforce any provision or provisions of this
Agreement shall not in any way be construed as a waiver of any such provision,
or provisions, nor prevent that party thereafter from enforcing each and every
other provision of this Agreement. The rights granted both parties herein are
25
<PAGE>
cumulative and shall not constitute a waiver of either party's right to assert
all other legal remedies available to it under the circumstances.
4.10 Arbitration of All Disputes.
---------------------------
Any controversy or claim arising out of or relating to this Agreement
(or the breach thereof) shall be settled by binding and non-appealable
arbitration in San Francisco, California by an arbitrator. Executive and the
Company shall initially confer and attempt to reach agreement on the individual
to be appointed as such arbitrator. If no agreement is reached, the parties
shall request from the San Francisco office of the Judicial Arbitration and
Mediation Services ("JAMS") a list of five retired judges affiliated with JAMS.
Executive and the Company shall each alternately strike names from such list
until only one name remains and such person shall thereby be selected as the
arbitrator. Except as otherwise provided for herein, such arbitration shall be
conducted in conformity with the procedures specified in the California
Arbitration Act (Cal. C.C.P. (S)(S) 1280 et seq.). The arbitrator shall not be
-- ---
authorized to award punitive damages with respect to any claim, dispute or
controversy. The parties intend that this Section 4.10 shall be valid, binding,
enforceable and irrevocable and shall survive the termination of this Agreement
and that any arbitration proceeding hereunder shall be concluded within 60 days
after the initiation thereof. The Company and Executive shall jointly so
instruct the
26
<PAGE>
Arbitrator chosen to arbitrate any dispute arising hereunder and agree that the
criteria used by them to select such Arbitrator shall include his or her
availability to act expeditiously within not more than the 60-day period
referred to herein. The parties hereto agree that the final decisions of the
Arbitrator so chosen may be enforced by a court of competent jurisdiction.
4.11 Confirmation of Consulting Relationship.
---------------------------------------
The Company and Executive hereby agree and confirm that Executive has
performed valuable services for the Company as a Consultant from July 1, 1995
through July 23, 1995. In payment therefor, concurrently with the execution of
this Agreement, Executive is receiving a payment of $17,960 for such services
for which Executive hereby acknowledges receipt.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by an authorized officer and Executive has executed this Agreement as
of the date first above written.
CATELLUS DEVELOPMENT CORPORATION
By /s/ Nelson C. Rising
-------------------------------
Nelson C. Rising
Chief Executive Officer
"EXECUTIVE"
/s/ Stephen P. Wallace
---------------------------------
Stephen P. Wallace
27
<PAGE>
EXHIBIT A
CATELLUS DEVELOPMENT CORPORATION
AMENDED AND RESTATED EXECUTIVE STOCK OPTION PLAN
NON-QUALIFIED STOCK OPTION AWARD AGREEMENT
(Executive)
This Award Agreement ("Agreement") is entered into as of July 24, 1995
(the "Date of Grant") between Catellus Development Corporation, a Delaware
corporation ("Catellus"), and
Stephen P. Wallace
an employee of Catellus (the "Executive").
The Board of Directors (the "Board") of Catellus wishes to encourage
superior performance by the Executive and to further the identity of interests
of the Executive with the stockholders of Catellus by granting the Executive a
non-qualified stock option to acquire common stock of Catellus, par value $.01
per share ("Common Stock"), pursuant to the Amended and Restated Executive Stock
Option Plan (the "Plan").
Catellus and the Executive hereby agree as follows:
1. Number of Option Shares. This Agreement evidences the grant by
Catellus to the Executive, on the terms, conditions and restrictions set forth
herein and in the Plan, of a non-qualified stock option (the "Option") to
purchase, from time to time, a total of
330,000
shares of Common Stock (the "Option Shares").
2. Option Purchase Price. Upon exercise, the Executive shall pay to
Catellus $6.325 per Option Share, which price shall increase by 5%, compounded
annually, on each anniversary of the Date of Grant, commencing July 24, 1996
(the "Option Purchase Price").
3. Option Expiration Date. Unless terminated sooner in accordance with
the provisions of the Plan or this Agreement, the right to exercise the Option
shall expire on July 24, 2005 (the "Expiration Date").
1
<PAGE>
4. Vesting Restrictions. The Option shall be exercisable in accordance
with the following provisions:
a. No portion of the Option may be exercised for any reason until at
least six months have elapsed following the Date of Grant.
b. Subject to the provisions of Section 5 of this Agreement, the
Option shall become exercisable on or after the dates set forth below (each, a
"Vesting Date") in the following installments:
(i) The Option may be exercised as to 110,000 of the Option
Shares on and after the first anniversary of the Date of Grant.
(ii) The Option may be exercised as to 220,000 of the Option
Shares on and after the second anniversary of the Date of Grant.
(iii) The Option may be exercised as to all of the Option
Shares on and after the third anniversary of the Date of Grant.
5. Effect of Certain Events on Vesting and Exercise.
a. Termination of Employment.
(i) General. In the event of the Executive's termination of
-------
employment for any reason, any portion of the Option which has not
vested, or that is vested and is not exercised as provided in this
Section 5, shall be forfeited.
(ii) Termination as a Result of Retirement, Disability or Death.
----------------------------------------------------------
In the event of the Executive's termination of employment by reason
of retirement at or after age 65, disability (as defined in the
Plan) or death prior to the initial Vesting Date, a portion of the
Option will vest equal to the number of Option Shares subject to the
Option multiplied by a fraction, the numerator of which is the
number of months elapsed from the Date of Grant and the denominator
of which is the number of months from the Date of Grant to the final
Vesting Date.
(iii) Termination Without Cause or for Good Reason. In the
--------------------------------------------
event the Executive terminates his employment with Catellus for Good
Reason after February 1, 1996, or in the event the Executive
involuntarily ceases to be an employee of Catellus after February 1,
1996 for any reason other than as a result of retirement,
disability, death or Termination for Cause, the Option will vest as
to the entire number of Option Shares. "Good
2
<PAGE>
Reason" and "Termination for Cause" shall have the meaning set forth
in the Employment Agreement, dated as of July 24, l995, between
Executive and Catellus (the "Employment Agreement").
(iv) Termination for Cause. Notwithstanding any other
---------------------
provision herein, in the event of the Executive's termination of
employment "for cause" (as defined in the Employment Agreement) or
if the Executive (A) is employed by a competitor of, or engaged in
any activity in competition with, Catellus without Catellus'
consent, or (B) divulges without Catellus' consent any secret or
confidential information belonging to Catellus, any unexercised
portion of the Option, whether vested or unvested, shall be
immediately forfeited.
b. Change of Control. If the Executive is terminated at any time
following the execution of an agreement providing for a Change of Control or
within twelve months following a Change of Control, the Option shall vest
immediately as to the entire number of Option Shares. For purposes of this
Agreement, a "Change of Control" of Catellus shall be deemed to have occurred
upon the happening of any of the following events:
(i) the acquisition or holding, other than in or as a result
of a transaction approved by the Continuing Directors (as defined
in paragraph (ii) below) of Catellus, by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934) (an "Acquiror") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934) of 25% or more of the combined
voting power of the then outstanding shares of Common Stock and
other stock of Catellus entitled to vote generally in the election
of directors, but excluding for this purpose:
(A) any such acquisition (or holding) by Bay Area Real
Estate Investment Associates L.P., a limited partnership that as of
the date hereof holds approximately 42% of the issued and
outstanding Common Stock of Catellus (together with the limited
partner thereof, "BAREIA"), or while BAREIA is the beneficial owner
of shares having a greater percentage of such combined voting power
than the shares held by the Acquiror;
(B) any such acquisition (or holding) by Catellus or any of
its subsidiaries, or any employee benefit plan (or related trust)
of Catellus or such subsidiaries; or
(C) any such acquisition (or holding) by any corporation
with respect to which, following such acquisition, more than 50%
of,
3
<PAGE>
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Common Stock and other voting securities of Catellus immediately
prior to such acquisition in substantially the same proportion as
their ownership, immediately prior to such acquisition, of the then
outstanding shares of Common Stock of Catellus and of the combined
voting power of the then outstanding voting securities of Catellus
entitled to vote generally in the election of directors;
(ii) individuals who, as of the date hereof, constitute the
Board (the "Continuing Directors") cease for any reason to
constitute at least a majority of the Board, provided that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the stockholders of
Catellus, was approved by a vote of at least a majority of the
persons then comprising the Continuing Directors or who was
nominated for such election by BAREIA shall be considered a
Continuing Director, but excluding, for this purpose, any such
individual whose initial election as a member of the Board is in
connection with an actual or threatened "election contest" relating
to the election of the directors of Catellus (as such term is used
in Rule 14a-11 of Regulation 14A promulgated under the Securities
Exchange Act of 1934); or
(iii) approval by the stockholders of Catellus of (A) a
reorganization, merger or consolidation of Catellus, with respect
to which in each case all or substantially all of the individuals
and entities who were the respective beneficial owners of the
common stock or voting securities of Catellus immediately prior to
such reorganization, merger or consolidation will not, immediately
following such reorganization, merger or consolidation,
beneficially own, directly and indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the
corporation or other entity resulting from such reorganization,
merger or consolidation, or (B) a complete liquidation or
dissolution of Catellus, or (C) the sale or other disposition of
all or substantially all of the assets of Catellus.
4
<PAGE>
c. Exercise Period Following Termination.
(i) In the event of the Executive's termination of employment by
reason of death, any unexercised portion of the Option that is or
becomes vested upon his death in accordance with Section 5a(ii) of
this Agreement may be exercised by the Executive's personal
representative or by the person or persons to whom the Option shall
have been transferred by will or the laws of descent and
distribution at any time within one year following his death, but in
no event after the Expiration Date.
(ii) In the event of the Executive's termination of employment
for any reason other than death or "for cause" (as defined in the
Plan), any unexercised portion of the Option that is or becomes
vested upon such termination in accordance with Section 5a(ii),
5a(iii) or 5b of this Agreement (unless such unexercised portion is
forfeited in accordance with Section 5a(iv) of this Agreement) may
be exercised by the Executive at any time within three months
following such termination of employment, but in no event after the
Expiration Date.
6. Exercise of Option.
a. All or a portion of the Option may be exercised in accordance
with procedures (including requisite holding periods) established from time to
time by the Committee. If Common Shares are tendered as payment, such Common
Shares shall be valued at their Fair Market Value on the date of exercise of the
Option.
b. No fractional shares, or cash in lieu thereof, shall be issued
under the Option.
c. As a condition to the grant of the Option, the Executive agrees
that Catellus or its subsidiaries may withhold from the Common Shares to be
issued upon exercise of the Option that number of Common Shares that is
equivalent (valuing such Common Shares at their Fair Market Value on the date of
exercise of the Option) to the amount of any federal, state or local withholding
or other taxes due upon the exercise of the Option. The Committee has approved
without further condition the offset of Common Shares for such purposes (subject
to any applicable legal limitations) and the Executive irrevocably elects this
means of payment of such taxes. If any such taxes should become due after the
date of exercise, the Executive must pay, or arrange (to the satisfaction of
Catellus) to pay, the amount due.
d. No Common Shares shall be issued or transferred upon exercise of
the Option unless and until all legal requirements applicable to the issuance or
transfer of such Common Shares have been complied with to the satisfaction of
the Committee.
5
<PAGE>
7. Change in Capitalization. In the event of a change in the
capitalization of Catellus due to a stock split, stock dividend,
recapitalization, merger, consolidation, combination or similar event, an
appropriate adjustment shall be made in the number of Common Shares subject to
the Plan and the terms of the Option may be adjusted by the Committee to reflect
such change. Any adjustments pursuant to this Section shall be determined by the
Committee in its sole discretion.
8. No Assignability. The Option is not assignable or transferable by
the Executive, other than by will, by the laws of descent and distribution or
pursuant to a qualified domestic relations order (as defined by the Internal
Revenue Code of 1986, as amended, or Title I of the Employee Retirement Income
Security Act of 1974, or the rules thereunder), and may be exercised during the
lifetime of the Executive only by the Executive or, if the Executive becomes
disabled, by his legal representative.
9. Other Provisions.
a. Nothing in this Agreement or in the Plan shall confer any right
to continue employment with Catellus nor restrict Catellus from termination of
the employment relationship of the Executive at any time in accordance with the
Employment Agreement.
b. Nothing in this Agreement or in the Plan shall confer any rights
as a stockholder upon the Executive or any other person entitled to exercise the
Option with respect to any Option Shares covered by the Option until such time
as the Executive or such other person shall have become the holder of record of
such Option Shares.
c. The Executive acknowledges receipt of a copy of the Plan, which
is made a part hereof by this reference, and agrees to be bound by the terms
thereof. In the event of a conflict between the terms of this Agreement and the
Plan, the Plan shall be the controlling document; provided, however, that
-------- -------
Catellus and the Executive acknowledge that, pursuant to its authority under the
Plan, the Committee has established the vesting schedule contained in Section 4b
of this Agreement and approved the addition of Sections 5a(iii) and 5b of this
Agreement. Capitalized terms used but not defined herein shall have the
respective meanings ascribed to them in the Plan.
d. The Executive acknowledges that Catellus has the right to
terminate, modify or amend the Plan at any time, and that the grant of the
Option or of any other option in one year or at one time does not in any way
obligate Catellus to make a grant of an option at any future time or in any
given amount.
e. In the event that any provision of this Agreement is held to be
invalid, void or unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of this Agreement.
6
<PAGE>
f. The rights and obligations under this Agreement shall inure to the
benefit of, and shall be binding upon, Catellus, the Executive and the
Executive's representatives and beneficiaries.
g. Any notice to be given under the terms of this Agreement shall be
in writing and addressed to Catellus at 201 Mission Street, San Francisco,
California 94105, Attention: Secretary and to the Executive at the address given
beneath the Executive's signature, or at such other address as either party may
hereafter designate in writing to the other.
h. The interpretation, performance and enforcement of the Option and
this Agreement shall be governed by the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
"CATELLUS"
CATELLUS DEVELOPMENT
CORPORATION
By:
---------------------------------
Nelson C. Rising
President and Chief Executive
Officer
"EXECUTIVE"
-------------------------------------
Stephen P. Wallace
c/o Catellus Development Corporation
201 Mission Street
San Francisco, California 94105
7
<PAGE>
CATELLUS
CATELLUS DEVELOPMENT CORPORATION
BENEFITS SUMMARY
1995
Exhibit B
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
INSTRUCTIONS FOR OPEN ENROLLMENT
NOVEMBER 9 - 18, 1994
[_] If you are not making any changes to your plans, you need only to complete
---
the Flexible Benefits Plan Enrollment Form.
[_] If you are changing plans or adding/dependents, please obtain appropriate
forms from the Administrative Support person at your location.
[_] Medical-Prudential will continue to provide our medical coverage with an
HMO and PruCare Plus option. Kaiser will remain in place only for those
employees currently covered under the plan.
[_] Dental - Our dental plan will continue to be offered through Phoenix Home
Life.
[_] Supplemental Life/AD&D - This benefit will continue to be provided by
Phoenix Home Life at your cost. All employees presently covered will have
their coverage automatically carried over.
[_] All other benefits are paid for by Catellus and enrollment is automatic.
These benefits include:
. Vision Coverage
. Short Term/LongTerm Disability
. Basic Life/AD&D
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
BENEFIT CHANGES
[_] January 1, 1995 will see two minor changes to Catellus Development
Corporation's benefit program.
[_] Flexible Benefit Plan Benefit Increased
. Unreimbursed medical expenses increased to $1,500 per year.
[_] Vision Plan Modified
. New eyeglass frames can be purchased once every 24 months.
1995 MONTHLY COST OF HEAL BENEFITS: SAME AS 1994
SALARY RANGE EMPLOYEE/DEPENDENT HMO COST PRUCARE PLUS* DENTAL COST
- ----------------- ------------------ -------- ------------- -----------
Up to $25,000 Employee $ 5 $15 $4
Dependent $10 $30 $6
$25,00 - $35,000 Employee $16.51 $26.51 $8
Dependent $23.63 $53.63 $12
$35,001 - $50,000 Employee $21.51 $36.51 $10
Dependent $33.63 $73.63 $14
$50,001 - $70,000 Employee $26.51 $41.51 $13
Dependent $43.63 $103.63 $18
$70,001 and up Employee $31.51 $51.51 $15
Dependent $73.63 $133.63 $23
*All Health Options Include Vision Coverage through VSP
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
OPEN ENROLLMENT
MEDICAL CHOICES
HMO
BENEFITS PRUCARE
- --------------------------------- ---------------------------------
Services from or through your
Prudential Primary Care Physical
- --------------------------------- ---------------------------------
Annual Deductible None
(amount you pay before plan pays)
Doctor Visits 100% after $10 copay
Hospital Stay 100%
Emergency Room Visit 100% after $25 copay*
Preventive Care 100% after $10 copay
(well baby care, physicals)
Prescription Drugs 100% after $5 copay**
Out-of-Pocket Maximum $2,000 per individual
* In Dallas, the copay is $50
** In Dallas, the copay is $5 for generic and $10 for brand name drugs
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
OPEN ENROLLMENT
MEDICAL CHOICES
<TABLE>
<CAPTION>
BENEFITS POINT-OF-SERVICE (POS)
PRUCARE PLUS
- --------------------------------- --------------------------------------------------------
Services from or Non-Network
through your Providers
Prudential
Primary Care Physician
- --------------------------------- ---------------------- -----------------------
<S> <C> <C>
Annual Deductible None $200 individual
(amount you pay before plan pays) $500 family
Doctor Visits 100% after $10 copay 70% after deductible
Hospital Stay 90% 70% after deductible
Emergency Room Visit 100% after $25 copay 70% after deductible
Prevent Care 100% after $10 copay 70% after deductible
(well baby care, physicals) Well Child Care: Maximum
eligible charges: $15/visit,
$10/immunizations, $100/year
Prescription Drugs 100% after $5 copay
Out-of-Pocket Maximum $2,000 per individual
</TABLE>
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
<TABLE>
<CAPTION>
DENTAL
PHOENIX HOME LIFE
In-Network Out-of-Network
--------------------------------------------------------
Deductible $25 individual/$75 family
- ---------- --------------------------------------------------------
<S> <C> <C>
Preventive 100% deductible waived 100% deductible waived
Basic 90% 80%
Major 60% 50%
Orthodontia 50% 50%
Calendar Year Maximum $1,000 per individual
Orthodontia Lifetime Maximum $1,000 per individual
</TABLE>
LONG TERM DISABILITY
CIGNA
<TABLE>
<S> <C>
Elimination Period: 90 days
Monthly Benefit: 66.67% of basic monthly earnings to a maximum monthly benefit of
$10,000.
Definition of Disability You cannot perform each of the material duties of your regular
occupation; and after benefits have been paid for 24 months you cannot
perform each of the material duties of any gainful occupation for which
you are reasonably fitted by training, education or experience.
</TABLE>
SHORT TERM DISABILITY
CIGNA
<TABLE>
<S> <C>
Elimination Period: 7 days accident
7 days illness
Monthly Benefit: 66.67% of basic monthly earnings to a maximum of $2,037
Benefit Period: 13 weeks maximum (90 days).
</TABLE>
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
CORE LIFE/AD&D
PHOENIX HOME LIFE
- --------------------------------------------------------------------------------
Employee: 1.5 times basic annual earnings to a maximum benefit of $300,000
SUPPLEMENTAL LIFE/AD&D
PHOENIX HOME LIFE
- --------------------------------------------------------------------------------
Option 1: 1.5 times basic annual earnings to a maximum benefit of $300,000
Option 2: 2.5 times basic annual earnings to a maximum benefit of $300,000
Rates: 100% employee paid
- --------------------------------------------------------------------------------
Rate per $1,000 Rate per $1,000
Age Bands per month Age Bands per month
16-29 .11 50-54 .587
30-34 .135 55-59 .953
35-39 .154 60-64 1.411
40-44 .250 65-69 2.300
45-49 .364 70-74 3.433
SUPPLEMENTAL LIFE/AD&D - FAMILY LIFE BENEFITS
PHOENIX HOME LIFE
- --------------------------------------------------------------------------------
Spouse: In $10,000 units to a maximum benefit of $100,000
- --------------------------------------------------------------------------------
Rates for Spousal Benefit - Spouses rates based on Employee's spouse's age
- --------------------------------------------------------------------------------
Rate per $1,000 Rate per $1,000
Age Bands per month Age Bands per month
> 20 .11 45-49 .364
20-24 .11 50-54 .587
25-29 .11 55-59 .953
30-34 .135 60-64 1.411
35-39 .154 65-69 2.30
40-44 .250 Age 70 Terminates
Child(ren): In $2,500 units to a maximum benefit of $10,000
Rates for Child(ren): $.60 per $2,500 per month
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
FLEXIBLE SPENDING ACCOUNTS
Catellus Development Corporation will continue to offer the tax advantage of
Flexible Spending Arrangements in 1995. These benefits include:
[_] Pre-tax treatment of all employee contributions for health coverages.
[_] Pre-tax treatment of up to $1,500 in unreimbursed medical expenses.
[_] Pre-tax treatment of up to $5,000 in dependent care costs.
In 1995 Catellus Development Corporation will continue to use Lipman
Administrators of Fremont, California to administer its flexible spending
program.
[_] Reimbursement checks will continue to be paid twice monthly.
[_] Claims may be filed on a timely basis by fax machine.
Carefully determine your flexible spending account contributions for 1995.
Remember the use it or lose it provision governing these benefits.
[_] Complete the election form, sign it and return it with your other
enrollment forms.
This summary of benefits is a brief outline of your
insurance coverages. Please see the booklets for
the complete plan descriptions.
<PAGE>
EXHIBIT 10.38
LETTER OF UNDERSTANDING
March 24, 1995
Mr. Donald M. Parker
201 Mission Street
San Francisco, CA 94105
Dear Mr. Parker:
At the date hereof, you will become an officer of Catellus, namely "Vice
President - Bay Area Development". Under the employment arrangement we have
discussed, you will receive a base salary at the rate of $200,000 per year or at
the rate of approximately $16,666.66 per month.
In addition, during 1995, you will be entitled to a guaranteed bonus at the
annual rate of $60,000 for the remainder of 1995 which will begin to accrue on
April 1, 1995 resulting in a monthly accrual rate of approximately $6,666.66 per
month (the "Guaranteed Bonus"). You also will be eligible for a performance
bonus of up to an additional $60,000 for the year ending December 31, 1995 (the
"Performance Bonus") and the payment of that bonus will be predicated on
performance goals to be established by you and the undersigned within 30 days
following the date of this Letter of Understanding. The Guaranteed Bonus shall
be payable to you on or before January 15, 1996. The Performance Bonus, if any,
shall be payable to you on or before March 31, 1996.
It also is our understanding that by March 31, 1995, you will receive a
Non-Qualified Stock Option Award under the Catellus Amended and Restated
Executive Stock Option Plan (the "Option"). The Option shall cover 100,000
shares of Common Stock of Catellus (the "Stock Option"). The right to exercise
this Option shall expire in 7 years from the date of grant with respect to
50,000 of such shares, and in 10 years from the date of grant with respect to
the remaining 50,000 shares. The exercise price of the Stock Option shall be
the average of the closing prices of a share of Common Stock of Catellus for the
5 trading days immediately preceding the grant of the Stock Option. The Stock
Option shall vest to the extent of one-third of the shares covered thereby every
12 months commencing from the date
<PAGE>
of grant. The exercise price of the Stock Option shall increase by 5%
compounded annually, on each anniversary date of the Option grant. The
Compensation Committee of the Board of Directors of Catellus approved this
Option grant at its meeting held on March 21, 1995.
This Letter of Understanding is not a binding contract but is intended to
reflect our intentions with respect to the employment matters described above.
We would appreciate your signing below to reflect our understanding with respect
to your employment arrangement.
Very truly yours,
CATELLUS DEVELOPMENT CORPORATION
/s/ Nelson C. Rising
________________________________
Nelson C. Rising
President and Chief Executive Officer
The above reflects our understanding with respect to the proposed
employment arrangement between Catellus and the undersigned.
/s/ Donald M. Parker
______________________________
DONALD M. PARKER
<PAGE>
EXHIBIT 10.39
E x e c u t i o n C o p y
STOCK OPTION AWARD AGREEMENT
This Award Agreement ("Agreement") is entered into as of January 1, 1996
(the "Date of Grant") between Catellus Development Corporation, a Delaware
corporation ("Catellus"), and
Joseph R. Seiger
the Chairman of the Board of Catellus (the "Executive").
The Board of Directors (the "Board") of Catellus offered Executive the
choice of receiving his salary as Chairman of the Board for the calendar year
ending December 31, 1996 in cash or in the form of a non-qualified stock option
to acquire common stock of Catellus, par value $.01 per share ("Common Stock"),
pursuant to the Amended and Restated Executive Stock Option Plan (the "Plan")
and Executive has elected to receive the option.
Catellus and the Executive hereby agree as follows:
1. Number of Option Shares. This Agreement evidences the grant by
Catellus to the Executive, on the terms, conditions and restrictions set forth
herein and in the Plan, of a non-qualified stock option (the "Option") to
purchase, from time to time, a total of
47,319
shares of Common Stock (the "Option Shares").
2. Option Purchase Price. Upon exercise, the Executive shall pay to
Catellus $5.875 per Option Share (the "Option Purchase Price").
3. Option Expiration Date. Unless terminated sooner in accordance with
the provisions of the Plan or this Agreement, the right to exercise the Option
shall expire on January 1, 2006 (the "Expiration Date").
1
<PAGE>
4. Vesting Restrictions. The Option shall be exercisable in accordance
with the following provisions:
a. No portion of the Option may be exercised for any reason until at
least six months have elapsed following the Date of Grant.
b. Subject to the provisions of Section 5 of this Agreement, the Option
shall become exercisable (i) as to the entire number of the Option Shares on and
after the eighth anniversary of the Date of Grant or (ii) if earlier, in the
amounts indicated on and after the dates set forth below (each, a "Vesting
Date") in accordance with the provisions of Section 4c of this Agreement:
(A) The Option may be exercised up to 25% of the Option Shares
on and after the first anniversary of the Date of Grant provided the
conditions specified in Section 4c of this Agreement are met.
(B) The Option may be exercised up to 50% of the Option Shares
on and after the second anniversary of the Date of Grant provided the
conditions specified in Section 4c of this Agreement are met.
(C) The Option may be exercised up to 75% of the Option Shares
on and after the third anniversary of the Date of Grant provided the
conditions specified in Section 4c of this Agreement are met.
(D) The Option may be exercised as to up to the entire number
of the Option Shares on and after the fourth anniversary of the Date of
Grant provided the conditions specified in Section 4c of this Agreement
are met.
(c) The Option may be exercised as to (i) 25% of the Option Shares
provided the average of the Closing Price (as defined below) of a Common Share
(as defined in the Plan) for any 30 consecutive trading days following the Date
of Grant is at least $8.50; (ii) 50% of the Option Shares provided the average
Closing Price of a Common Share for any 30 consecutive trading days following
the Date of Grant is at least $10.50; (iii) 75% of the Option Shares provided
the average Closing Price of a Common Share for any 30 consecutive trading days
following the Date of Grant is at least $12.50; and (iv) 100% of the Option
Shares provided the average Closing Price of a Common Share for any 30
consecutive trading days following the Date of Grant is at least $15.00.
For purposes of this Section 4c, the term "Closing Price" shall mean,
for any trading day, the closing price of a Common Share on such day (i) on the
New York Stock Exchange ("NYSE"), if the Common Shares are then listed on such
exchange, (ii) if the Common Shares are not listed on the NYSE, on the principal
national stock exchange on which the Common Shares are then listed, or (iii) if
not listed on any national stock exchange, as reported by NASDAQ. If the Common
Shares are not then listed on any national stock exchange or reported by NASDAQ,
then the Closing Price shall be determined in any reasonable manner approved by
the Committee (as defined in the Plan).
2
<PAGE>
5. Effect of Certain Events on Vesting and Exercise.
a. Termination of Service.
(i) General. In the event the Executive ceases to be a director
-------
for any reason, any portion of the Option that (A) has not vested as of
such termination of service, or (B) is vested as of such termination or
becomes vested as a result of such termination in accordance with Section
5a(ii), 5a(iii), or 5b and is not exercised within the period specified in
Section 5d, shall be forfeited.
(ii) Termination as a Result of Retirement, Disability or Death.
----------------------------------------------------------
In the event the Executive ceases to be a director prior to the initial
Vesting Date by reason of (A) retirement at or after age 65, (B) disability
(as defined in the Plan), or (C) death, a portion of the Option will vest
equal to the number of Option Shares subject to the Option multiplied by a
fraction, the numerator of which is the number of months elapsed from the
Date of Grant and the denominator of which is the number of months from the
Date of Grant to the final Vesting Date.
(iii) Termination for Reasons Beyond Executive's Control.
--------------------------------------------------
In the event the Executive ceases to be a director for any reason other
than (A) retirement at or after age 65, (B) disability, (C) death, (D)
voluntary resignation, (E) nonperformance of his duties as Chairman of the
Board, or (F) "for cause" (as defined in the Plan), the Option shall vest
immediately as to the entire number of Option Shares.
(iv) Termination for Cause. Notwithstanding any other provision
---------------------
herein, in the event the Executive ceases to be a director "for cause", any
unexercised portion of the Option, whether vested or unvested, shall be
immediately forfeited.
b. Change of Control. If the Executive is terminated at any time
within twelve months following a Change of Control, the Option shall vest
immediately as to the entire number of Option Shares. For purposes of this
Agreement, a "Change of Control" of Catellus shall be deemed to have occurred
upon the happening of any of the following events:
(i) the acquisition or holding, other than in or as a result of a
transaction approved by the Continuing Directors (as defined in paragraph
(ii) below) of Catellus, by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934) (an "Acquiror") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Securities Exchange Act of 1934) of 25% or more
of the combined voting power of
3
<PAGE>
the then outstanding shares of Common Stock and other stock of Catellus
entitled to vote generally in the election of directors, but excluding for
this purpose:
(A) any such acquisition (or holding) by the California
Public Employees' Retirement System ("CalPERS"), which as of the date
hereof holds approximately 41% of the issued and outstanding Common
Stock of Catellus, or while CalPERS is the beneficial owner of shares
having a greater percentage of such combined voting power than the
shares held by the Acquiror;
(B) any such acquisition (or holding) by Catellus or any of
its subsidiaries, or any employee benefit plan (or related trust) of
Catellus or such subsidiaries; or
(C) any such acquisition (or holding) by any corporation
with respect to which, following such acquisition, more than 50% of,
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Common
Stock and other voting securities of Catellus immediately prior to
such acquisition in substantially the same proportion as their
ownership, immediately prior to such acquisition, of the then
outstanding shares of Common Stock of Catellus and of the combined
voting power of the then outstanding voting securities of Catellus
entitled to vote generally in the election of directors;
(ii) individuals who, as of the date hereof, constitute the Board
(the "Continuing Directors") cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
the stockholders of Catellus, was approved by a vote of at least a majority
of the persons then comprising the Continuing Directors, shall be
considered a Continuing Director, but excluding, for this purpose, any such
individual whose initial election as a member of the Board is in connection
with an actual or threatened "election contest" relating to the election of
the directors of Catellus (as such term is used in Rule 14a-11 of
Regulation 14A promulgated under the Securities Exchange Act of 1934); or
(iii) approval by the stockholders of Catellus of (A) a
reorganization, merger or consolidation of Catellus, with respect to which
in each case all or substantially all of the individuals and entities who
were the respective beneficial owners of the common stock and other voting
securities of Catellus
4
<PAGE>
immediately prior to such reorganization, merger or consolidation will not,
immediately following such reorganization, merger or consolidation,
beneficially own, directly and indirectly, more than 50% of, respectively,
the then outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote generally in the
election of directors of the corporation or other entity resulting from
such reorganization, merger or consolidation, or (B) a complete liquidation
or dissolution of Catellus, or (C) the sale or other disposition of all or
substantially all of the assets of Catellus.
c. Forfeiture. Notwithstanding any other provision herein, any
unexercised portion of the Option, whether vested or unvested, shall be
immediately forfeited if the Executive (i) is employed by a competitor of, or
engaged in any activity in competition with, Catellus without Catellus' consent,
(ii) divulges without Catellus' consent any secret or confidential information
belonging to Catellus, or (iii) is engaged in any other activities which would
constitute grounds for termination "for cause".
d. Exercise Period Following Termination of Service.
(i) In the event the Executive ceases to be a director by
reason of death, any unexercised portion of the Option that is or becomes
vested upon his death in accordance with Section 5a(ii) of this Agreement
may be exercised by the Executive's personal representative or by the
person or persons to whom the Option shall have been transferred by will or
the laws of descent and distribution at any time within one year following
his death, but in no event after the Expiration Date.
(ii) In the event the Executive ceases to be a director (A)
for any reason (1) other than death or (2) other than "for cause" or (B) by
reason of the resignation of the Executive, any unexercised portion of the
Option that is or becomes vested upon such termination in accordance with
Section 5a(ii), 5a(iii), or 5b of this Agreement (unless such unexercised
portion is forfeited in accordance with Section 5a(iv) or 5c of this
Agreement) may be exercised by the Executive at any time within three
months following such termination of service, but in no event after the
Expiration Date.
6. Exercise of Option.
a. All or a portion of the Option may be exercised in accordance
with procedures (including requisite holding periods) established from time to
time by the Committee. If shares of Common Stock are tendered as payment, such
shares of Common Stock shall be valued at their Fair Market Value (as defined in
the Plan) on the date of exercise of the Option.
5
<PAGE>
b. No fractional shares, or cash in lieu thereof, shall be issued
under the Option.
c. As a condition to the grant of the Option, the Executive agrees
(i) that Catellus may deduct from any payments of any kind otherwise due to the
Executive from Catellus the aggregate amount of any federal, state or local
taxes of any kind required by law to be withheld with respect thereto or, if no
such payments are due or to become due to the Executive, that the Executive
shall pay to Catellus, or make arrangements satisfactory to Catellus regarding
the payment to it of, such taxes and (ii) that Catellus may withhold from the
shares of Common Stock to be issued upon exercise of the Option that number of
shares of Common Stock that is equivalent (valuing such shares of Common Stock
at their Fair Market Value on the date of exercise of the Option) to the amount
of any federal, state or local withholding or other taxes due upon the exercise
of the Option. The Committee has approved without further condition the offset
of shares of Common Stock for such purposes (subject to any applicable legal
limitations) and the Executive irrevocably elects this means of payment of such
taxes. If any such taxes should become due after the date of exercise, the
Executive must pay, or arrange (to the satisfaction of Catellus) to pay, the
amount due.
d. No shares of Common Stock shall be issued or transferred upon
exercise of the Option unless and until all legal requirements applicable to the
issuance or transfer of such Common Stock have been complied with to the
satisfaction of the Committee.
7. Change in Capitalization. In the event of a change in the
capitalization of Catellus due to a stock split, stock dividend,
recapitalization, merger, consolidation, combination or similar event, an
appropriate adjustment shall be made in the number of Common Shares subject to
the Plan and the terms of the Option may be adjusted by the Committee to reflect
such change. Any adjustments pursuant to this Section shall be determined by the
Committee in its sole discretion.
8. No Assignability. The Option is not assignable or transferable by
the Executive, other than by will, by the laws of descent and distribution or
pursuant to a qualified domestic relations order (as defined by the Internal
Revenue Code of 1986, as amended, or Title I of the Employee Retirement Income
Security Act of 1974, or the rules thereunder), and may be exercised during the
lifetime of the Executive only by the Executive or, if the Executive becomes
disabled, by his legal representative.
6
<PAGE>
9. Other Provisions.
a. Nothing in this Agreement or in the Plan shall confer any right
to continue as a director or the Chairman of the Board of Catellus nor restrict
Catellus from termination of the Executive as a director or the Chairman of the
Board of Catellus at any time.
b. Nothing in this Agreement or in the Plan shall confer any rights
as a stockholder upon the Executive or any other person entitled to exercise the
Option with respect to any Option Shares covered by the Option until such time
as the Executive or such other person shall have become the holder of record of
such Option Shares.
c. The Executive acknowledges receipt of a copy of the Plan, which
is made a part hereof by this reference, and agrees to be bound by the terms
thereof. In the event of a conflict between the terms of this Agreement and the
Plan, the Plan shall be the controlling document; provided, however, that
Catellus and the Executive acknowledge that, pursuant to its authority under the
Plan, the Committee has established the Option Purchase Price contained in
Section 2 of this Agreement and the vesting schedule contained in Sections 4b
and 4c of this Agreement and approved the addition of Sections 5a(iii) and 5b of
this Agreement. Capitalized terms used but not defined herein shall have the
respective meanings ascribed to them in the Plan.
d. The Executive acknowledges that Catellus has the right to
terminate, modify or amend the Plan at any time, but that no such termination,
modification or amendment may, without the Executive's consent, adversely affect
the rights of the Executive under the Option. The Executive further acknowledges
that the grant of the Option or of any other option in one year or at one time
does not in any way obligate Catellus to make a grant of an option at any future
time or in any given amount.
e. In the event that any provision of this Agreement is held to be
invalid, void or unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of this Agreement.
f. The rights and obligations under this Agreement shall inure to
the benefit of, and shall be binding upon, Catellus, the Executive and the
Executive's representatives and beneficiaries.
g. Any communication under this Agreement shall be in writing and
addressed to Catellus at 201 Mission Street, San Francisco, California 94105,
Attention: Secretary and to the Executive at the address given beneath the
Executive's signature, or at such other address as either party may hereafter
designate in writing to the other.
7
<PAGE>
h. The interpretation, performance and enforcement of the Option and
this Agreement shall be governed by the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
"CATELLUS"
CATELLUS DEVELOPMENT
CORPORATION
By: /s/ Nelson C. Rising
--------------------------------
Nelson C. Rising
Chief Executive Officer
ATTEST:
"EXECUTIVE"
/s/ Barbara Zeyen
- --------------------------------
Assistant Secretary
/s/ Joseph R. Seiger
------------------------------------
Joseph R. Seiger
Chairman of the Board
c/o Catellus Development Corporation
201 Mission Street
San Francisco, California 94105
8
<PAGE>
EXHIBIT 10.40
C A T E L L U S
TO: Theodore L. Tanner
FROM: Nelson C. Rising
DATE: November 15, 1995
RE: Revised Memorandum of Understanding Regarding Termination of
Employment
- --------------------------------------------------------------------------------
This Revised Memorandum of Understanding ("Revised Memorandum") has
been prepared in accordance with our discussions. Catellus Development
Corporation ("Company") and you have agreed that your employment with the
Company will terminate as of December 31, 1995, which will then become your
termination date ("Termination Date"). This Revised Memorandum sets forth the
terms of your continued employment, termination and severance benefits.
Effective upon your execution of this Revised Memorandum, the
following provisions shall govern your employment with the Company:
. You will continue to receive your regular compensation through your
Termination Date, in accordance with the Company's normal payroll
practice.
. Until your Termination Date, you will remain subject to all of the
Company's personnel policies, including, but not limited to, the
Company's disciplinary and normal termination policies. It remains
within the Company's discretion to alter, amend, change or modify,
within the parameters of the law, any and all conditions of your
employment, including but not limited to your benefits and wages.
. During your employment, you shall continue to receive all benefits
provided to regular full-time employees.
. In addition to the benefits provided for in this Revised
Memorandum, on your Termination Date, you are entitled to receive
payment for certain accrued but unused benefits, calculated as of
October 24, 1995 to be as of your Termination Date:
Floating Holiday, Personal Choice
Days and Vacation $14,163.60
Banked Vacation $ 7,725.60
-----------
$21,889.20
<PAGE>
. Upon the timely execution, without revocation, of the Agreement
and Release of Claims ("Agreement"), attached as Exhibit A,
Catellus shall pay to you as settlement of all claims, the sum of
Sixty-Six Thousand Nine Hundred and Fifty Dollars ($66,950.00),
less applicable taxes and deductions authorized by law, as a
lump-sum severance ("Severance Benefit") payment. The Severance
Benefit will be treated as "wages" for the purposes of state and
federal employment taxes and, as such, is subject to withholding
and other payroll taxes as provided by applicable law. You have
been given at least 21 days to consider the Agreement. You have
through January 3, 1996 to consider the Agreement and you have
the right to revoke the Agreement anytime within seven (7) days
after your delivery to the Company of an executed copy of the
Agreement. Under no circumstances may the Agreement be executed
prior to your Termination Date.
. If you sign the Agreement and do not subsequently revoke it, the
Severance Benefit payable to you will be mailed to you within
five (5) days after the expiration of the seven- (7) day
revocation period. If you choose not to sign the Agreement, no
Severance Benefit will be payable to you.
. If you sign the Agreement, without revocation, and you make a
timely COBRA election, the Company will pay the COBRA premiums
for you and any Qualified Beneficiary until the earlier of: the
date you become covered under another employer's group health
plan or June 30, 1996.
. In accordance with the Company's 1995 compensation package, you
will remain eligible for a Bonus of up to 60% of your annual base
salary. The full 60% Bonus shall be payable, in accordance with
the package, only if you successfully complete the Metropolitan
Transit Authority Project and effectuate an orderly transition to
your successor of all of your current responsibilities. Your
Bonus, if any, shall be determined on or before January 2, 1996
and payable on January 16, 1996.
. You shall never disclose any confidential information gained as a
result of your employment with Catellus and you acknowledge that
any such information, whether written or oral, obtained by you at
any time during your employment shall remain confidential, except
as required by law.
. A legal determination that any provision of this Revised
Memorandum is void, invalid or unenforceable shall have no effect
on the remaining provisions.
2.
<PAGE>
. All Company property in your possession, including, but not limited
to files and records, must be returned to the Company on or before
your Termination Date.
. This Revised Memorandum supersedes all other agreements, written
and/or verbal.
. You agree to keep the terms of this Revised Memorandum completely
confidential, and you will not hereafter disclose any information
concerning this Revised Memorandum to anyone, except as is required
by law and is necessary for legitimate law enforcement or
compliance purposes.
In order for this Revised Memorandum to become effective, you must
sign the below Acknowledgment and Agreement and return it to Maureen Sullivan,
General Counsel, by November 17, 1995.
ACKNOWLEDGMENT AND AGREEMENT
I agree to the terms of the Revised Memorandum of Understanding dated
November 15, 1995.
Date: November 16, 1995 /s/ Theodore L. Tanner
-------------------------------------
Theodore L. Tanner
3.
<PAGE>
EXHIBIT A
AGREEMENT AND RELEASE OF ALL CLAIMS
This Agreement and Release of All Claims ("Agreement") is made and
entered into by and between THEODORE L. TANNER (hereinafter sometimes referred
to as the "Employee") and CATELLUS DEVELOPMENT CORPORATION, its successors,
subsidiaries, related companies, parent company, and affiliates (hereinafter
sometimes referred to as the "Company").
The Company believes and Theodore L. Tanner agrees that it is
authorized to terminate the Employee's employment without notice or cause;
The Company through a Revised Memorandum of Understanding Regarding
Employment dated November 15, 1995 (the "Revised Memorandum") has offered a
certain Severance Benefit;
The Employee's employment terminates effective December 31, 1995;
Receipt of this Severance Benefit as set forth in the Revised
Memorandum requires that the Employee execute this Agreement referred to in the
Revised Memorandum as the "Agreement";
The Employee does not have pending against the Company or any
employee, agent, official, or director of the Company any claim, charge, or
action in or with any federal, state, or local court or administrative agency;
and
The Employee wishes to receive the Severance Benefit provided under
the Revised Memorandum.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained in this document and the payment of the Severance Benefit under the
Revised Memorandum; which benefits shall be paid by the Company to the Employee
in accordance with this Agreement, and in an effort to avoid unnecessary
lawsuits, it is hereby agreed by and between the parties as follows;
FIRST: This Agreement and compliance with this Agreement shall not be
-----
construed as an admission by the Company of any liability whatsoever, or as an
admission by the Company of any violation of the rights of Theodore L. Tanner or
any other person, violation of any order, law, statute, duty, or contract
whatsoever against the Employee or any other person. The Company specifically
disclaims any liability to the Employee or any other person for any alleged
violation of the rights of the Employee or any other person, or for any alleged
1.
<PAGE>
violation of any order, law, statute, duty, or contract on the part of the
Company, its employees or agents or related companies or their employees or
agents.
SECOND: (a) Theodore L. Tanner understands and agrees that he has
------
not executed this Agreement without first having considered it for a full
twenty-one (21) days from the receipt of this Agreement and that he did not
execute this Agreement without first being advised in writing to consult an
attorney. The Agreement will be executed by the Employee on not earlier than
your Termination Date and no later than January 3, 1996. If after seven (7)
days after the Employee delivers to the Company an executed copy of this
Agreement and if the Employee has not exercised the Employee's right of
revocation as described in paragraph 8.F below, the Company shall cause to be
delivered (by U.S. mail) within five (5) days, a check equal to his Severance
Benefit due as calculated pursuant to the terms of the Revised Memorandum in the
gross amount of Sixty-Six Thousand Nine Hundred Fifty Dollars ($66,950.00) minus
employment taxes and any other deductions authorized by law.
(b) The Employee agrees that the foregoing payment constitutes the
entire amount of monetary consideration provided to the Employee under this
Agreement and that the Employee will not seek any further compensation for any
other claimed damage, costs, or attorneys' fees in connection with the matters
encompassed in this Agreement, including, but not limited to, any claim with
respect to discrimination, the WARN Act or any other matter. As to the WARN
Act, the Employee agrees that he is waiving all rights, if any, under said Act
and that the Employee is entering into this Agreement freely, voluntarily and
without any coercion.
(c) The Employee agrees that the Employee will not seek nor accept
employment with the Company in the future and that the Company is entitled to
reject without cause any application for employment with the Company made by the
Employee.
THIRD: The Employee represents that the Employee has not filed any
-----
complaints, claims, or actions against the Company, its officers, agents,
directors, supervisors, employees, or representatives with any state, federal,
or local agency or court and that the Employee will not do so at any time
hereafter (either on his account or as a member of a class) and that if any
agency or court assumes jurisdiction of any complaint, claim, or action
(including, without limitation, any class action) against the Company or its
affiliated companies or any of their officers, agents, directors, supervisors,
employees, or representatives on behalf of the Employee, the Employee will
direct that agency or court to withdraw from or dismiss with prejudice the
matter as to any claim made by him or on his behalf.
FOURTH: If requested by the Company, and upon reasonable notice, the
------
Employee will act or appear as a witness, deponent or in any other reasonable
capacity to assist the Company or any affiliate in any civil or criminal action
not arising from this Agreement.
FIFTH: The Employee agrees that all rights under section 1542 of the
-----
Civil Code of the State of California are waived by the Employee. Section 1542
provides as follows:
2.
<PAGE>
A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor.
SIXTH: Notwithstanding the provisions of section 1542 of the Civil
-----
Code of the State of California, or any other similar statute under the law of
the state of employment or residence, the Employee hereby irrevocably and
unconditionally releases and forever discharges the Company and each and all of
its officers, agents, directors, supervisors, employees, representatives, and
their successors and assigns and all persons acting by, through, under, or in
concert with any of them from any and all charges, complaints, claims, and
liabilities of any kind or nature whatsoever, known or unknown, suspected or
unsuspected (hereinafter referred to as "claim" or "claims") which the Employee
at any time heretofore had or claimed to have or which the Employee may have or
claim to have regarding events that have occurred as of the date of this
Agreement, including, without limitation, any and all claims related or in any
manner incidental to the Employee's employment with the Company or the
termination therefrom or notice with respect to termination therefrom under the
WARN Act (29 U.S.C. (S) 2101, et seq.) or otherwise. It is expressly understood
-------
by Theodore L. Tanner that among the various rights and claims being waived in
this Agreement are those arising under the Age Discrimination in Employment Act
of 1967 (29 U.S.C. (S) 621, et seq.).
-------
SEVENTH: The parties understand the word "claims" to include all
-------
actions, claims, and grievances, whether actual or potential, known or unknown,
and specifically but not exclusively all claims arising out of the Employee's
employment with the Company and the Employee's termination. All such claims
(including related attorneys' fees and costs) are forever barred by this
Agreement regardless of whether those claims are based on any alleged breach of
a duty arising in a statute, contract, constitutional provision, or tort; any
alleged unlawful act, including, without limitation, discrimination or
harassment of any kind (including, without limitation: age, race, sex, national
origin, marital status, religion, sexual preference, veteran's preference,
disability); notice under the WARN Act; any other claim or cause of action; and
regardless of the forum in which it might be brought.
EIGHTH: The Employee understands and agrees that he:
------
A. has reviewed all aspects of this Agreement;
B. has carefully read and fully understands all the provisions
of this Agreement;
C. understands that in agreeing to this document he is
releasing the Company from any and all claims he may have against the Company;
D. knowingly and voluntarily agrees to all the terms set forth
in this Agreement;
3.
<PAGE>
E. was advised and hereby is advised in writing to consider the
terms of this Agreement and consult with an attorney of his choice prior to
executing this Agreement;
F. has a full seven (7) days following the execution of this
Agreement to revoke the Agreement and has been and hereby is advised in writing
that this Agreement shall not become effective or enforceable until the
revocation period has expired; and
G. understands that rights or claims under the Age Discrimination in
Employment Act of 1967 (29 U.S.C. (S) 621, et seq.) that may arise after the
-------
date of this Agreement is executed are not waived.
NINTH: The parties acknowledge that they do not rely and have not
-----
relied upon any representation or statement made by any of the parties other
than those specifically stated in this written Agreement.
TENTH: This Agreement shall be binding upon the parties hereto and
-----
upon their heirs, administrators, representatives, executors, successors, and
assigns, and shall inure to the benefit of said parties and each of them and to
their heirs, administrators, representatives, executors, successors, and
assigns. The Employee expressly warrants that the Employee has not transferred
to any person or entity any rights, causes of action, or claims released in this
Agreement.
ELEVENTH: Should any provision of this Agreement be declared or be
--------
determined by any court of competent jurisdiction to be wholly or partially
illegal, invalid, or unenforceable, the legality, validity, and enforceability
of the remaining parts, terms, or provisions shall not be affected thereby, and
said illegal, unenforceable, or invalid part, term, or provision shall be deemed
not to be a part of this Agreement.
TWELFTH: This Agreement sets forth the entire agreement between the
-------
parties hereto and fully supersedes any and all prior agreements or
understandings, written or oral, between the parties hereto pertaining to the
subject matter hereof, except with respect to the post termination availability
of health coverage and the payment of the Bonus referred to in the Revised
Memorandum.
THIRTEENTH: This Agreement shall be interpreted in accordance with
----------
the plain meaning of its terms and not strictly for or against any of the
parties hereto.
FOURTEENTH: If the Employee breaks his promise in this Agreement by
----------
filing a lawsuit or other complaint or charge based on claims that the Employee
has released, or by not having claim made on his behalf by a class-type action
dismissed, as to any person or entity, the Employee will pay that person's or
entity's reasonable attorneys' fees and all other costs incurred in defending
against the Employee's claim. In addition, if the Employee breaks the promises
made in this Agreement, the Employee shall forfeit all right to future benefits
under
4.
<PAGE>
the Agreement and must repay all Agreement benefits and all Severance Benefits
previously received, upon the Company's demand.
FIFTEENTH: Finally, Employee agrees not to disparage the Company in
---------
any manner and not to disclose any confidential information or trade secrets
which the Employee learned while employed by the Company. The Employee further
agrees not to solicit or help anyone solicit any employees or customers of the
Company to cease employment or to cease doing business with the Company.
THEODORE L. TANNER CATELLUS DEVELOPMENT CORPORATION
By:
- --------------------------- -------------------------------
Title:
---------------------------
Dated: -------------------- Dated: ---------------------------
5.
<PAGE>
EXHIBIT 10.41
TO: Jeffrey K. Gwin
FROM: Tim Beaudin
DATE: February 16, 1996
RE: Memorandum of Understanding Regarding Separation From Employment
- --------------------------------------------------------------------------
This Memorandum of Understanding ("Memorandum") has been prepared
in accordance with our various discussions. Catellus Development Corporation
("Catellus") continues to undergo reorganization and consequently continues to
make management adjustments. As an at-will employee both you and Catellus may
terminate your employment at any time. In accordance with our discussions,
Catellus is prepared to accept your resignation.
Effective upon your execution of this Memorandum, the following
provisions shall govern your employment with the Company:
. You resign as Vice President Development of Catellus
effective February 23, 1996 ("Resignation Date").
. All accrued salary and benefits in the amount of Twenty Seven
Thousand Seventy-Seven Dollars and Sixty-Four Cents
($27,077.64) shall be paid as of your Resignation Date.
. Upon the timely execution, without revocation, of the
Agreement and Release of Claims ("Agreement"), attached as
Exhibit A, Catellus shall pay to you severance in the amount
of $143,000 payable as follows:
$ 25,000.00 payable on June 6, 1996;
$ 118,000.00 payable on January 2, 1997
Such severance shall be taxable as wages and subject to
applicable state and federal taxes.
. If the Agreement is so executed and you make a timely
election for COBRA coverage, Catellus shall also pay on your
behalf COBRA premiums for you and all dependents covered by
Catellus group health plan as of your Resignation Date until
the earlier of: group health coverage of any type is made
available to you or eighteen months from your Resignation
Date.
. You shall never disclose any confidential information gained
as a result of your employment with Catellus and you
acknowledge that any such
<PAGE>
information, whether written or oral, obtained by you at any
time during your employment shall remain confidential.
. A legal determination that any provision of this Memorandum
is void, invalid or unenforceable shall have no effect on the
remaining provisions.
. This Memorandum supersedes all other agreements, written
and/or verbal.
. You agree to keep the terms of this Memorandum completely
confidential, and you will not hereafter disclose any
information concerning this Memorandum to anyone, except as
is required by law and is necessary for legitimate law
enforcement or compliance purposes.
In order for this Memorandum to become effective, you must sign the
below Acknowledgment and Agreement and return it to Jaime Gertmenian in San
Francisco by February 23, 1996.
ACKNOWLEDGMENT AND AGREEMENT
I agree to the terms of the Memorandum of Understanding dated
February 16, 1996.
Date: February 21, 1996 /s/ Jeffrey K. Gwin
--------------------------------------
Jeffrey K. Gwin
<PAGE>
EXHIBIT A
AGREEMENT AND RELEASE OF ALL CLAIMS
This Agreement and Release of All Claims ("Agreement") is made and
entered into by between JEFFREY K. GWIN (hereinafter sometimes referred to as
the "Employee") and CATELLUS DEVELOPMENT CORPORATION, its successors,
subsidiaries, related companies, parent company, and affiliates (hereinafter
sometimes referred to as the "Company").
The Company believes and Jeffrey K. Gwin agrees that it is
authorized to terminate the Employee's employment without notice or cause;
The Company through a Memorandum of Understanding Regarding
Separation from Employment dated February 16, 1996 (the "Memorandum") has
offered certain Severance Benefits;
The Employee resigns his employment effective February 23, 1996.
Receipt of this Severance as set forth in the Memorandum requires
that the Employee execute this Agreement referred to in the Memorandum as the
"Release";
The Employee does not have pending against the Company or any
employee, agent, official, or director of the Company any claim, charge, or
action in or with any federal, state, or local court or administrative agency;
and
The Employee wishes to receive the Severance provided under the
Memorandum.
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained in this document and the payment of the Severance under the
Memorandum; which benefits shall be paid by the Company to the Employee in
accordance with this Agreement, and in an effort to avoid unnecessary lawsuits,
it is hereby agreed by and between the parties as follows;
First: This Agreement and compliance with this Agreement shall
-----
not be construed as an admission by the Company of any liability whatsoever, or
as an admission by the Company of any violation of the rights of Jeffrey K.
Gwin or any other person, violation of any order, law, statute, duty, or
contract whatsoever against the Employee or any other person. The Company
specifically disclaims any liability to the Employee or any other person for
any alleged violation of the rights of the Employee or any other person, or for
any alleged violation of any order, law, statute, duty, or contract on the part
of the Company, its employees or agents or related companies or their employees
or agents.
<PAGE>
Second: (a) Jeffrey K. Gwin understands and agrees that he has
------
not executed this Agreement without first having considered it for a full
twenty-one (21) days from the receipt of this Agreement and that he did not
execute this Agreement without first being advised in writing to consult an
attorney. The Agreement will be executed by the Employee on March 11, 1996.
If after seven (7) days after the Employee delivers to the Company an executed
copy of this Agreement and if the Employee has not exercised the Employee's
right of revocation as described in paragraph 8.F below, the Company shall
cause to be delivered (by U.S. mail) a check equal to Twenty-Five Thousand
Dollars ($25,000.00) (less applicable taxes) on June 3, 1996 and a check equal
to One Hundred Eighteen Thousand Dollars ($118,000.00) (less applicable taxes)
on January 2, 1997 and the Company shall pay COBRA premiums pursuant to the
terms of the Memorandum.
(b) The Employee agrees that the foregoing payment
constitutes the entire amount of monetary consideration provided to the
Employee under this Agreement and that the Employee will not seek any further
compensation for any other claimed damage, costs, or attorneys' fees in
connection with the matters encompassed in this Agreement.
(c) The Employee agrees that the Employee will not
seek nor accept employment with the Company in the future and that the Company
is entitled to reject without cause any application for employment with the
Company made by the Employee.
Third: The Employee represents that the Employee has not filed
-----
any complaints, claims, or actions against the Company, its officers, agents,
directors, supervisors, employees, or representatives with any state, federal,
or local agency or court and that the Employee will not do so at any time
hereafter (either on his account or as a member of a class) and that if any
agency or court assumes jurisdiction of any complaint, claim, or action
(including, without limitation, any class action) against the Company or its
affiliated companies or any of their officers, agents, directors, supervisors,
employees, or representatives on behalf of the Employee, the Employee will
direct that agency or court to withdraw from or dismiss with prejudice the
matter as to any claim made by him or on his behalf.
Fourth: If requested by the Company, and upon reasonable
------
notice, the Employee will act or appear as a witness, deponent or in any other
reasonable capacity to assist the Company or any affiliate in any civil or
criminal action not arising from this Agreement.
Fifth: The Employee agrees that all rights under section 1542
-----
of the Civil Code of the State of California are waived by the Employee.
Section 1542 provides as follows:
2
<PAGE>
A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him must
have materially affected his settlement with the debtor.
SIXTH: Notwithstanding the provisions of section 1542 of the
-----
Civil Code of the State of California, or any other similar statute under the
law of the state of employment or residence, the Employee hereby irrevocably
and unconditionally releases and forever discharges the Company and each and
all of its officers, agents, directors, supervisors, employees,
representatives, and their successors and assigns and all persons acting by,
through, under, or in concert with any of them from any and all charges,
complaints, claims, and liabilities of any kind or nature whatsoever, known or
unknown, suspected or unsuspected (hereinafter referred to as "claim" or
"claims") which the Employee at any time heretofore had or claimed to have or
which the Employee may have or claim to have regarding events that have
occurred as of the date of this Agreement, including, without limitation, any
and all claims related or in any manner incidental to the Employee's employment
with the Company or the termination therefrom. It is expressly understood by
Jeffrey K. Gwin that among the various rights and claims being waived in this
Agreement are those arising under the Age Discrimination in Employment Act of
1967 (29 U.S.C. Section 621, et seq.).
-------
SEVENTH: The parties understand the word "claims" to include
-------
all actions, claims, and grievances, whether actual or potential, known or
unknown, and specifically but not exclusively all claims arising out of the
Employee's employment with the Company and the Employee's termination. All
such claims (including related attorneys' fees and costs) are forever barred by
this Agreement regardless of whether those claims are based on any alleged
breach of a duty arising in a statute, contract, constitutional provision, or
tort; any alleged unlawful act, including, without limitation, discrimination
or harassment of any kind (including, without limitation: age, race, sex,
national origin, marital status, religion, sexual preference, veteran's
preference, disability); any other claim or cause of action; and regardless of
the forum in which it might be brought.
EIGHTH: The Employee understands and agrees that he:
------
A. has reviewed all aspects of this Agreement;
B. has carefully read and fully understands all the
provisions of this Agreement;
C. understands that in agreeing to this document he is
releasing the Company from any and all claims he may have against the Company;
D. knowingly and voluntarily agrees to all the terms set
forth in this Agreement;
3
<PAGE>
E. was advised and hereby is advised in writing to
consider the terms of this Agreement and consult with an attorney of his choice
prior to executing this Agreement.
F. has a full seven (7) days following the execution of
this Agreement and has been and hereby is advised in writing that this
Agreement shall not become effective or enforceable until the revocation period
has expired; and
G. understands that rights or claims under the Age
Discrimination in Employment Act of 1967 (29 U.S.C. Section 621, et seq.) that
-------
may arise after the date of this Agreement is executed are not waived.
NINTH: The parties acknowledge that they do not rely and have
-----
not relied upon any representation or statement made by any of the parties
other than those specifically stated in this written Agreement.
TENTH: This Agreement shall be binding upon the parties hereto
-----
and upon their heirs, administrators, representatives, executors, successors,
and assigns, and shall inure to the benefit of said parties and each of them
and to their heirs, administrators, representatives, executors, successors, and
assigns. The Employee expressly warrants that the Employee has not transferred
to any person or entity any rights, causes of action, or claims released in
this Agreement.
ELEVENTH: Should any provision of this Agreement be declared
--------
or be determined by any court of competent jurisdiction to be wholly or
partially illegal, invalid, or unenforceable, the legality, validity, and
enforceability of the remaining parts, terms, or provisions shall not be
affected thereby, and said illegal, unenforceable, or invalid part, term, or
provision shall be deemed not to be a part of this Agreement.
TWELFTH: This Agreement sets forth the entire agreement
-------
between the parties hereto and fully supersedes any and all prior agreements or
understandings, written or oral, between the parties hereto pertaining to the
subject matter hereof.
THIRTEENTH: This Agreement shall be interpreted in accordance
----------
with the plain meaning of its terms and not strictly for or against any of the
parties hereto.
FOURTEENTH: If the Employee breaks his promise in this
----------
Agreement by filing a lawsuit or other complaint or charge based on claims that
the Employee has released, or by not having claim made on his behalf by a
class-type action dismissed, as to any person or entity, the Employee will pay
that person's or entity's reasonable attorneys' fees and all other costs
incurred in defending against the Employee's claim. In addition, if the
Employee breaks the promises made in this Agreement, the Employee shall forfeit
all right to future benefits under the Agreement and must repay all Severance
previously received, upon the Company's demand.
4
<PAGE>
FIFTEENTH: Finally, Employee agrees not to disparage the
---------
Company in any manner and not to disclose any confidential information or trade
secrets which the Employee learned while employed by the Company. The Employee
further agrees not to solicit or help anyone solicit any employees or customers
of the Company to cease employment or to cease doing business with the Company.
JEFFREY K. GWIN CATELLUS DEVELOPMENT CORPORATION
By:
- -------------------------------- ----------------------------
Title:
-------------------------
Dated:
------------------------- Dated:
-------------------------
5
<PAGE>
EXHIBIT 10.42
CONSULTING AGREEMENT
This Consulting Agreement made this 25th day of February, 1996, between
CATELLUS DEVELOPMENT CORPORATION, having a principal place of business at
201 Mission Street, 2nd Floor, San Francisco, CA, 94105 (hereinafter
"Catellus"), and JEFFREY K. GWIN, of Newport Beach, California (hereinafter
"Consultant"), provides the following:
ARTICLE 1. TERM OF CONTRACT
Section 1.01.TERM. This agreement will become effective on February 26,
1996 and will continue in effect through May 31, 1996, unless terminated in
accordance with the provisions of Article 7 of this agreement. This agreement
is not subject to renewal or extension.
ARTICLE 2. INDEPENDENT CONTRACTOR STATUS
Section 2.01.INDEPENDENT CONTRACTOR STATUS. It is the express intention of
the parties that Consultant is an independent contractor and not an employee,
agent, joint venturer or partner of Catellus. Nothing in this agreement shall
be interpreted or construed as creating or establishing the relationship of
employer and employee between Catellus and Consultant or any employee or agent
of Consultant. Both parties acknowledge that Consultant is not an employee for
state or federal tax purposes. Consultant shall retain the right to perform
services for others during the term of this agreement.
ARTICLE 3. SERVICES TO BE PERFORMED BY CONSULTANT
Section 3.01.SPECIFIC SERVICES. Consultant agrees to serve an
"institutional memory" function with regard to various Catellus programs and
projects and to consult on transition issues with respect to Catellus'
reorganization. Consultant shall have the right to refuse to perform specific
requests by Catellus to provide these services. Consultant's services shall
not include supervising, overseeing, or being reported to by Catellus or
Catellus's agents or employees in the normal course of business.
Section 3.02.METHOD OF PERFORMING SERVICES. Consultant will determine the
method, details, and means of performing the above-described services.
Catellus shall have no right to, and shall not, control the manner or determine
the method of accomplishing Consultant's services.
Section 3.03.PLACE OF WORK. Consultant shall perform the services required
by this agreement at any place or location and at such times as Consultant
shall determine. Catellus is not required to provide any office or support
services to Consultant.
Section 3.04.TIME OF WORK. Consultant will be available on an on-call
basis only, and Catellus shall not have priority over Consultant's time or
availability. Consultant will be
1
<PAGE>
reasonably available to respond to such requests for services as Catellus may
make from time to time. Consultant shall have the right to refuse to perform
specific requests by Catellus to provide services.
ARTICLE 4. COMPENSATION
Section 4.01.AMOUNT OF COMPENSATION. In consideration for the services to
be performed by Consultant, Catellus agrees to pay Consultant consulting fees
of Fifteen Thousand Dollars ($15,000.00) per calendar month beginning March 1,
1996 and consulting fee of Two Thousand Dollars ($2,000.00) for the month of
February 1996. This is the full and exact amount to be paid by Catellus to
Consultant as compensation, regardless of the actual quantity of services
rendered by Consultant, if any.
Section 4.02.DATE FOR PAYMENT OF COMPENSATION. Payment will be made
monthly by Catellus to Consultant, on the first business day of each month
except for the month of February which shall be paid on March 1, 1996.
Section 4.03.EXPENSES. Consultant shall be responsible for all costs and
expenses incident to the performance of services for Catellus, including but
not limited to, all taxes required of or imposed against Consultant and all
other of Consultant's costs of doing business. Catellus shall be responsible
for no expenses incurred by Consultant in performing services for Catellus.
ARTICLE 5. OBLIGATIONS OF CONSULTANT
Section 5.01.ASSIGNMENT. Neither this agreement nor any rights, duties or
obligations under this agreement may be delegated or assigned by Consultant
without the prior written consent of Catellus.
Section 5.02. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Consultant shall
not disclose to any unauthorized person any confidential information he may
obtain regarding Catellus, its customers, or its methods of doing business.
All confidential information, including but not limited to files, records,
documents, data, lists, and similar items relating to the business of Catellus,
whether prepared by Consultant or otherwise coming into his possession, shall
remain the exclusive property of Catellus and shall not be used by Consultant
except in the course of the performance of Consultant's services under this
Consulting Agreement.
Section 5.03.STATE AND FEDERAL TAXES. As Consultant is not Catellus's
employee, Consultant is responsible for paying all required state and federal
taxes. In particular:
. Catellus will not withhold FICA (Social Security) from Consultant's
payments;
. Catellus will not make state or federal unemployment insurance
contributions on Consultant's behalf;
. Catellus will not withhold state or federal income tax from payment to
Consultant;
2
<PAGE>
. Catellus will not make disability insurance contributions on behalf of
Consultant;
. Catellus will not obtain workers' compensation insurance on behalf of
Consultant.
ARTICLE 6. OBLIGATIONS OF CATELLUS
Section 6.01.COOPERATION OF CATELLUS. Catellus agrees to comply with all
reasonable requests of Consultant necessary to the performance of Consultant's
duties under this agreement.
Section 6.02.ASSIGNMENT. Neither this agreement nor any rights, duties or
obligations under this agreement may be delegated or assigned by Catellus
without the prior written consent of Consultant.
ARTICLE 7. TERMINATION OF AGREEMENT
Section 7.01.TERMINATION ON OCCURRENCE OF STATED EVENTS. This
agreement shall terminate automatically on the occurrence of any of the
following events:
1. Bankruptcy or insolvency of either party;
2. Sale of the business of either party;
3. Death of the Contractor.
Section 7.02.TERMINATION BY CATELLUS FOR DEFAULT OF CONSULTANT. Should
Consultant default in the performance of this agreement or materially breach
any of its provisions, Catellus, at Catellus's option, may terminate this
agreement by giving written notification to Consultant. For purposes of this
section, material breach of this agreement shall include, but not be limited
to, unreasonable refusal to perform properly requested services.
Section 7.03.TERMINATION BY CONSULTANT FOR DEFAULT OF CATELLUS. Should
Catellus default in the performance of this agreement or materially breach any
of its provisions, Consultant, at Consultant's option, may terminate this
agreement by giving written notification to Catellus.
Section 7.04.TERMINATION FOR FAILURE TO MAKE AGREED-UPON PAYMENTS. Should
Catellus fail to pay Consultant all or any part of the compensation set forth
in Article 4 of this agreement on the date due, Consultant, at Consultant's
option, may terminate this agreement if the failure is not remedied by Catellus
within thirty (30) days from the date payment is due.
ARTICLE 8. GENERAL PROVISIONS
Section 8.01.NOTICES. Any notices given hereunder by either party to the
other may be effected either by personal delivery in writing or by mail,
registered or certified, postage prepaid with return receipt requested. Mailed
notices shall be addressed to the parties at
3
<PAGE>
the addresses appearing in the introductory paragraph of this agreement, but
each party may change the address by written notice in accordance with this
paragraph. Notices delivered personally will be deemed communicated as of actual
receipt; mailed notices will be deemed communicated as of two days after
mailing.
Section 8.02. ENTIRE AGREEMENT OF THE PARTIES. This agreement supersedes
any and all agreements, either oral or written, between the parties hereto with
respect to the rendering of services by Consultant for Catellus and contains
all the covenants and agreements between the parties with respect to the
rendering of such services in any manner whatsoever. Each party to this
agreement acknowledges that no representations, inducements, promises, or
agreements have been made, orally or otherwise, by any party, or by anyone
acting on behalf of any party, which are not embodied herein, and that no other
agreement, statement or promise not contained in this agreement shall be valid
or binding. Any modification of this agreement will be effective only if it is
in writing signed by the party to be charged.
Section 8.03.PARTIAL INVALIDITY. If any provision in this agreement is
held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remaining provisions will nevertheless continue in full
force without being impaired or invalidated in any way.
Section 8.04.ATTORNEYS' FEES. If any action at law or in equity,
including an action for declaratory relief, is brought to enforce or interpret
the provisions of this agreement, the prevailing party will be entitled to
reasonable attorneys' fees, which may be set by the court in the same action or
in a separate legal action brought for that purpose, in addition to any other
relief to which that party may be entitled.
Section 8.05.GOVERNING LAW. This agreement will be governed by and
construed in accordance with the laws of the State of California.
Executed at San Francisco, California, on the date and year first above
written.
CONSULTANT: CATELLUS:
Jeffrey K. Gwin Catellus Development Corporation
/s/ Jeffrey K. Gwin By:
- -------------------------------- -----------------------------
Social Security or Taxpayer
Identification Number:
- --------------------------------
4
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES AND JOINT VENTURES OF CATELLUS DEVELOPMENT CORPORATION
<TABLE>
<CAPTION>
JURISDICTION OF
PERCENTAGE PARTNERSHIP OR
OWNED BY STATE OF
CATELLUS INCORPORATION
----------- ---------------
<S> <C> <C>
Santa Fe Towers Land Company 100% California
Torrance Investment Company 66.66(1) California
Santa Fe Towers Land Company 100% Delaware
Seabridge Properties, Inc. 100% Delaware
JMB/Santa Fe Bayfront Venture 50%(2) California
Harbor Drive Company 100% Delaware
Pacific Market Investment Company 50%(3) California
SF Pacific Properties Inc. 100% Delaware
Golden Empire Investment Corporation 100%(4) Delaware
Golden Empire Investment Corporation 100% California
Sequoia Pacific Realco 95.33%(5) California
Pacific Design Center 75%(6) California
Design Center Services 75%(6) California
Westada Corporation 100% Delaware
North Stockton K&B - S.F. Venture No. 1 50%(7) California
Catellus Management Corporation 100% Delaware
Collinsville Property Corporation 100% Delaware
The Montezuma Wetlands Project 50%(8) California
Catellus Construction Corporation 100%(9) Delaware
Catellus Union Station, Inc. 100% Delaware
Union Station Partners 50%(10) California
Catellus Residential Group, Inc. 100% California
Akins Financial Corporation 100%(13) California
Akins Eagle Crest, Inc. 100%(13) California
Akins Communities, Inc. 100%(13) California
Akins Homes Corp. I 100%(13) California
Akins Ridgemoor, Inc. 100%(13) California
Akins Marbella, Inc. 100%(13) California
Akins Ridgemoor Homes Corp. I 100%(13) California
Akins & Associates, Inc. 100%(13) California
Akins Partners Limited Partnership 100%(13) California
Akins Westchester, L.L.C. 50%(14) California
Koll/Akins L.L.C. 50%(15) California
Akins-Seyen general partnership 50%(14) California
Catellus Residential Ocean Ridge, Inc. 100%(13) California
Catellus Residential Oxnard, Inc. 100%(13) California
Dallas International Ltd. 25.21%(11) Texas
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
New Orleans International Hotel 14.15% Louisiana
New Orleans Rivercenter 22.5%(12) Louisiana
International Rivercenter 25.16% Louisiana
New Orleans Rivercenter 38.75% Louisiana
Desman Road Partners 37.82% California
</TABLE>
(1) Partnership interest owned directly by Santa Fe Towers Land Company.
(2) Partnership interest owned directly by Seabridge Properties, Inc.
(3) Partnership interest owned directly by Harbor Drive Company.
(4) Owned directly by SF Pacific Properties Inc.
(5) Partnership interest owned directly by Golden Empire Investment
Corporation.
(6) Partnership interest owned directly by Sequoia Pacific Realco.
(7) Partnership interest owned directly by Westada Corporation.
(8) Partnership interest owned directly by Collinsville Property Corporation.
(9) Formed to acquire State Contractor's License and perform construction
services for a fee.
(10) Partnership interest owned directly by Catellus Union Station, Inc.
(11) Catellus owns 25.21% of capital, 24.19% of profit and loss.
(12) Partnership interest owned directly by New Orleans International Hotel.
(13) Owned directly by Catellus Residential Group, Inc.
(14) Partnership Interest owned directly by Akins Homes Corp. I.
(15) Partnership Interest owned directly by Akins Partners Limited Partnership.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-8 of the Catellus
Development Corporation Amended and Restated Executive Stock Option Plan and the
Stock Option Agreement (Joseph R. Seiger), the Registration Statement on Form S-
8 of the Catellus Development Corporation Profit Sharing & Savings Plan and
Trust, the Registration Statement on Form S-8 of the Catellus Development
Corporation Long Term Incentive Compensation Plan, Stock Purchase Program,
Incentive Stock Compensation Plan and Stock Option Plan, the Registration
Statement on Form S-8 of the Catellus Development Corporation Executive Stock
Option Plan and the Registration Statement on Form S-8 of the Catellus
Development Corporation 1995 Stock Option Plan (Nos. 33-58143, 33-38827, 33-
42124, 33-49980 and 333-01215 respectively) of our report dated February 12,
1996, appearing on page F-2 of this Form 10-K. We also consent to the
incorporation by reference of our report on the Financial Statement Schedules,
which appears on page S-1 of this Form 10-K.
/s/ Price Waterhouse
- --------------------
Price Waterhouse LLP
San Francisco, CA
March 27, 1996
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT REAL ESTATE APPRAISERS
---------------------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-8 of the Catellus
Development Corporation Amended and Restated Executive Stock Option Plan and the
Stock Option Agreement (Joseph R. Seiger), the Registration Statement on Form S-
8 of the Catellus Development Corporation Profit Sharing & Savings Plan and
Trust, the Registration Statements on Form S-8 of the Catellus Development
Corporation Long Term Incentive Compensation Plan, Stock Purchase Program,
Incentive Stock Compensation Plan and Stock Option Plan, the Registration
Statement on Form S-8 of the Catellus Development Corporation Executive Stock
Option Plan and the Registration Statement on Form S-8 of the Catellus
Development Corporation 1995 Stock Option Plan (Nos. 33-58143, 33-38827, 33-
42124, 33-49980 and 333-01215 respectively) of our report dated March 12, 1996,
appearing as Exhibit 99.1 of this Form 10-K.
Landauer Associates, Inc.
/s/ JAMES C. KAFES /s/ JOHN F. BRENGLEMAN
- ------------------------ ----------------------
James C. Kafes, MAI, CRE John F. Brengleman
Managing Director Senior Vice President
New York, NY
March 27, 1996
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
The undersigned hereby authorizes Nelson C. Rising, Stephen P. Wallace and
Paul A. Lockie, or any of them, with full power of substitution, to sign on his
or her behalf, in the capacity stated below, the Annual Report on Form 10-K (the
"10-K") of Catellus Development Corporation and to file the 10-K, together with
exhibits thereto, and any amendment to the 10-K and other documents in
connection therewith, with the Securities and Exchange Commission.
Dated: March 20, 1996 /s/ Joseph F. Alibrandi
--------------------------
Joseph F. Alibrandi
Director
<PAGE>
POWER OF ATTORNEY
The undersigned hereby authorizes Nelson C. Rising, Stephen P. Wallace
and Paul A. Lockie, or any of them, with full power of substitution, to sign on
his or her behalf, in the capacity stated below, the Annual Report on Form 10-K
(the "10-K") of Catellus Development Corporation and to file the 10-K, together
with exhibits thereto, and any amendment to the 10-K and other documents in
connection therewith, with the Securities and Exchange Commission.
Dated: March 20, 1996 /s/ Daryl J. Carter
----------------------------
Daryl J. Carter
Director
<PAGE>
POWER OF ATTORNEY
The undersigned hereby authorizes Nelson C. Rising, Stephen P. Wallace
and Paul A. Lockie, or any of them, with full power of substitution, to sign on
his or her behalf, in the capacity stated below, the Annual Report on Form 10-K
(the "10-K") of Catellus Development Corporation and to file the 10-K, together
with exhibits thereto, and any amendment to the 10-K and other documents in
connection therewith, with the Securities and Exchange Commission.
Dated: March 20, 1996 /s/ Christine Garvey
---------------------------
Christine Garvey
Director
<PAGE>
POWER OF ATTORNEY
The undersigned hereby authorizes Nelson C. Rising, Stephen P. Wallace
and Paul A. Lockie, or any of them, with full power of substitution, to sign on
his or her behalf, in the capacity stated below, the Annual Report on Form 10-K
(the "10-K") of Catellus Development Corporation and to file the 10-K, together
with exhibits thereto, and any amendment to the 10-K and other documents in
connection therewith, with the Securities and Exchange Commission.
Dated: March 20, 1996 /s/ Nelson C. Rising
---------------------------
Nelson C. Rising
Director
<PAGE>
POWER OF ATTORNEY
The undersigned hereby authorizes Nelson C. Rising, Stephen P. Wallace
and Paul A. Lockie, or any of them, with full power of substitution, to sign on
his or her behalf, in the capacity stated below, the Annual Report on Form 10-K
(the "10-K") of Catellus Development Corporation and to file the 10-K, together
with exhibits thereto, and any amendment to the 10-K and other documents in
connection therewith, with the Securities and Exchange Commission.
Dated: March 20, 1996 /s/ Joseph R. Seiger
--------------------------
Joseph R. Seiger
Director
<PAGE>
POWER OF ATTORNEY
The undersigned hereby authorizes Nelson C. Rising, Stephen P. Wallace
and Paul A. Lockie, or any of them, with full power of substitution, to sign on
his or her behalf, in the capacity stated below, the Annual Report on Form 10-K
(the "10-K") of Catellus Development Corporation and to file the 10-K, together
with exhibits thereto, and any amendment to the 10-K and other documents in
connection therewith, with the Securities and Exchange Commission.
Dated: March 20, 1996 /s/ Jacqueline R. Slater
---------------------------
Jacqueline R. Slater
Director
<PAGE>
POWER OF ATTORNEY
The undersigned hereby authorizes Nelson C. Rising, Stephen P. Wallace
and Paul A. Lockie, or any of them, with full power of substitution, to sign on
his or her behalf, in the capacity stated below, the Annual Report on Form 10-K
(the "10-K") of Catellus Development Corporation and to file the 10-K, together
with exhibits thereto, and any amendment to the 10-K and other documents in
connection therewith, with the Securities and Exchange Commission.
Dated: March 20, 1996 /s/ Thomas M. Steinberg
-------------------------
Thomas M. Steinberg
Director
<PAGE>
POWER OF ATTORNEY
The undersigned hereby authorizes Nelson C. Rising, Stephen P. Wallace
and Paul A. Lockie, or any of them, with full power of substitution, to sign on
his or her behalf, in the capacity stated below, the Annual Report on Form 10-K
(the "10-K") of Catellus Development Corporation and to file the 10-K, together
with exhibits thereto, and any amendment to the 10-K and other documents in
connection therewith, with the Securities and Exchange Commission.
Dated: March 20, 1996 /s/ Tom C. Stickel
---------------------------
Tom C. Stickel
Director
<PAGE>
POWER OF ATTORNEY
The undersigned hereby authorizes Nelson C. Rising, Stephen P. Wallace
and Paul A. Lockie, or any of them, with full power of substitution, to sign on
his or her behalf, in the capacity stated below, the Annual Report on Form 10-K
(the "10-K") of Catellus Development Corporation and to file the 10-K, together
with exhibits thereto, and any amendment to the 10-K and other documents in
connection therewith, with the Securities and Exchange Commission.
Dated: March 20, 1996 /s/ Beverly Benedict Thomas
-----------------------------
Beverly Benedict Thomas
Director
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 27,743
<SECURITIES> 0
<RECEIVABLES> 19,631
<ALLOWANCES> 1,751
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,191,679
<DEPRECIATION> 184,228
<TOTAL-ASSETS> 1,097,604
<CURRENT-LIABILITIES> 0
<BONDS> 496,180
0
322,500
<COMMON> 730
<OTHER-SE> 119,644
<TOTAL-LIABILITY-AND-EQUITY> 1,097,604
<SALES> 65,423
<TOTAL-REVENUES> 186,219
<CGS> 31,681
<TOTAL-COSTS> 214,982
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 504
<INTEREST-EXPENSE> 25,757
<INCOME-PRETAX> (54,520)
<INCOME-TAX> (21,518)
<INCOME-CONTINUING> (33,002)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (33,002)
<EPS-PRIMARY> (.78)
<EPS-DILUTED> (.78)
</TABLE>
<PAGE>
To the Board of Directors and Stockholders of
Catellus Development Corporation
We have reviewed the estimate of aggregate current value of the land and
joint venture portfolio of Catellus Development Corporation (the Company) as of
December 31, 1995. The land and joint venture interests valued at December 31,
1995 include approximately 855,170 acres of land and 8 joint ventures. These
interests were valued subject to tenants' lease, but before debt.
At December 31, 1994, we reviewed the estimate of aggregate current value
of the total real estate holding of the Company. The property interests valued
at December 31, 1994 included approximately 243 income producing buildings; 54
land lease positions; approximately 893,000 acres of undeveloped land; and 9
joint venture interests. These property interests were also valued subject to
tenants' leases, but before debt.
In order to comply with the Company's change in current value reporting, we
have also reviewed an estimate of aggregate current value provided by the
Company of the land and joint venture portfolio only as of December 31, 1994;
which reflects the same assets valued at December 31, 1995.
The aggregate current value of the land and joint venture interests,
estimated by the Company as of December 31, 1995 and 1994, was $1,038,684,000
and $1,036,498,000, respectively. These totals represent the Company's estimate
of the aggregate current value of the interests described above and assume that
the individual assets are marketable and would be disposed of in an orderly
manner, allowing a sufficient time period for exposure of each interest to
potential purchasers. The current valuation of the portfolio has applied neither
a premium nor a discount with regard to a bulk sale of the entire portfolio.
Based upon our review, we concur with the Company's estimates of the
aggregate current value of the portfolio. By this, we mean it is our opinion
that the current value estimates by the Company are within ten percent (10%) of
the aggregate value which we would estimate in a full and complete market value
appraisal of the same interests. A variation of less than ten percent (10%)
between appraisers implies substantial agreement as to the most probable current
value of such property interests.
The data used in our review were supplied to us in summary form by the
Company. We have had complete and unrestricted access to all underlying
documents. We have relied upon the Company's interpretation and summaries of
leases, operating agreements, estimate of environmental remediation costs, etc.
During 1994 and 1995, we physically inspected Company properties with combined
individual current value estimates representing approximately 83% of the
aggregate current value estimate.
We certify that neither Landauer Associates, Inc. nor the undersigned have
any present or prospective interest in the Company's properties, and we have no
personal interest or bias with respect to the parties involved. To the best of
our knowledge and belief, the facts upon which the analysis and conclusion were
based are materially true and correct. No one other than the undersigned,
assisted by members of our staff, performed the analysis and reached the
conclusions resulting from the analyses, opinions, or conclusions in, or the use
of, this review.
This review has been prepared in conformity with the Code of Ethics and
Standards of Professional Practice of the Appraisal Institute. As of the date of
this letter, James C. Kafes has completed the requirement of the continuing
education program of the Appraisal Institute.
Respectfully submitted,
Landauer Associates, Inc.
Real Estate Counselors
James C. Kafes, MAI, CRE John P. Brengelman
Managing Director Senior Vice President
New York, New York
March 12, 1996
