<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
------------
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1999 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 (IRS 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
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
--- ---
As of May 12, 1999, there were 106,903,846 issued and outstanding shares of
the registrant's common stock, $.01 par value per share.
================================================================================
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheet as of March 31, 1999 and
December 31, 1998............................................. 2
Consolidated Statement of Operations for the three months ended
March 31, 1999 and 1998....................................... 3
Consolidated Statement of Cash Flows for the three months ended
March 31, 1999 and 1998....................................... 4
Notes to Consolidated Financial Statements...................... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................... 10
PART II. OTHER INFORMATION............................................... 21
SIGNATURES................................................................ 22
EXHIBIT INDEX............................................................. 23
1
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
CATELLUS DEVELOPMENT CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------------- ---------------
(Unaudited)
<S> <C> <C>
Assets
Properties.......................................... $1,727,374 $1,660,554
Less accumulated depreciation....................... (272,915) (265,077)
---------- ----------
1,454,459 1,395,477
Other assets and deferred charges, net.............. 84,458 80,240
Notes receivable, less allowance.................... 15,256 15,275
Accounts receivable, less allowance................. 27,625 32,289
Restricted cash and investments..................... 60,620 49,284
Cash and cash equivalents........................... 26,950 52,975
---------- ----------
Total......................................... $1,669,368 $1,625,540
========== ==========
Liabilities and stockholders' equity
Mortgage and other debt............................. $ 902,153 $ 873,207
Accounts payable and accrued expenses............... 74,584 81,951
Deferred credits and other liabilities.............. 41,457 41,620
Deferred income taxes............................... 144,073 138,533
---------- ----------
Total liabilities............................. 1,162,267 1,135,311
---------- ----------
Commitments and contingencies (Note 8)
Stockholders' equity
Common stock - 106,858 and 106,808 shares issued at
March 31, 1999 and December 31, 1998, respectively 1,069 1,068
Paid-in capital..................................... 480,127 479,636
Accumulated earnings................................ 25,905 9,525
---------- ----------
Total stockholders' equity...................... 507,101 490,229
---------- ----------
Total......................................... $1,669,368 $1,625,540
========== ==========
</TABLE>
See notes to consolidated financial statements
2
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended
March 31,
--------------------
1999 1998
--------- ---------
(Unaudited)
<S> <C> <C>
Rental properties
Rental revenue.......................................... $ 41,479 $ 35,494
Property operating costs................................ (11,556) (9,988)
Equity in earnings of operating joint
ventures, net......................................... 3,436 2,694
-------- --------
33,359 28,200
-------- --------
Other property activities and fee services
Gain on property sales.................................. 14,306 6,139
Development and management fee income, net.............. 671 755
Equity in earnings (losses) of
development joint ventures, net....................... 132 (42)
Land holding costs, net................................. (305) (407)
-------- --------
14,804 6,445
-------- --------
Interest expense.......................................... (9,406) (9,562)
Depreciation and amortization............................. (9,162) (8,185)
General and administrative expense........................ (3,844) (3,274)
Gain (loss) on non-strategic asset sales.................. 986 (53)
Other, net................................................ 710 (373)
-------- --------
Income before income taxes................................ 27,447 13,198
-------- --------
Income tax expense
Current................................................ (4,897) (1,538)
Deferred............................................... (6,170) (3,747)
-------- --------
(11,067) (5,285)
-------- --------
Net income............................................. $ 16,380 $ 7,913
======== ========
Net income per share
basic and assuming dilution....................... $ 0.15 $ 0.07
======== ========
Average number of common shares outstanding - basic.... 106,832 106,554
======== ========
Average number of common shares outstanding - diluted.. 109,238 109,776
======== ========
</TABLE>
See notes to consolidated financial statements
3
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
1999 1998
--------- --------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income............................................. $ 16,380 $ 7,913
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization........................ 9,162 8,185
Deferred income taxes................................ 6,170 3,747
Amortization of deferred loan fees and other costs... 1,027 702
Equity in earnings of joint ventures................. (3,568) (2,652)
Operating distributions from joint ventures.......... 20,961 901
Gain on sale of operating property................... (10,270) --
Cost of properties and non-strategic assets sold..... 26,023 7,259
Expenditures for development properties.............. (51,596) (16,311)
Contributions to joint ventures...................... (22) --
Other property acquisitions.......................... -- (6,500)
Other, net........................................... 1,520 (865)
Change in operating assets and liabilities............. (5,010) (5,570)
-------- --------
Net cash provided by (used in) operating activities...... 10,777 (3,191)
-------- --------
Cash flows from investing activities:
Proceeds from sale of operating property............... 13,926 --
Property acquisitions.................................. (16,623) --
Capital expenditures for investment properties......... (43,547) (26,920)
Tenant improvements.................................... (538) (757)
Contributions to joint ventures........................ (7,854) (1,492)
Restricted cash for future investment.................. (11,336) (906)
-------- --------
Net cash used in investing activities.................... (65,972) (30,075)
-------- --------
Cash flows from financing activities:
Borrowings............................................. 71,711 55,315
Repayment of borrowings................................ (42,765) (19,746)
Distributions to minority partners..................... (100) (5,994)
Proceeds from issuance of common stock................. 324 858
-------- --------
Net cash provided by financing activities................ 29,170 30,433
-------- --------
Net decrease in cash and cash equivalents................ (26,025) (2,833)
Cash and cash equivalents at beginning of period......... 52,975 17,294
-------- --------
Cash and cash equivalents at end of period............... $ 26,950 $ 14,461
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized)................. $ 8,307 $ 8,758
Income taxes......................................... $ 63 $ 2,899
</TABLE>
See notes to consolidated financial statements
4
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999
(Unaudited)
NOTE 1. DESCRIPTION OF BUSINESS
Catellus Development Corporation, together with its consolidated
subsidiaries, (the "Company") is a diversified real estate operating company,
with a large portfolio of rental properties and developable land, that manages
and develops real estate for its own account and that of others. The Company's
development portfolio of industrial, residential, retail, office, and joint
venture projects is primarily located in major markets in California and five
other states. The Company's rental 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. INTERIM FINANCIAL DATA
The accompanying consolidated financial statements should be read in
conjunction with the Company's 1998 Annual Report on Form 10-K as filed with the
Securities and Exchange Commission. In the opinion of management, the
accompanying financial information includes all adjustments, consisting only of
normal recurring adjustments, necessary to present fairly the financial
position, results of operations, and cash flows for the interim periods
presented. Certain prior period financial data has been reclassified to conform
with the current period presentation.
NOTE 3. RESTRICTED CASH AND INVESTMENTS
Of the total restricted cash and investments of $60.6 million at March 31,
1999, $20.1 million represents proceeds from development property sales being
held in separate cash accounts at a trust company in order to preserve the
Company's options of reinvesting the proceeds on a tax-deferred basis. In
addition, restricted investments of $40.5 million at March 31, 1999 represent
certificates of deposits used to guarantee completion of building construction
and lease performance for certain properties that secure debt.
NOTE 4. INCOME PER SHARE
Net income per share of common stock is computed by dividing net income by
the weighted average number of shares of common stock and equivalents
outstanding during the period (see table below for effect of dilutive
securities).
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------------------------------------
1999 1998
----------------------------- -----------------------------
Per Share Per Share
Income Shares Amount Income Shares Amount
------- ------- ---------- ------- -------- ---------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Net income applicable to
common stockholders.............. $16,380 106,832 $ 0.15 $7,913 106,554 $ 0.07
Net effect of dilutive
securities: stock options........ -- 2,406 ========== -- 3,222 =========
------- ------- ------ -------
Income applicable to common
stockholders assuming dilution... $16,380 109,238 $ 0.15 $7,913 109,776 $ 0.07
======= ======= ========== ====== ======= =========
</TABLE>
5
<PAGE>
NOTE 5. MORTGAGE AND OTHER DEBT
Mortgage and other debt at March 31, 1999 and December 31, 1998 are
summarized as follows:
<TABLE>
<CAPTION>
<S>
March 31, December 31,
1999 1998
--------- ------------
(in thousands)
<S> <C> <C>
First mortgage loans................................. $555,274 $557,180
Secured revolving credit line........................ 197,135 190,135
Acquisition secured promissory notes................. 33,445 34,311
Unsecured revolving credit lines..................... 34,600 24,700
Construction loans................................... 17,776 3,975
Assessment district bonds............................ 20,279 19,585
Term loan - secured.................................. 12,738 12,778
Secured promissory notes............................. 21,360 21,360
Other loans.......................................... 9,546 9,183
-------- --------
Total mortgage and other debt..................... $902,153 $873,207
======== ========
Due in one year...................................... $ 22,836 $ 10,059
======== ========
</TABLE>
In March 1999, the Company assumed a variable rate (three months LIBOR plus
1.5%) secured construction loan with a total capacity of $14.4 million. This
loan was assumed upon the purchase of an uncompleted building, has an
outstanding balance of $8.9 million at March 31, 1999, and matures in August
2001.
Interest costs relating to mortgage and other debt for the three-month
periods ended March 31, 1999 and 1998 are summarized as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1999 1998
------- -------
(in thousands)
<S> <C> <C>
Total interest incurred........................ $15,300 $12,545
Interest capitalized........................... (5,894) (2,983)
------- -------
Interest expensed.......................... $ 9,406 $ 9,562
======= =======
</TABLE>
6
<PAGE>
NOTE 6. PROPERTIES
Book value by property type at March 31, 1999 and December 31, 1998 consisted of
the following:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---------- ------------
(in thousands)
<S> <C> <C>
Rental properties:
Industrial buildings ................................................... $ 584,172 $ 547,903
Office buildings........................................................ 195,938 205,024
Retail buildings ....................................................... 94,839 95,729
Land leases (1) ........................................................ 67,820 65,245
Investment in joint ventures ........................................... (43,906) (48,330)
---------- ----------
898,863 865,571
---------- ----------
Developable Properties:
Industrial ............................................................. 190,562 168,453
Residential ............................................................ 95,061 72,413
Mixed-Use .............................................................. 296,930 294,084
Retail, office and other ............................................... 23,084 20,532
Natural resources ...................................................... 6,447 6,445
Properties held for sale ............................................... 9,688 10,144
Investment in joint ventures ........................................... 45,197 62,203
---------- ----------
666,969 634,274
---------- ----------
Work-in-process:
Industrial ............................................................. 92,523 103,456
Residential ............................................................ 45,720 34,350
---------- ----------
138,243 137,806
---------- ----------
Other .................................................................... 23,299 22,903
---------- ----------
Gross book value ......................................................... 1,727,374 1,660,554
Accumulated depreciation ................................................. (272,915) (265,077)
---------- ----------
Net book value ........................................................... $1,454,459 $1,395,477
========== ==========
</TABLE>
(1) This category includes approximately $36.0 million of land which the Company
intends to sell.
7
<PAGE>
NOTE 7. SEGMENT REPORTING
The Company's reportable segments are: Asset Management, Commercial
Development, Residential Development and Mixed-Use Development. Each segment is
evaluated on the excess of revenues over costs, exclusive of depreciation,
amortization, gain on non-strategic asset sales, and income taxes. Inter-
segment gains and losses are not recognized.
Interim financial data by reportable segment is as follows:
<TABLE>
<CAPTION>
Asset Commercial Residential Mixed-Use Consolidated
Management Development Development Development Other(a) Total
---------- ----------- ----------- ----------- -------- ------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended March 31, 1999
Revenues from external customers....................... $ 91,101 $4,592 $15,827 $3,065 $ 7,431 $122,016
Interest revenue....................................... 79 237 223 3 214 756
Interest expense, net of capitalized................... (12,188) -- -- (177) 2,959 (9,406)
Segment earnings before depreciation, amortization,
gain on non-strategic asset sales and income taxes... 29,628 86 3,984 976 949 35,623
Depreciation and amortization.......................... (8,054) (271) -- (347) (490) (9,162)
Three Months Ended March 31, 1998
Revenues from external customers....................... 42,126 4,671 6,291 3,188 2,982 59,258
Interest revenue....................................... 37 27 -- 2 146 212
Interest expense, net of capitalized................... (10,610) -- -- (643) 1,691 (9,562)
Segment earnings before depreciation, amortization,
gain on non-strategic asset sales and income taxes... 20,813 157 1,646 185 (1,365) 21,436
Depreciation and amortization.......................... (7,266) (152) (1) (293) (473) (8,185)
</TABLE>
(a) Includes a company that manages land and other properties for third
parties, disposes various properties, and corporate. None of those
segments meets any of the quantitative thresholds for determining
reportable segments.
NOTE 8. COMMITMENTS AND CONTINGENCIES
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, management believes that, considering
current insurance coverages and the substantial legal defenses available, 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 liability may arise from the current or past
ownership, or current or past operation, of real properties. While the Company
or outside consultants have evaluated the environmental liabilities associated
with most of the properties currently owned by the Company, any evaluation
necessarily is based upon then-prevailing law, identified site conditions and
the use of sampling methodologies. 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 because of
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 that of other
responsible parties, and the extent to which such costs are recoverable from
insurance.
8
<PAGE>
At March 31, 1999, management estimates that future costs for
remediation of identified or suspected environmental contamination on operating
properties and properties previously sold approximate $10.2 million and has
provided a reserve for that amount. It is anticipated that such costs will be
incurred over the next ten years with a substantial portion incurred over the
next five years. Management also estimates that similar costs relating to the
Company's properties to be developed or sold may range from $11.5 million to
$30.3 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.
The Company's estimates were developed based on reviews that took place over
several years based upon then prevailing law and identified site conditions.
Because of the breadth of its portfolio, and past sales, the Company is unable
to review each property extensively on a regular basis. Also, the Company does
not generally have access to properties sold in the past that could create
environmental liabilities. 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.
As of March 31, 1999, the Company has outstanding standby letters of
credit and surety bonds in the amount of $113 million in favor of local
municipalities or financial institutions to guarantee performance on
construction of real property improvements or financial obligations.
Additionally, the Company guarantees 50% of a secured loan associated with a
joint venture investment; the outstanding balance of the loan was
$60.1 million at March 31, 1999.
NOTE 9. RELATED PARTY TRANSACTIONS
During the three months ended March 31, 1999, the Company acquired 148
lots entitled for residential development for $18.9 million from a joint venture
in which the Company has a 33% interest. The earnings related to this
transaction from the unconsolidated joint venture are deferred until the lots
are sold to third parties.
9
<PAGE>
Item 2. Management's Discussion And Analysis Of Financial Condition And Results
Of Operations.
The following discussion and analysis should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in our 1998 Form 10-K.
Results of Operations
Comparison of the three-month periods ended March 31, 1999 and 1998
Rental Properties. Rental revenue and property operating costs from our rental
- ------------------
properties for the three-month periods ended March 31, 1999 and 1998 are
summarized below:
<TABLE>
<CAPTION>
Rental Revenue Property Operating Costs
----------------------------------------- -----------------------------------------
Three Months Ended March 31, Three Months Ended March 31,
1999 1998 Difference 1999 1998 Difference
----------- ----------- ------------- ------------ ----------- ------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Industrial buildings................ $ 22,601 $ 18,824 $ 3,777 $ 4,882 $ 3,977 $ 905
Office buildings.................... 8,368 7,905 463 3,427 3,055 372
Retail buildings.................... 3,437 3,371 66 1,133 953 180
Land development(1)................. 2,933 2,719 214 1,914 1,745 169
Land leases......................... 4,140 2,675 1,465 200 258 (58)
--------- --------- -------- ------- -------- --------
$ 41,479 $ 35,494 $ 5,985 $ 11,556 $ 9,988 $ 1,568
========= ========== ======== ======== ======== ========
</TABLE>
(1) This category represents interim income-producing uses of properties
intended for mixed-use development.
Building square footage owned, square footage leased and occupancy are
as follows:
<TABLE>
<CAPTION>
March 31,
-----------------------------------------------------------
1999 1998
---------------------------- ----------------------------
(in thousands, except percentages)
Owned Leased % Owned Leased %
----- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Industrial buildings................ 17,658 16,516 93.5% 14,326 13,974 97.5%
Office buildings.................... 1,620 1,504 92.8% 1,620 1,550 95.7%
Retail buildings.................... 928 830 89.4% 928 862 92.9%
Land development(1)................. 1,205 1,101 91.4% 1,220 1,001 82.0%
------ ------ ------ ------
Total(2)............................ 21,411 19,951 93.2% 18,094 17,387 96.1%
====== ====== ====== ======
</TABLE>
(1) This category represents interim income-producing uses of properties
intended for mixed-use development.
(2) Excludes property owned by joint ventures.
The increase in revenue from industrial buildings for the three months
ended March 31, 1999 as compared to the same period in 1998 is primarily
attributable to the net addition of four new buildings, totaling approximately
644,000 square feet, that were added to the portfolio during the quarter, and a
full quarter of operations from eleven buildings totaling approximately 2.7
million square feet that were added to the portfolio in 1998. Approximately
$3.5 million of the increase is attributable to base rents and tenant pass-
through for the 1999 and 1998 new properties, and an increase of $0.4 million in
revenues was attributable to base rents and higher tenant pass-through charges
from properties which were owned and operated for all of 1999 and 1998 ("Same
Space"), offset by a decrease of $0.1 million in revenues attributable to
properties sold during 1998.
Operating costs for the industrial buildings increased by $0.9 million
primarily because of operating costs and property taxes related to the new
additions to the industrial portfolio.
10
<PAGE>
Rental revenue for our office portfolio increased by $0.5 million for the
three months ended March 31, 1999, compared to the same period in 1998,
primarily because of a one-time lease termination fee. Operating costs for
office buildings increased by $0.4 million, primarily as a result of higher
repairs and maintenance.
The $1.5 million increase in revenues from land leases for the three months
ended March 31, 1999, compared to the same period in 1998 is primarily
attributable to land leases and other leases acquired in February, June, and
September of 1998. The majority of the increase attributable to these
acquisitions is not of a long-term nature, as we intend to sell approximately
$36 million of these assets (see Other Sales in Other Property Activities and
Fee Services below).
In total, property operating costs were higher because of property taxes
associated with the new buildings and higher operating and maintenance costs
attributable to Same Space.
Equity in earnings of operating joint ventures, net, increased by $0.7
million for the three months ended March 31, 1999, compared to the same period
in 1998 primarily because of higher occupancies and room rates in our hotel
joint ventures.
Other Property Activities and Fee Services. Gain on property sales was
- -------------------------------------------
$14.3 million in the three months ended March 31, 1999 compared to $6.1 million
for the same period in 1998, summarized as follows:
<TABLE>
<CAPTION>
Three Months Ended March 31,
1999 1998 Difference
------------- ------------- -------------
(in thousands)
<S> <C> <C> <C>
Commercial Sales:
Sales................................................ $ 16,100 $ 11,556 $ 4,544
Cost of sales........................................ 14,605 6,721 7,884
--------- --------- ---------
Gain......................................... 1,495 4,835 (3,340)
--------- --------- ---------
Residential Sales:
Sales................................................ 15,591 5,922 9,669
Cost of sales........................................ 13,655 4,618 9,037
--------- --------- ---------
Gain......................................... 1,936 1,304 632
--------- --------- ---------
Other Sales
Sales................................................ 42,073 -- 42,073
Cost of sales........................................ 31,198 -- 31,198
--------- --------- ---------
Gain......................................... 10,875 -- 10,875
--------- --------- ---------
Total gain on property sales......................... $ 14,306 $ 6,139 $ 8,167
========= ========= =========
</TABLE>
The 1999 results from commercial sales for the three months ended March 31,
1999 include the closing of the sale of 100,000 square feet of office building
space and 21.9 acres of land capable of supporting 0.5 million square feet of
commercial development, as compared to 23.0 acres of land capable of supporting
0.4 million square feet of commercial development for the same period in 1998.
The decrease in gain from commercial sales is primarily attributable to a 1998
land sale with low cost basis by a joint venture. In addition, residential sales
include the closing of 42 homes in 1999 as compared to 12 homes in 1998.
The 1999 results from other sales for the three months ended March 31, 1999
include a sale by one of our joint ventures of an apartment project in San
Diego, California, as well as the sales of land and related land leases
associated with acquisitions in the land lease portfolio during 1998, as noted
above (see Cash flows from investing activities section for further discussions
on acquisitions). We anticipate continued gains from land lease sales in 1999.
11
<PAGE>
We expect there will be significant variability in income generated from
our other property activities (see Variability in Results section below).
Following is a summary of sales of development property under contract but
not closed as of March 31, 1999 and 1998:
<TABLE>
<CAPTION>
March 31,
1999 1998
-------------- --------------
(in thousands)
<S> <C> <C>
Commercial development property........................... $ 81,376 $ 80,389
Residential development property ========== ==========
Owned projects
Units................................................... $ 42,250 $ 29,478
Lots.................................................... 8,348 --
---------- ----------
$ 50,598 $ 29,478
========== ==========
Joint venture projects - Units(1)....................... $ 12,640 $ 17,041
========== ==========
</TABLE>
/1/ The amounts shown are 100% of the gross sales price; we are entitled to
receive 25% of the net profits from an unconsolidated joint venture.
Development and management fee income, net, for the three months ended
March 31, 1999 approximated that of the same period in 1998. Over the previous
two years, a major source of fee income was from a contract to manage and sell
the non-railroad real estate assets of a major railroad company. As
anticipated, the inventory of managed assets is now depleted, and it is expected
that future management fees will decrease.
Equity in earnings of development joint ventures, net, for the three months
ended March 31, 1999, as compared to the same period in 1998, increased by $0.2
million primarily because of the increased unit sales at two residential
projects in Rowland Heights, California.
Other Items on the Statement of Operations. Interest expense decreased
- -------------------------------------------
approximately $0.2 million in the three months ended March 31, 1999 compared to
the same period in 1998; however, total interest incurred increased $2.8
million. Increased interest expense attributable to additions to the portfolio
was offset by the increase in capitalized interest related to higher development
activity and lower interest rates resulting from a major refinancing completed
in 1998. During the three months ended March 31, 1999, the average number of
square feet of commercial development under construction was 4.7 million as
compared to 3.7 million during the same period in 1998. Additionally, we have
started construction on 79 residential units thus far in 1999 as compared to 21
units during the same period in 1998 from our projects and projects of
consolidated joint ventures.
Following is a summary of interest incurred:
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------------------------------
1999 1998 Difference
------------ ------------ --------------
(in thousands)
<S> <C> <C> <C>
Total interest incurred ................ $ 15,300 $ 12,545 $ 2,755
Interest capitalized .................... (5,894) (2,983) (2,911)
-------- -------- --------
Interest expensed ....................... $ 9,406 $ 9,562 $ (156)
======== ======== ========
</TABLE>
General and administrative expense increased by $0.6 million for the three
months ended March 31, 1999 as compared to the same period in 1998 primarily
because of the increase in the overall activities.
12
<PAGE>
The increase in gain on sales of non-strategic assets from the three months
ended March 31, 1999 compared to the same period in 1998 is summarized as
follows:
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------------------------------
1999 1998 Difference
------------ ------------ --------------
(in thousands)
<S> <C> <C> <C>
Sales.................................... $ 1,329 $ 293 $ 1,036
Cost of Sales............................ 343 346 (3)
--------- ---------- ---------
Gain (loss)......................... $ 986 $ (53) $ 1,039
========= ========== =========
</TABLE>
In 1995, we began an accelerated program of selling non-strategic assets,
with the proceeds intended to pay down a portion of existing debt and fund new
development. From 1995 through March 31, 1999, we sold $260 million of non-
strategic assets. The most significant remaining non-strategic asset is our
approximately 782,000-acre desert and agricultural portfolio.
In February of 1999, we signed an agreement with a non-profit conservation
group to sell and donate up to 437,000 acres of desert holdings and 20,000 acres
of severed mineral rights to the conservation group or the federal government
for a total cash consideration of up to $54.6 million. This sale will generate a
significant gain when completed; however, the sale and its potential gain are
contingent upon the completion of due diligence by the appropriate parties and
funding by both the conservation group and the federal government. In April
1999, we received an initial deposit of $5.0 million from the conservation
group. The remainder of the transaction is expected to close by early 2000.
The closing schedule is subject to federal government appropriations of up to
$36.0 million from the Land and Water Conservation Fund. However, if the
government funds are not appropriated, the agreement provides for a partial
closing on the portion of the transaction covered by private funds.
In addition, we plan to exchange our land for land of equal value managed
by the U.S. Bureau of Land Management in order to consolidate our desert land
holdings. Additional non-strategic sales are expected to be substantially lower
than the levels of the past three years.
Other, net, changed by $1.1 million in the three months ended March 31,
1999 compared to the same period in 1998 primarily because of the $0.7 million
decrease in professional fees, and a net $0.4 million increase in interest
income generated by higher restricted funds (tax-deferred sales and financing
deposits) and other income for the three months ended March 31, 1999 as
compared to the same period in 1998.
Variability in Results
- ----------------------
Although we have a large portfolio of rental properties that provides
relatively constant operating results, our earnings from period to period will
be affected by the nature and timing of acquisitions and sales of property and
sales of non-strategic assets. Many of our projects require a lengthy process
to complete the development cycle before they are sold. Additionally, sales of
non-strategic assets are difficult to predict and are generally subject to
lengthy negotiations and contingencies that need to be resolved before closing.
These factors tend to "bunch" income in particular periods rather than producing
a more even pattern throughout the year. In addition, gross margins may vary
significantly as the mix of property varies. The cost basis of the properties
sold varies because (i) a number of properties have been owned for many decades;
while some properties were acquired within the last ten to fifteen years; (ii)
properties are owned in various geographical locations; and, (iii) development
projects have varying infrastructure costs and build-out periods.
Earnings Before Depreciation and Deferred Taxes ("EBDDT")
We use a supplemental performance measure, EBDDT, along with net income, to
report our operating results. EBDDT is not a measure of operating results or
cash flows from operating activities as defined by generally accepted accounting
principles. Additionally, EBDDT is not necessarily indicative of cash available
to fund cash needs and should not be considered as an alternative to cash flows
as a measure of liquidity. However, we believe that EBDDT provides relevant
information about our operations and is useful, along with net income, for an
understanding of our operating results.
13
<PAGE>
EBDDT is calculated by making various adjustments to net income.
Depreciation, amortization and deferred income taxes are excluded from EBDDT as
they represent non-cash charges. In addition, gains on the sale of non-
strategic assets and extraordinary items, including their current tax effect,
represent unusual and/or non-recurring items and are excluded from the EBDDT
calculation.
Net income is reconciled to EBDDT as follows:
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1999 1998
----------- ------------
(in thousands)
<S> <C> <C>
Net income applicable to common stockholders.......................... $ 16,380 $ 7,913
Depreciation and amortization...................................... 9,162 8,185
Deferred income taxes.............................................. 6,170 3,747
(Gain) loss on non-strategic asset sales........................... (986) 53
-------- --------
Earnings before depreciation and deferred taxes....................... $ 30,726 $ 19,898
======== ========
Average number of common shares outstanding - basic................... 106,832 106,554
======== ========
Average number of common shares outstanding - diluted................. 109,238 109,776
======== ========
</TABLE>
The $10.8 million increase in EBDDT for the first quarter in 1999 compared
to the same period in 1998 was primarily because of an increase in gain on
property sales and improved operating results from rental properties, partially
offset by higher current income taxes.
Liquidity and Capital Resources
Cash flows from operating activities
Cash provided by (used in) operating activities reflected in the statement
of cash flows for the three months ended March 31, 1999 and 1998 was $10.8
million and $(3.2) million, respectively. The change is primarily attributable
to sales of commercial, residential, and other properties of $34.1 million and
$17.5 million for the three months ended March 31, 1999 and 1998, respectively.
Sales of non-strategic assets were $1.3 million and $0.3 million for the three
months ended March 31, 1999 and 1998, respectively. These increases are offset
by the increase in capital expenditures, which are included in the schedule of
capital expenditures in the following discussion of Capital expenditures
from investing activities. Cash generated from rental properties increased
principally because of the addition of new buildings.
Cash flows from investing activities
Net cash used in investing activities reflected in the statement of cash
flows for the three months ended March 31, 1999 and 1998 was $65.9 million and
$30.1 million, respectively. The increase between 1999 and 1998 is because of a
$16.6 million increase in capital expenditures (primarily attributable to $9.1
million for infrastructure and $6.7 million for construction and building
improvements) and a $16.6 million increase in commercial property acquisitions.
The increase is also due to a $10.4 million increase in short-term investments
and restricted cash. Included in the restricted cash and investment balance is
$20.1 million of proceeds from property sales held in separate accounts at a
trust company in order to preserve our options of reinvesting the proceeds on a
tax-deferred basis. These increases were offset by the proceeds of $13.9
million from the sale of an apartment project by one of our joint ventures.
14
<PAGE>
Capital expenditures include the following:
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------------------
1999 1998 Difference
------------ ------------ -------------
(in thousands)
<S> <C> <C> <C>
Capital Expenditures From Operating Activities (1)
Capital expenditures for residential and industrial development properties... $ 26,641 $ 14,604 $ 12,037
Residential property acquisitions............................................ 21,804 -- 21,804
Capitalized interest and property tax........................................ 3,151 1,707 1,444
-------- -------- --------
Expenditures for development properties................................... 51,596 16,311 35,285
Other property acquisitions.................................................. - 6,500 (6,500)
-------- -------- --------
Capital expenditures in cash flows from operating activities.............. 51,596 22,811 28,785
Seller-financed acquisition............................................... -- 26,000 (26,000)
-------- -------- --------
Total capital expenditures in operating activities........................ 51,596 48,811 2,785
-------- -------- --------
Capital Expenditures From Investing Activities (2)
Construction and building improvements....................................... 23,005 16,258 6,747
Predevelopment............................................................... 1,899 3,939 (2,040)
Infrastructure and other..................................................... 14,376 5,278 9,098
Capitalized interest and property tax........................................ 4,267 1,445 2,822
-------- -------- --------
Capital expenditures for investment properties............................ 43,547 26,920 16,627
Commercial property acquisitions............................................. 16,623 - 16,623
Tenant improvements.......................................................... 538 757 (219)
-------- -------- --------
Capital expenditures in investing activities.............................. 60,708 27,677 33,031
-------- -------- --------
Total Capital Expenditures................................................... $112,304 $ 76,488 $ 35,816
======== ======== ========
</TABLE>
(1) This category includes capital expenditures for properties the Company
intends to build to sell.
(2) This category includes capital expenditures for properties the Company
intends to hold for its own account.
Capital expenditures for residential and industrial development properties --
relates to the development of residential and industrial for-sale development
properties. The increase from 1998 to 1999 is primarily because of the increase
in both residential and industrial for-sale development activity.
For the three months ended March 31, 1999, we started construction on 79
residential units and completed 50 units compared to 21 starts and 15
completions during the same period in 1998 including our consolidated joint
venture projects.
15
<PAGE>
Construction and building improvements -- relates primarily to development of
new commercial properties held for lease and improvements to existing buildings.
Development activity is summarized below:
<TABLE>
<CAPTION>
Three Months Ended March 31,
--------------------------------------
1999 1998
------------- -------------
(in square feet)
<S> <C> <C>
Under construction, beginning of period........................... 5,036,500 3,774,000
Construction starts............................................... 341,000 100,000
Completed - retained in portfolio................................. (640,000) -
Completed - design/build or sold.................................. (353,000) (235,000)
--------- ---------
Under construction, end of period................................. 4,384,500(1) 3,639,000
========= =========
Contracts signed, construction not started........................ 484,250 884,000
========= =========
</TABLE>
(1) This includes 905,000 square feet of development that will be sold upon
completion, 258,000 square feet of "design/build" development for third
party owners, and 3,221,500 square feet that will be added to our portfolio
upon completion.
Property Acquisitions--For the three months ended March 31, 1999 and 1998,
we invested approximately $37.8 million and $6.5 million, respectively, in the
acquisition of new property directly or through joint ventures.
. Residential Acquisitions--For the three months ended March 31, 1999, we
invested approximately $21.2 million in the acquisitions of residential
development property directly or through joint ventures. These acquisitions
will support up to 182 homes.
. Commercial Acquisitions--For the three months ended March 31,1999, we
invested approximately $16.6 million in the acquisitions of entitled
commercial development land and a partially completed industrial building.
These acquisitions added approximately 1.2 million square feet of potential
industrial development in Grand Prairie, Texas, and 0.5 million square feet
in the industrial development portfolio in Romeoville, Illinois.
Predevelopment--relates to amounts incurred in obtaining entitlements for
our major mixed-use project, the Mission Bay project in San Francisco,
California, and our Fleet Industrial Supply Center, Alameda Annex, project in
Alameda, California.
Infrastructure and other--primarily represents infrastructure costs
incurred in connection with our major mixed-use and development projects. The
increase in 1999 compared to 1998 relates primarily to the Woodridge, Illinois;
the Denver, Colorado; the Portland, Oregon; and the Mission Bay in San Francisco
projects.
Capitalized interest and property taxes--represents interest and property
taxes capitalized to our development projects. The increase in 1999 compared to
1998 is because of the significant increase in construction activity, as noted
above.
Cash flows from financing activities
Net cash provided by financing activities reflected in the statement of
cash flows decreased by $1.3 million in 1999 compared to 1998. This decrease is
primarily because of $6.6 million lower in net borrowings used to finance
development projects and a $0.5 million decrease in proceeds from the exercise
of stock options, offset by a $5.9 million decrease in distributions to minority
partners.
Capital commitments
As of March 31, 1999, we had outstanding standby letters of credit and
surety bonds in the amount of $113.0 million in favor of local municipalities or
financial institutions to guarantee performance on construction of real property
improvements or financial obligations.
16
<PAGE>
As of March 31, 1999, we had approximately $76.8 million in total
commitments for capital expenditures. These commitments are primarily to fund
the construction of industrial development projects, predevelopment costs and
re-leasing costs, and to fund the construction of residential developments.
Cash balances, available borrowings and capital resources
As of March 31, 1999, we had $27.0 million in cash and cash equivalents,
and $60.6 million in restricted cash and investments. In addition, we had
available $41.3 million under our secured revolving credit facility and secured
construction line of credit.
Our residential subsidiary had a $60 million line of credit facility at
March 31, 1999. This facility was increased to $80 million on April 18, 1999.
The borrowing capacity at any point in time varies as property and homes are
acquired, built and sold. At March 31, 1999 the capacity was $34.7 million, of
which $34.6 was drawn. Consequently, an additional $45.4 million of liquidity is
available, provided the appropriate collateral level is achieved to increase the
borrowing capacity.
Our short- and long-term liquidity and capital resources requirements will
be provided from three sources: (1) ongoing operating income from rental
properties, (2) proceeds from sales of development property, other property and
non-strategic assets, and (3) additional debt. As noted above, a secured
revolving line of credit is available to us for meeting liquidity requirements.
Our ability to meet mid- and long-term capital requirements is dependent upon
the ability to obtain additional financing for new construction, acquisitions,
and currently unencumbered properties. There is no assurance that this financing
can be obtained at this time.
Debt covenants--Certain loan agreements contain restrictive financial
covenants, the most restrictive of which require our debt coverage ratio to be
at least 1.60:1, require stockholders' equity to be no less than $419 million,
and require that we maintain certain other specified financial ratios. We were
in compliance with all such covenants at March 31, 1999.
Environmental Matters
Many of our properties are in urban and industrial areas and may have been
leased to or previously owned by commercial and industrial companies that may
have discharged hazardous materials. We incur on-going environmental
remediation costs, and legal costs relating to clean-up, defense of litigation
and the pursuit of responsible third parties. Costs incurred in connection with
operating properties and with properties previously sold are expensed. As of
March 31, 1999, we have provided a reserve of $10.2 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 few years (see Note 8 of the
accompanying consolidated financial statements for further discussions).
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 March 31, 1999,our
estimate of potential liability for identified environmental costs relating to
properties to be developed or sold ranged from $11.5 million to $30.3 million.
These costs generally will be capitalized as they are incurred over the course
of the estimated development period of approximately 20 years. Environmental
costs capitalized during 1999 totaled $0.3 million.
17
<PAGE>
While we or outside consultants have evaluated the environmental
liabilities associated with most of the properties currently owned by us, any
evaluation necessarily is based upon then-prevailing law, identified site
conditions and the use of sampling methodologies. Also, we do not generally
have access to properties sold in the past, which could create environmental
liabilities. We monitor our exposure to environmental costs on a regular basis.
Although an unexpected event could have a material impact on the results of
operations for any period, we do not believe that such costs for identified
liabilities will have a material adverse effect on our financial position,
results of operations or cash flows.
Year 2000 Readiness
Overview. To address the potential effects of the Year 2000 problem (the
inability of some hardware and software to distinguish the year 2000 from the
year 1900), we have adopted a program (the "Program") that examines three areas:
. Our information systems, including hardware and software ("I.S.");
. Our non-I.S. systems that use date-sensitive technology ("Embedded
Technology"); and
. Third parties with whom we do business ("Third Parties").
For each area, the Program has three phases:
. Phase 1, Inventory: Develop a list of potentially affected functions;
. Phase II, Assessment and planning: Assess the nature and severity of
the problem and determine necessary corrective action; and
. Phase III, Remediation and testing: Implement any necessary corrective
action and test the results.
Information Systems. A failure of systems such as our telephones or
computer network could materially impair our ability to perform essential
business functions, such as the collection of revenue, payment of debts, and
communications generally.
We have substantially completed Phases I and II of the Program for I.S.,
and Phase III is currently underway. Since January 1997, we have ensured that
all regularly scheduled I.S. replacements and upgrades are Year 2000 compliant.
From January 1, 1997, through March 31, 1999, we spent approximately $1.2
million on I.S. improvements, upgrades and replacements. For the remainder of
1999, we may spend up to approximately $1.6 million on I.S. improvements,
upgrades and replacements. Substantially all of these expenditures are primarily
for business purposes other than addressing Year 2000 issues. In 1999, we expect
to spend approximately $175,000 on testing and upgrades specifically related to
the Year 2000 issue. No significant planned I.S. projects have been deferred
because of the Program.
We believe that, with these improvements, upgrades and replacements, the
Year 2000 problem will not significantly affect its I.S. If planned
improvements, upgrades and replacements are not timely completed (for example,
because of a scarcity of Year 2000 compliant products), the Year 2000 problem
could have a material impact on us. Nonetheless, we believe that our plans for
resolving the Year 2000 problem with respect to I.S. are adequate and that we
will not need to develop contingency plans.
18
<PAGE>
Embedded Technology. Electronic monitoring and control systems may have
date-sensitive coding embedded within their circuitry that is susceptible to
failure if it is not Year 2000 compliant. Year 2000 noncompliance could affect
the functioning of elevators and escalators, heating, ventilation and air
conditioning systems, security systems, fire-life safety systems, and other
automated building systems, which could affect use and access to buildings and
emergency response capabilities.
In December 1998, we completed an inventory of Embedded Technology in those
systems for which we are responsible in our approximately 250 buildings. Phases
II and III are currently underway. In February 1999, we engaged an engineering
firm to conduct an analysis of embedded technology in a sampling of buildings.
Based on the results of their work, we have engaged them to perform similar
analyses of our higher risk buildings nationwide. While we are currently unable
to estimate the costs we will incur in Phases II and III, we expect that these
costs will not exceed $1,000,000. We expect to substantially complete this work
in August 1999, with the remaining work to be completed in October 1999. If
necessary, contingency planning is scheduled for the third quarter of 1999.
Meanwhile, we have incorporated Year 2000 compliance in our due diligence for
any acquisition of property.
Third Parties. We depend on a wide variety of Third Parties. To the
extent that Third Parties are unable to perform because of their own Year 2000
problems, we may be adversely affected. Because of the speculative nature of
these risks, it is not possible to estimate their financial impact on us. Third
Parties on whom we depend include:
. Customers, such as tenants and buyers of properties;
. Suppliers of goods, services or capital; and
. Regulatory bodies, such as government agencies from whom we must
obtain permits in order to proceed with our projects.
In the third quarter of 1998, we began identifying and prioritizing Third
Parties and communicating with them about their approach to the Year 2000
problem. This phase is expected to be substantially complete by second quarter
of 1999. We have initiated more detailed evaluations of the most critical Third
Parties. If necessary, these evaluations will be followed, where possible, by
the development of contingency plans, scheduled for second and third quarters of
1999. In most cases, we must rely primarily on statements from Third Parties as
to their Year 2000 readiness and will not attempt any independent verification.
Because the systems of Third Parties are outside our control, the remediation
and testing phase of the Program is not applicable to Third Parties.
This area of the Program is being undertaken by our employees and is not
expected to involve significant additional expenditures or to delay any of our
other work significantly.
Summary. The Program schedule is subject to change depending on future
developments, including delays by Third Parties. A failure to correct
significant Year 2000 problems could impair our ability to conduct our business
and could affect our financial performance. Because of the general uncertainty
inherent in the Year 2000 problem and the uncertainty about the Year 2000
readiness of Third Parties, we cannot determine whether there will be a material
impact on its results of operations, liquidity, or financial condition. We
believe that the Program will significantly reduce the risk of interruption of
our business operations.
Forward-Looking Information and Risk Factors
Except for historical matters, the matters discussed in this annual report
are forward-looking statements that involve risks and uncertainties. We have
tried, wherever practical, to identify these forward-looking statements by using
words like "anticipate," "believe," "estimate," "project," "expect," and similar
expressions. Forward-looking statements include, but are not limited to,
statements about plans; opportunities; markets and economic conditions;
development, construction and sales activities; availability of financing; and
property values.
19
<PAGE>
We caution that these forward-looking statements reflect our current
beliefs and are based on information currently available to us. Accordingly,
these statements are subject to risks and uncertainties that could cause our
actual results, performance, or achievements to differ materially from those
expressed in or implied by these statements. In particular, among the factors
that could cause actual results to differ materially are:
. Changes in the real estate market or in general economic conditions in
the areas in which we own property
. Competition in the real estate industry
. Changes in tax laws and other circumstances that affect our ability to
control the timing and recognition of deferred tax liability
. Availability of financing to meet our capital needs, the variability
of interest rates, and our ability to use our collateral to secure
loans
. Delay in receipt of or denial of government approvals and entitlements
for development projects, and other political and discretionary
government decisions affecting the use of or access to land
. Exposure of our assets to damage from natural occurrences such as
earthquakes and weather conditions that affect the progress of
construction
. Liability for environmental remediation at properties owned or
formerly owned by us or our predecessors
. Changes in the cost of land and building materials
. Our ability to recruit and retain or replace key personnel
. Limitations on or challenges to title to our properties
. Risks related to the performance, interests, and financial strength of
our joint venture projects
20
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBITS
An Exhibit Index follows the signatures below.
21
<PAGE>
SIGNATURES
Pursuant to the requirements 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
Date: May 17, 1999 By: /s/ Stephen P. Wallace
---------------------- -------------------------
Stephen P. Wallace
Executive Vice President
Chief Financial Officer
Principal Financial Officer
Date: May 17, 1999 By: /s/ Paul A. Lockie
---------------------- ---------------------
Paul A. Lockie
Vice President and Controller
Principal Accounting Officer
22
<PAGE>
EXHIBIT INDEX
3.1 Form of Restated Certificate of Incorporation of the Registrant (1)
3.1A Amendment to Restated Certificate of Incorporation of the Registrant
(6)
3.2 Form of Certificate of Designations, Preferences and Rights of $3.25
Series A Cumulative Convertible Preferred Stock (2)
3.3 By-Laws, as amended*
3.4 Form of Certificate of Designations, Preferences and Rights of $3.625
Series B Cumulative Convertible Exchangeable Preferred Stock (6)
4.1 Amended and Restated Line of Credit Loan Agreement among Catellus
Development Corporation, Bank of America National Trust and Savings
Association as Arranger and Administrative Agent, The First National
Bank of Chicago as Documentation Agent, and The Other Financial
Institutions Party Hereto, dated as of October 28, 1998 (12)
4.2 Loan Agreement by and between Catellus Finance 1, L.L.C and Prudential
Mortgage Capital Company, Inc. dated as of October 28, 1998 (12)
4.3 Loan Agreement dated as of October 28, 1996 between the Registrant and
Bank of America National Trust and Savings Association (10)
10.1 Exploration Agreement and Option to Lease dated December 28, 1989
between the Registrant and Santa Fe Pacific Minerals Corporation (1)
10.2 Registration Rights Agreement dated as of December 29, 1989 among the
Registrant, BAREIA, O&Y and Itel (1)
10.2A Letter Agreement dated November 14, 1995 between the Registrant and
California Public Employees' Retirement System (9)
10.3 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)
10.4 State Tax Allocation and Indemnity Agreement dated December 29, 1989
among the Registrant and certain of its subsidiaries and SFP (1)
10.5 Registrant's Incentive Stock Compensation Plan (3)
10.6 Termination, Substitution and Guarantee Agreement between ATSF and the
Registrant dated December 21, 1990(4)
10.7 Registrant's Amended and Restated 1991 Stock Option Plan (11)
10.8 Registrant's amended and Restated Executive Stock Option Plan (11)
10.9 Form of First Amendment to Registration Rights Agreement among the
Registrant, BAREIA, O&Y and Itel (5)
10.10 Amended and Restated Executive Employment Agreement dated as of
November 29, 1995 between the Registrant and Nelson C. Rising (9)
23
<PAGE>
10.11 Executive Employment Agreement dated February 10, 1995 between the
Registrant and Timothy J. Beaudin (8)
10.12 Employment Agreement dated July 24, 1996 between the Registrant and
Stephen P. Wallace (9)
10.13 Registrant's Amended and Restated 1995 Stock Option Plan (11)
10.14 Registrant's Amended and Restated 1996 Performance Award Plan *
10.15 Employment Agreement dated February 1, 1996 between the Registrant and
Ira Yellin (10)
10.16 Letter Agreement dated February 1, 1996 between the Registrant and Ira
Yellin (10)
10.17 Amended and Restated Employment Agreement dated September 16, 1997
between the Registrant and Kathleen Smalley (11)
10.18 Letter Agreement dated November 16, 1996 between the Registrant and
Steve Wallace (10)
10.19 Letter Agreement dated November 16, 1996 between the Registrant and
Timothy Beaudin (10)
10.20 Office lease dated November 22, 1996 between Bradbury Associates, L.P.
and the Registrant (10)
10.21 Registrant's Deferred Compensation Plan (11)
10.22 Letter Agreement dated November 14, 1997 between the Registrant and
Doug Gardner (12)
27 Financial Data Schedule*
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.
*Filed with this report on Form 10-Q.
(1) Incorporated by reference to 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 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 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 the Form 10-K for the year ended December 31,
1990.
(5) Incorporated by reference to Amendment No. 2 to Form S-3 as filed with the
Commission on February 4, 1993.
(6) Incorporated by reference to the Form 10-K for the year ended December 31,
1993.
(7) Incorporated by reference to Amendment No. 1 to the Form 10-K for the year
ended December 31, 1993.
(8) Incorporated by reference to the Form 10-K for the year ended December 31,
1994.
(9) Incorporated by reference to the Form 10-K for the year ended December 31,
1995.
24
<PAGE>
(10)Incorporated by reference to the Form 10-K for the year ended December 31,
1996.
(11)Incorporated by reference to the Form 10-K for the year ended December 31,
1997.
(12)Incorporated by reference to the Form 10-K for the year ended December 31,
1998
(b) No reports on Form 8-K were filed during the quarter for which the
report is filed.
25
<PAGE>
EXHIBIT 3.3
AMENDED AND RESTATED BY-LAWS
of
CATELLUS DEVELOPMENT CORPORATION
1. MEETINGS OF STOCKHOLDERS.
------------------------
1.1. Annual Meeting. An annual meeting of the stockholders shall be
--------------
held at such time, date, and place within or without the State of Delaware as
the Board of Directors (the "Board") may fix for the purpose of electing
directors and transacting such other business as may come before the meeting.
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 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
<PAGE>
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 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.
<PAGE>
(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.
1.9. Stockholder Nominations and Proposals.
-------------------------------------
(a) At an annual meeting of the stockholders, only such business will
be conducted or considered as is properly brought before the meeting. To be
properly brought before an annual meeting, business must be (i) specified in the
notice of meeting (or any supplement to the notice) given by or at the direction
of the Board in accordance with these Bylaws and presented at the meeting by a
shareholder, officer, or director, (ii) otherwise properly brought before the
meeting by the presiding officer or by or at the direction of a majority of the
Board, or (iii) otherwise properly requested to be brought before the meeting by
a stockholder of the Company in accordance with Section 1.9(b) below.
(b) For business to be properly requested by a stockholder to be
brought before an annual meeting, the stockholder must (i) be a stockholder of
the corporation of record at the time of the giving of notice for the annual
meeting provided for in these bylaws, (ii) be entitled to vote at the annual
meeting, (iii) have given timely notice of the business in writing to the
secretary of the corporation and (iv) present the matter at the meeting unless
it is presented on the stockholder's behalf by or at the direction of the Board.
A stockholder's notice to the secretary of the corporation must set forth as to
each matter the stockholder proposes to bring before the annual meeting: (A) a
description in reasonable detail of the business desired to be brought before
the annual meeting and the reasons for conducting the business at the annual
meeting, (B) the name and address, as they appear on the corporation's books, of
the stockholder proposing the business and of the beneficial owner, if any on
whose behalf the proposal is made, (C) the class and number of shares of the
corporation that are owned beneficially and of record by the
<PAGE>
stockholder proposing the business and by the beneficial owner, if any, on whose
behalf the proposal is made, and (D) any material interest of the stockholder
proposing the business and of the beneficial owner, if any, on whose behalf the
proposal is made in the business. Notwithstanding the foregoing provisions, a
stockholder must also comply with all applicable requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder with
respect to the matters set forth in this bylaw. Nothing in this bylaw will be
deemed to expand or diminish any rights of stockholders to request inclusion of
proposals in the Company's proxy statement pursuant to Rule 14a-8 under the
Securities Exchange Act of 1934, as amended.
(c) Nominations of persons for election as directors of the
corporation may be made only at an annual meeting of stockholders (i) by or at
the direction of the Board or (ii) by any stockholder who is a stockholder of
record at the time of giving of notice provided for in these bylaws, who is
entitled to vote for the election of directors at the meeting, and who complies
with the procedures set forth in this bylaw. All nominations by stockholders
must be made pursuant to timely notice in proper written form to the secretary
of the corporation.
(d) To be in proper written form, a stockholder's notice of
nomination must set forth (i) the name and address, as they appear on the
corporation's books, of the stockholder giving the notice and of the beneficial
owner, if any, on whose behalf the nomination is made; (ii) a representation
that the stockholder giving the notice is a holder of record of stock of the
corporation entitled to vote at the annual meeting and intends to appear in
person or by proxy at the annual meeting to nominate the person or persons
specified in the notice; (iii) the class and number of shares of stock of the
corporation owned beneficially and of record by the stockholder giving the
notice and by the beneficial owner, if any, on whose behalf the nomination is
made; (iv) a description of all arrangements or understandings between or among
any of (A) the stockholder giving the notice, (B) the beneficial owner on whose
behalf the notice is given, (C) each nominee, and (D) any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder giving the notice; (v) such other
information regarding each nominee proposed by the stockholder giving the notice
as would be required to be included in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission under the Securities
Exchange Act of 1934 had the nominee been nominated, or intended to be
nominated, by the Board; and (vi) the signed consent of each nominee to serve as
a director of the corporation if so elected. The presiding officer of any
annual meeting will, if the facts warrant, determine that a nomination was not
made in accordance with the procedures prescribed by this bylaw, and if he or
she should so determine, he or she will so declare to the meeting, and the
defective nomination will be disregarded. Notwithstanding the foregoing
provisions, a stockholder must also comply with all applicable requirement of
the Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder with respect to the matters set forth in this bylaw.
<PAGE>
(e) To be timely, a stockholder's notice under paragraphs (b) or (d)
above must be delivered to or mailed and received at the principal executive
offices of the corporation not less than 60 calendar days before the annual
meeting; provided, however, that in the event public announcement of the date of
-----------------
the annual meeting is not made at least 75 calendar days before the date of the
annual meeting, notice by the stockholder to be timely must be received not
later than the close of business on the 10th calendar day following the day on
which public announcement is first made of the date of the annual meeting. For
purposes of this bylaw, "public announcement" means disclosure in a press
release reported by the Dow Jones News Service, Associated Press, or comparable
national news service or in a document publicly filed by the corporation with
the Securities Exchange Commission pursuant to Section 13, 14, or 15(d) of the
Securities Exchange Act of 1934, as amended, or furnished to stockholders.
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 eleven 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 other 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.
<PAGE>
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.
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 the director at his or her
residence or usual place of business at least three days before the meeting or
by delivering notice to the director personally (including by telephone) or by
e-mail or facsimile at least one day before the meeting. Notice shall be deemed
duly given when (a) delivered personally, (b) sent by e-mail or 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 proceedings 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.
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.
<PAGE>
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.
2.12. Chairman of the Board. The chairman of the board shall be
---------------------
elected by the Board at the annual meeting 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 the chairman. The
chairman shall hold office until the next annual meeting of the Board and until
the election of his successor; provided, however, that the chairman may resign
at anytime 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. The chairman may be removed by the
Board either with or without cause.
3. COMMITTEES.
----------
3.1. Committees of the Board. The Board, by resolution adopted by a
-----------------------
majority of the entire Board, may designate committees 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 Benefits or
Corporate Governance 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 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.
<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 office.
4.6. 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 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.
4.7. Chief Operating Officer. The chief operating officer shall have
-----------------------
such powers and duties as the Board or the president may assign.
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
<PAGE>
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 satisfactory surety before issuing a new
certificate to replace a certificate claimed to have been lost or destroyed.
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
payment 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 AND INSURANCE.
-----------------------------
6.1 Right to Indemnification. Each person who was or is a party or is
------------------------
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
or inaction
<PAGE>
in an official capacity or in any other capacity while serving as a director,
officer, employee or agent, shall be indemnified and held harmless by the
corporation to the fullest extent permitted by the laws of Delaware, as the same
exist or may hereafter be amended, against all costs, charges, expenses,
liabilities and losses (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith, and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that the corporation shall
------------------
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board. The right to indemnification
conferred in this Article shall be a contract right and shall include the right
to be paid by the corporation the expenses incurred in defending any such
proceeding in advance of its final disposition; provided, however, that, if the
--------- --------
Delaware General Corporation Law requires, the payment of such expenses incurred
by a director or officer in his or her capacity as a director or officer (and
not in any other capacity in which service was or is rendered by such person
while a director or officer, including, without limitation, service to an
employee benefit plan) in advance of the final disposition of proceeding, shall
be made only upon delivery to the corporation of an undertaking, by or on behalf
of such director or officer, to repay all amounts so advanced if it shall
ultimately be determined that such director or officer is not entitled to be
indemnified under this Section or otherwise. The corporation may, by action of
the Board, provide indemnification to employees and agents of the corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.
6.2 Right of Claimant to Bring Suit. If a claim under Section 6.1 of
-------------------------------
this Article is not paid in full by the corporation within thirty days after a
written claim has been received by the corporation, the claimant may at any time
thereafter bring suit against the corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any is required, has been tendered to corporation)
that the claimant has failed to meet a standard of conduct which makes it
permissible under Delaware law for corporation to indemnify the claimant for the
amount claimed. Neither the failure of the corporation (including its Board,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
permissible in the circumstances because he or she has met such standard of
conduct, nor an actual determination by the corporation (including its Board,
independent legal counsel, or its stockholders) that the claimant has not met
such standard of conduct, shall be a defense to the action or create a
presumption that the claimant has failed to meet such standard of conduct.
6.3 Non-Exclusivity of Rights. The right to indemnification and the
--------------------------
payment of expenses incurred in defending a proceeding in advance of its final
<PAGE>
disposition conferred in this Article shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
6.4 Insurance. The corporation may maintain insurance, at its
----------
expense, to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against such expense,
liability or loss under Delaware law.
6.5 Expenses as a Witness. To the extent that any director, officer,
----------------------
employee or agent of the corporation is by reason of such position, or a
position with another entity at the request of the corporation, a witness in any
action, suit or proceeding, he or she shall be indemnified against all costs and
expenses actually and reasonably incurred by him or her or on his or her behalf
in connection therewith.
6.6 Indemnity Agreements. The corporation may enter into agreements
---------------------
with any director, officer, employee or agent of the corporation providing for
indemnification to the full extent permitted by Delaware law.
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 corporation's name and the year and
state in which it was incorporated.
7.2. Fiscal Year. The Board may determine the corporation's fiscal
-----------
year. Until changed by the Board, the corporation'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.
<PAGE>
NOTES TO AMENDMENTS
-------------------
Section 1.1:
-----------
Amended on February 25, 1999, to change annual meeting from May to a
time, date and place that the Board may fix,
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 1.9:
------------
Added on October 14, 1998.
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.
Amended on March 26, 1997 to increase the number of directors from
nine to twelve.
Amended on March 26, 1998, to decrease the number of directors from
twelve to eleven.
Section 2.6:
------------
Amended on October 14, 1998, to permit notice of board meetings to be
given by e-mail.
Section 2.12:
------------
<PAGE>
Amended and restated on October 29, 1997 to exclude the Chairman of
the Board as an officer of the Company (to enable the Chairman to
serve on various committees of the Board).
Section 3.1:
-----------
Amended on October 16, 1992 to add the final sentence.
Section 4.1:
-----------
Amended and restated on October 29, 1997 to exclude the Chairman of
the Board as an officer of the Company (to enable the Chairman to
serve on various committees of the Board).
Section 4.3:
-----------
Amended on February 27, 1992 to add the final sentence.
Section 4.6:
-----------
Amended on October 29, 1997. Previous Section 4.6 was deleted, and the
appropriate Sections were renumbered to reflect the deletion of this
section. Sections are now numbered only to 4.10, rather than 4.11.
(Purpose was to exclude the Chairman of the Board as an officer of the
Company to enable the Chairman to serve on various committees of the
Board.)
Section 4.7:
------------
Added on October 14, 1998, with existing Sections 4.7 through 4.10
renumbered as Sections 4.8 through 4.11.
Section 6:
---------
Amended and restated on October 29, 1997.
<PAGE>
Exhibit 10.14
CATELLUS DEVELOPMENT CORPORATION
AMENDED AND RESTATED 1996 PERFORMANCE AWARD PLAN
(As Restated to Incorporate Amendments
through April 1999)
<PAGE>
CATELLUS DEVELOPMENT CORPORATION
AMENDED AND RESTATED 1996 PERFORMANCE AWARD PLAN
(As Restated to Incorporate Amendments
through April 1999)
SECTION 1. Purpose.
The purpose of this Plan is to benefit the Corporation's stockholders by
encouraging high levels of performance by individuals who contribute to the
success of the Corporation and its Subsidiaries and to enable the Corporation
and its Subsidiaries to attract, motivate, retain and reward talented and
experienced individuals. This Plan is also intended to enable the Corporation
to attract, motivate and retain experienced and knowledgeable independent
directors through the benefits provided under Section 9.
SECTION 2. Definitions; Rules of Construction.
(a) Defined Terms. The terms defined in this Section shall have the following
meanings for purposes of this Plan:
"Award" means an award granted pursuant to Section 4, Section 9 or Section 10,
including stock units originally granted under the Deferral Plan that were
converted into Director Stock Units under this Plan effective May 1, 1997 by
action of the Board.
"Award Agreement" means an agreement described in Section 6, Section 9 or
Section 10 entered into between the Corporation and a Participant, setting forth
the terms and conditions of an Award granted to a Participant.
"Beneficiary" means a person or persons (including a trust or trusts) validly
designated by a Participant or, in the absence of a valid designation, entitled
by will or the laws of descent and distribution, to receive the benefits
specified in the Award Agreement and under this Plan in the event of a
Participant's death.
"Board of Directors" or "Board" means the Board of Directors of the Corporation.
"Cash-Based Awards" means Awards, as described in Section 4(a)(5), that, if
paid, must be paid in cash and that are neither denominated in nor have a value
derived from the value of, nor an exercise or conversion privilege at a price
related to, shares of Stock.
"Change of Control" is defined in Section 7(c).
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
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"Committee" means each of the Compensation and Benefits Committee, the
Compensation Review Committee and the Special Committee, unless the context
requires otherwise.
"Compensation and Benefits Committee" means the Compensation and Benefits
Committee of the Board, whose members are appointed by the Board from time to
time. Although the Compensation and Benefits Committee has the authority under
the Plan to make grants of Awards to any Participant, it is anticipated that the
Compensation and Benefits Committee will make grants of Awards only to those
Participants who are not subject to Section 16 of the Exchange Act or Section
162(m) of the Code and the rules promulgated thereunder.
"Compensation Review Committee" means the Compensation Review Committee of the
Board, whose members are appointed by the Board from time to time. All of the
members of the Compensation Review Committee, which may not be less than two,
are intended at all times to qualify as "outside directors" within the meaning
of Section 162(m) of the Code, and as "non-employee directors" within the
meaning of Rule 16b-3; provided, however, that the failure of a member of such
committee to so qualify shall not be deemed to invalidate any Award granted by
such committee. Although the Compensation Review Committee has the authority
under the Plan to make grants of Awards to any Participant, it is anticipated
that the Compensation Review Committee will make grants of Awards only to those
Participants who are subject to Section 16 of the Exchange Act and/or Section
162(m) of the Code and the rules promulgated thereunder.
"Corporation" means Catellus Development Corporation.
"Deferral Plan" means the Corporation's Non-Employee Directors Deferred Stock
Compensation Plan, which has been terminated.
"Director Stock Unit" means a non-voting unit of measurement which is deemed for
bookkeeping purposes to be equivalent to one outstanding share of Common Stock
of the Company (subject to adjustment) solely for purposes of this Plan.
"Director Stock Unit Account" means the bookkeeping account established under
Section 10 and maintained by the Company on behalf of each Participant and
credited with Director Stock Units in accordance with Section 10.
"Director Stock Unit Award" means a deferred payment award payable in Common
Stock based on Director Stock Units credited to a Director Stock Unit Account
under Section 10.
"Employee" means any employee (whether or not also a director) of the
Corporation or any of its Subsidiaries, but excludes any part-time employee
(defined for these purposes as a person regularly working fewer than 30 hours
per week) or a temporary employee, and (in the case of an Incentive Stock
Option) an Employee of any Subsidiary that is not a "subsidiary corporation" of
the Corporation as defined in Code Section 424(f).
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"EPS" means earnings per common share on a fully diluted basis determined by
dividing (i) net earnings, less dividends on preferred stock of the Corporation
by (ii) the weighted average number of common shares and common share
equivalents outstanding.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from time
to time.
"Executive Officer" means executive officer as defined in Rule 3b-7 under the
Exchange Act, provided that, if the Board has designated the executive officers
of the Corporation for purposes of reporting under the Exchange Act, the
designation shall be conclusive for purposes of this Plan.
"Fair Market Value" means the closing price of the relevant security for the
applicable date as reported on the composite tape of New York Stock Exchange
issues (or, if the security is not so listed, the principal national stock
exchange on which the security is then listed or, if the security is not listed
on any national stock exchange, such other reporting system as shall be selected
by the Committee). The Committee shall determine the Fair Market Value of any
security that is not publicly traded using criteria as it shall determine, in
its sole discretion, to be appropriate for the valuation.
"For Cause" means (i) the continued failure by the Participant to substantially
perform his or her duties with the Corporation or a Subsidiary (other than any
such failure resulting from his or her incapacity due to physical or mental
illness), or (ii) conduct by the Participant which is materially injurious to
the Corporation or a Subsidiary, monetarily or otherwise, in either case as
determined by the Committee.
"Insider" means any person who is subject to Section 16(b) of the Exchange Act.
"Net Cash Flow" means cash and cash equivalents derived from either (i) net cash
flow from operations or (ii) net cash flow from operations, financings and
investing activities, as determined by the Committee at the time an Award is
granted.
"Non-Employee Director" means a member of the Board of Directors of the
Corporation who is not also an Employee.
"Officer" means any officer (whether or not also an employee) of the Corporation
or any of its Subsidiaries, but excludes, in the case of an Incentive Stock
Option, an Officer of any Subsidiary that is not a "subsidiary corporation" of
the Corporation as defined in Code Section 424(f).
"Option" means a Nonqualified Stock Option or an Incentive Stock Option, as
described in Section 4(a)(1) or (2).
"Participant" means any Employee, any Officer or any Non-Employee Director who
is granted an Award pursuant to this Plan that remains outstanding.
"Performance-Based Awards" is defined in Section 4(b).
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"Performance Goal" means EPS or ROE or Net Cash Flow or Total Stockholder
Return, and "Performance Goals" means any combination thereof.
"QDRO" means a qualified domestic relations order as defined in Section 414(p)
of the Code or Title I, Section 206(d)(3) of the Employee Retirement Income
Security Act of 1974, as amended from time to time (to the same extent as if
this Plan was subject thereto), or the applicable rules thereunder.
"Retainer" means the annual retainer payable by the Company to a Non-Employee
Director.
"ROE" means consolidated net income of the Corporation (less preferred
dividends) divided by the average consolidated common stockholders equity.
"Rule 16b-3" means Rule 16b-3 under Section 16 of the Exchange Act, as amended
from time to time.
"Share-Based Awards" means Awards, as described in Sections 4(a)(1) through (4),
that are payable or denominated in or have a value derived from the value of, or
an exercise or conversion privilege at a price related to, shares of Stock and
Awards under Section 10.
"Share Units" means the number of units under a Share-Based Award that is
payable solely in cash or is actually paid in cash, determined by reference to
the number of shares of Stock by which the Share-Based Award is measured.
"Special Committee" means a committee consisting of one or more members of the
Board that is appointed by the Board from time to time. The member or members
of the Special Committee need not qualify as "outside directors" within the
meaning of Section 162(m) of the Code, or as "non-employee directors" within the
meaning of Rule 16b-3. Although the Special Committee has the authority under
the Plan, within limits (if any) authorized by the Compensation and Benefits
Committee, the Compensation Review Committee or the Board, to make grants of
Awards to any Participant, it is anticipated that the Special Committee will
make grants of Awards only to those Participants who are not subject to Section
16 of the Exchange Act or Section 162(m) of the Code and the rules promulgated
thereunder.
"Stock" means shares of Common Stock of the Corporation, par value $.01 per
share, subject to adjustments made under Section 7 or by operation of law.
"Stock Trading Price" means the average of the closing prices of the relevant
security for 30 consecutive days as reported on the composite tape of New York
Stock Exchange issues (or, if the security is not so listed, the principal
national stock exchange on which the security is then listed or, if the security
is not listed on any national stock exchange, such other reporting system as
shall be selected by the Committee). The Committee shall determine the Stock
Trading Price of any security that is not publicly traded using criteria as it
shall determine, in its sole discretion, to be appropriate for the valuation.
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"Subsidiary" means, as to any person, any corporation, association, partnership,
joint venture or other business entity of which 50% or more of the voting stock
or other equity interests (in the case of entities other than corporations) is
owned or controlled (directly or indirectly) by that entity, or by one or more
of the Subsidiaries of that entity, or by a combination thereof.
"Total Stockholder Return" means, with respect to the Corporation or other
entities (if measured on a relative basis), the (i) change in the market price
of its common stock (as quoted in the principal market on which it is traded as
of the beginning and ending of the period) plus dividends and other
distributions paid, divided by (ii) the beginning quoted market price, all of
which is adjusted for any changes in equity structure including, but not limited
to, stock splits and stock dividends.
(b) Financial and Accounting Terms. Except as otherwise expressly provided or
the context otherwise requires, financial and accounting terms, including
terms defined herein as Performance Goals, are used as defined for purposes
of, and shall be determined in accordance with, generally accepted
accounting principles and as derived from the audited consolidated
financial statements of the Corporation, prepared in the ordinary course of
business.
(c) Rules of Construction. For purposes of this Plan and the Award Agreements,
unless otherwise expressly provided or the context otherwise requires, the
terms defined in this Plan include the plural and the singular, and
pronouns of either gender or neuter shall include, as appropriate, the
other pronoun forms.
SECTION 3. Eligibility
Any one or more Awards may be granted to any Employee or any Officer who is
designated by the Compensation and Benefits Committee, the Compensation Review
Committee or the Special Committee to receive an Award. Non-Employee Directors
shall not be eligible to receive any Awards except for (a) the Nonqualified
Stock Options granted automatically without action of any Committee under the
provisions of Section 9, and (b) Director Stock Unit Awards pursuant to Section
10.
SECTION 4. Awards
(a) Type of Awards. Each Committee may grant any of the following types of
Awards, either singly, in tandem or in combination with other Awards:
(1) Nonqualified Stock Options. A Nonqualified Stock Option is an Award in
the form of an option to purchase Stock that is not intended to comply with the
requirements of Code Section 422. Unless the Committee provides otherwise, and
such provision is reflected in the Award Agreement, the exercise price of each
Nonqualified Stock Option granted under this Plan shall be not less than the
Fair Market Value of the Stock on the date that the Option is granted.
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<PAGE>
(2) Incentive Stock Options. An Incentive Stock Option is an Award in the
form of an option to purchase Stock that is intended to comply with the
requirements of Code Section 422 or any successor section of the Code. The
exercise price of each Incentive Stock Option granted under this Plan shall be
not less than the Fair Market Value of the Stock on the date that the Option is
granted; provided, however, that the exercise price of any Incentive Stock
Option granted to a Participant who owns more than 10% of the total combined
voting power of all classes of stock of the Corporation or any Subsidiary shall
not be less than 110% of such Fair Market Value. In addition, the Committee
shall include such other terms of any Incentive Stock Option as it deems
necessary or desirable to qualify the Option as an incentive stock option under
the provisions of Section 422 of the Code. To the extent that the aggregate
"fair market value" of Stock with respect to which one or more incentive stock
options first become exercisable by a Participant in any calendar year exceeds
$100,000, taking into account both Stock subject to Incentive Stock Options
under this Plan and stock subject to incentive stock options under all other
plans of the Corporation or of other entities referenced in Code Section
422(d)(1), the Options shall be treated as Nonqualified Stock Options.
(3) Stock Appreciation Rights. A Stock Appreciation Right is an Award in
the form of a right to receive, upon surrender of the right, but without other
payment, an amount based on appreciation in the value of Stock over a base price
established in the Award, payable in cash, Stock or such other form or
combination of forms of payout, at times and upon conditions (which may include
a Change of Control), as may be approved by the Committee. Unless the Committee
provides otherwise, and such provision is reflected in the Award Agreement, the
minimum base price of a Stock Appreciation Right granted under this Plan shall
be not less than the lowest of the Fair Market Value of the underlying Stock on
the date the Stock Appreciation Right is granted or, in the case of a Stock
Appreciation Right related to an Option (whether already outstanding or
concurrently granted), the exercise price of the related Option.
(4) Other Share-Based Awards. Each Committee may from time to time grant
Awards under this Plan that provide Participants with Stock or the right to
purchase Stock, or provide other incentive Awards (including, but not limited
to, phantom stock or units, performance stock or units, bonus stock, dividend
equivalent units, or similar securities or rights) that have a value derived
from the value of, or an exercise or conversion privilege at a price related to,
or that are otherwise payable in shares of Stock. The Awards shall be in a form
determined by the Committee, provided that the Awards shall not be inconsistent
with the other express terms of this Plan. Awards under this Section 4(a)(4) to
Executive Officers that are either granted or become vested, exercisable or
payable based on attainment of one or more of the Performance Goals shall only
be granted as Performance-Based Awards under Section 4(b). Restricted stock may
not be issued under this Plan.
(5) Cash-Based Awards. Cash-Based Awards are Awards that provide
Participants with the opportunity to earn a cash payment based upon the level of
performance of the Corporation relative to one or more Performance Goals
established by the Committee for an award cycle of more than one but not more
than five years. For each award cycle, the Committee shall determine the size
of the Awards, the Performance Goals, the performance targets as to
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<PAGE>
each of the Performance Goals, the level or levels of achievement necessary for
award payments and the weighting of the Performance Goals, if more than one
Performance Goal is applicable. Cash-Based Awards to Executive Officers that are
either granted or become vested, exercisable or payable based on attainment of
one or more Performance Goals shall only be granted as Performance-Based Awards
under Section 4(b).
(b) Special Performance-Based Awards. Without limiting the generality of the
foregoing, any of the type of Awards listed in Section 4(a) also may be
granted by the Compensation Review Committee as awards that satisfy the
requirements for "performance-based compensation" within the meaning of
Code Section 162(m) ("Performance-Based Awards"), the grant, vesting,
exercisability or payment of which depends on the degree of achievement of
the Performance Goals relative to preestablished targeted levels for the
Corporation on a consolidated basis. Notwithstanding anything contained in
this Section 4(b) to the contrary, any Option or Stock Appreciation Right
awarded by the Compensation Review Committee with an exercise price or a
base price not less than Fair Market Value on the date of grant shall be
subject only to the requirements of clauses (1) and (3)(A) below in order
for such Awards to satisfy the requirements for Performance-Based Awards
under this Section 4(b) (with such Awards hereinafter referred to as a
"Qualifying Option" or a "Qualifying Stock Appreciation Right",
respectively). With the exception of any Qualifying Option or Qualifying
Stock Appreciation Right, an Award by the Compensation Review Committee
that is intended to satisfy the requirements of this Section 4(b) shall be
designated as a Performance-Based Award at the time of grant.
(1) Eligible Class. The eligible class of persons for Awards under this
Section 4(b) shall be all Employees and Officers.
(2) Performance Goals. The performance goals for any Awards under this
Section 4(b) (other than Qualifying Options and Qualifying Stock Appreciation
Rights) shall be, on an absolute or relative basis, one or more of the
Performance Goals. The specific performance target(s) with respect to
Performance Goal(s) must be established by the Compensation Review Committee in
advance of the deadlines applicable under Code Section 162(m) and while the
performance relating to the Performance Goal(s) remains substantially uncertain.
(3) Individual Limits.
(A) Share-Based Awards. The maximum number of shares of Stock or
Share Units that are issuable under Options, Stock Appreciation Rights or other
Share-Based Awards (described under Section 4(a)(4)) that are granted as
Performance-Based Awards during any one calendar year to any one Participant
under this Plan shall not exceed 1,000,000, either individually or in the
aggregate, subject to adjustment as provided in Section 7. Awards that are
canceled during the year shall be counted against this limit to the extent
required by Code Section 162(m).
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(B) Cash-Based Awards. The aggregate amount of compensation to be
paid to any Participant under this Plan in respect of Cash-Based Awards that are
granted during any one calendar year to any one individual as Performance-Based
Awards shall not exceed $2,000,000.
(4) Committee Certification. Before any Performance-Based Award under this
Section 4(b) (other than Qualifying Options and Qualifying Stock Appreciation
Rights) is paid, the Compensation Review Committee must certify in writing (by
resolution or otherwise) that the applicable Performance Goal(s) and any other
material terms of the Performance-Based Award were satisfied; provided, however,
that a Performance-Based Award may be paid without regard to the satisfaction of
the applicable Performance Goal in the event of a Change of Control as provided
in Section 7(b).
(5) Terms and Conditions of Awards; Committee Discretion to Reduce
Performance Awards. The Compensation Review Committee shall have discretion to
determine the conditions, restrictions or other limitations, in accordance with
the terms of this Plan and Code Section 162(m), on the payment of individual
Performance-Based Awards under this Section 4(b). To the extent set forth in an
Award Agreement, the Compensation Review Committee may reserve the right to
reduce the amount payable in accordance with any standards or on any other basis
(including the Committee's discretion), as the Compensation Review Committee may
impose.
(6) Adjustments for Material Changes. In the event of (i) a change in
corporate capitalization, a corporate transaction or a complete or partial
corporate liquidation, or (ii) any extraordinary gain or loss or other event
that is treated for accounting purposes as an extraordinary item under generally
accepted accounting principles, or (iii) any material change in accounting
policies or practices affecting the Corporation and/or the Performance Goals or
targets, then, to the extent any of the foregoing events (or a material effect
thereof) was not anticipated at the time the targets were set, the Compensation
Review Committee may make adjustments to the Performance Goals and/or targets,
applied as of the date of the event, and based solely on objective criteria, so
as to neutralize, in the Compensation Review Committee's judgment, the effect of
the event on the applicable Performance-Based Award.
(7) Interpretation. Except as specifically provided in this Section 4(b),
the provisions of this Section 4(b) shall be interpreted and administered by the
Compensation Review Committee in a manner consistent with the requirements for
exemption of Performance-Based Awards granted to Executive Officers as
"performance-based compensation" under Code Section 162(m) and regulations and
other interpretations issued by the Internal Revenue Service thereunder.
(c) Maximum Term of Awards. Except as provided in or pursuant to Section 10,
no Award that contemplates exercise or conversion may be exercised or
converted to any extent, and no other Award that defers vesting, shall
remain outstanding and unexercised, unconverted or unvested more than 10
years after the date the Award was initially granted.
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SECTION 5. Shares of Stock and Units Available Under Plan.
(a) Aggregate Share Limit. The maximum number of shares of Stock that may be
issued pursuant to all Share-Based Awards (including Incentive Stock
Options and Director Stock Units) is 4,000,000, subject to adjustment as
provided in this Section 5 or Section 7.
(b) Aggregate Unit Limit. The maximum number of Share Units and Director Stock
Units that may be paid pursuant to all Share-Based Awards is 4,000,000,
subject to adjustment as provided in this Section 5 or Section 7.
(c) Reissue of Shares and Other Awards. Any unexercised, unconverted or
undistributed portion of any expired, canceled, terminated or forfeited
Award, or any alternative form of consideration under an Award that is not
paid in connection with the settlement of an Award or any portion of an
Award, shall again be available for Award under Section 5(a) or 5(b), as
applicable, whether or not the Participant has received benefits of
ownership (such as dividends or dividend equivalents or voting rights)
during the period in which the Participant's ownership was restricted or
otherwise not vested. Shares of Stock that are issued pursuant to Awards
and subsequently reacquired by the Corporation pursuant to the terms and
conditions of the Awards shall be available for reissuance under the Plan.
If the Corporation withholds shares of Stock pursuant to Section 5(g), the
number of shares that would have been deliverable with respect to an Award
but that are withheld may in effect not be issued but the aggregate number
of shares issuable with respect to the applicable Award shall be reduced by
the number of shares withheld and such shares shall be available for
additional Awards under this Plan.
(d) Interpretive Issues. Additional rules for determining the number of shares
of Stock or Share Units authorized under this Plan may be adopted by the
Committee, as it deems necessary or appropriate.
(e) Treasury Shares; No Fractional Shares. The Stock which may be issued
(which term includes Stock reissued or otherwise delivered) pursuant to an
Award under this Plan may be treasury or authorized but unissued Stock or
Stock acquired, subsequently or in anticipation of a transaction under this
Plan, in the open market or in privately negotiated transactions to satisfy
the requirements of this Plan. No fractional shares shall be issued but
fractional interests may be accumulated. The Committee, however, may
determine that cash, other securities, or other property will be paid or
transferred in lieu of any fractional share interests.
(f) Consideration. The Stock issued under this Plan may be issued (subject to
Section 12(d)) for any lawful form of consideration, the value of which
equals the par value of the Stock or such greater or lesser value as the
Committee, consistent with Sections 12(d), 4(a)(1), 4(a)(2) and 4(a)(3),
may require.
(g) Purchase or Exercise Price; Withholding. The exercise or purchase price
(if any) of the Stock issuable pursuant to any Award and any withholding
obligation under applicable tax laws shall be paid in cash or, subject to
the Committee's express authorization and the restrictions, conditions and
procedures the Committee may impose, any one or combination of (i) cash,
(ii) a
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check payable to the order of the Corporation, (iii) the delivery of shares
of Stock, provided that any such shares used in payment shall have been
owned by the Participant at least six months prior to the date of exercise
(or with the consent of the Committee, for less than six months), (iv) a
reduction in the amount of Stock or other amounts otherwise issuable or
payable pursuant to such Award, (v) notice and third party payment in such
manner as may be authorized by the Committee, or (vi) the delivery of a
promissory note, or other obligation for the future payment in money, the
terms and conditions of which shall be determined (subject to Section
12(d)) by the Committee. In the case of a payment by the means described in
clause (iii) or (iv) above, the Stock to be so delivered or offset shall be
determined by reference to the Fair Market Value of the Stock on the date
as of which the payment or offset is made.
(h) Cashless Exercise. The Committee may permit the exercise of the Award and
payment of any applicable withholding tax in respect of an Award by
delivery of written notice, subject to the Corporation's receipt of a third
party payment in full in cash for the exercise price and the applicable
withholding prior to issuance of Stock, in the manner and subject to the
procedures as may be established by the Committee.
SECTION 6. Award Agreements
Each Award under this Plan shall be evidenced by an Award Agreement in a form
approved by the Committee setting forth, in the case of Share-Based Awards, the
number of shares of Stock or Share Units, as applicable, subject to the Award,
and the price (if any) and term of the Award and, in the case of Performance-
Based Awards, the applicable Performance Goals. The Award Agreement shall also
set forth (or incorporate by reference) other material terms and conditions
applicable to the Award as determined by the Committee consistent with the
limitations of this Plan.
(a) Incorporated Provisions. Award Agreements shall be subject to the terms of
this Plan and shall be deemed to include the following terms, unless the
Committee in the Award Agreement otherwise (consistent with applicable
legal considerations) provides:
(1) Nonassignability: The Award shall not be assignable nor transferable,
except (A) by will or by the laws of descent and distribution, or (B) pursuant
to a QDRO or any other exception to transfer restrictions expressly permitted by
the Committee and set forth in the Award Agreement (or an amendment thereto), or
(C) in the case of Awards constituting Incentive Stock Options, as permitted by
the Code. The restrictions on exercise and transfer shall not be deemed to
prohibit, to the extent permitted by the Committee, transfers without
consideration for estate and financial planning purposes, nor transfers to such
other persons or in such other circumstances as the Committee may in the Award
Agreement expressly permit. During the lifetime of a Participant the Award
shall be exercised only by such Participant or by his or her guardian or legal
representative, except as expressly otherwise provided consistent with the
foregoing transfer restrictions. The designation of a Beneficiary hereunder
shall not constitute a transfer prohibited by the foregoing provisions.
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(2) Rights as Stockholder: A Participant shall have no rights as a holder
of Stock with respect to any unissued securities covered by an Award until the
date the Participant becomes the holder of record of these securities. Except
as provided in Section 7, no adjustment or other provision shall be made for
dividends or other stockholder rights, except to the extent that the Award
Agreement provides for dividend equivalents or similar economic benefits.
(3) Withholding: The Participant shall be responsible for payment of any
taxes or similar charges required by law to be withheld from an Award or an
amount paid in satisfaction of an Award and these obligations shall be paid by
the Participant on or prior to the payment of the Award. In the case of an
Award payable in cash, the withholding obligation shall be satisfied by
withholding the applicable amount and paying the net amount in cash to the
Participant. In the case of an Award paid in shares of Stock, a Participant
shall satisfy the withholding obligation as provided in Section 5(g).
(4) Option Holding Period: Subject to the authority of the Committee under
Section 7, a minimum six-month period shall elapse between the date of initial
grant of any Option and the sale of the underlying shares of Stock, and the
Corporation may impose legend and other restrictions on the Stock issued on
exercise of the Options to enforce this requirement.
(b) Other Provisions. Award Agreements may include other terms and conditions
as the Committee shall approve including, but not limited to, the
following:
(1) Termination of Employment: A provision describing the treatment of an
Award in the event of the retirement, disability, death or other termination of
a Participant's employment with or services to the Company or any Subsidiary,
including any provisions relating to the vesting, exercisability, forfeiture or
cancellation of the Award in these circumstances, subject, in the case of
Performance-Based Awards, to any applicable requirements for "performance-based
compensation" under Code Section 162(m).
(2) Vesting; Effect of Termination; Change of Control: Any other terms
consistent with the terms of this Plan as are necessary and appropriate to
effect the Award to the Participant including, but not limited to, the vesting
provisions, any requirements for continued employment, any other restrictions or
conditions (including performance requirements) of the Award, and the method by
which (consistent with Section 7) the restrictions or conditions lapse, and the
effect on the Award of a Change of Control.
(3) Replacement and Substitution: Any provisions permitting or requiring
the surrender of outstanding Awards or securities held by the Participant in
whole or in part in order to exercise or realize rights under or as a condition
precedent to other Awards, or in exchange for the grant of new or amended Awards
under similar or different terms.
(4) Reloading. Any provisions for successive or replenished Awards
including, but not limited to, reload Options.
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(5) Termination of Benefits. A provision that any and all unexercised
Awards and all rights under this Plan of a Participant who received such Award
(or his or her designated Beneficiary or legal representative) and the exercise
or vesting thereof, shall be forfeited if, prior to the time of such exercise,
the Participant shall (i) be employed by a competitor of, or shall be engaged in
any activity in competition with, the Corporation without the Corporation's
consent, (ii) divulge without the Corporation's consent any secret or
confidential information belonging to the Corporation, (iii) engage in any other
activities which would constitute grounds for termination For Cause or (iv) be
terminated For Cause.
(c) Contract Rights, Forms and Signatures. Any obligation of the Corporation to
any Participant with respect to an Award shall be based solely upon contractual
obligations created by this Plan and an Award Agreement. No Award shall be
enforceable until the Award Agreement or a receipt has been signed by the
Participant and on behalf of the Corporation by an Executive Officer (other than
the recipient) or his or her delegate. By executing the Award Agreement or
receipt, a Participant shall be deemed to have accepted and consented to the
terms of this Plan and any action taken in good faith under this Plan by and
within the discretion of the Committee, the Board of Directors or their
delegates. Unless the Award Agreement otherwise expressly provides, there shall
be no third party beneficiaries of the obligations of the Corporation to the
Participant under the Award Agreement.
SECTION 7. Adjustments; Change of Control; Acquisitions
(a) Adjustments. If there shall occur any recapitalization, stock split
(including a stock split in the form of a stock dividend), reverse stock split,
merger, combination, consolidation, or other reorganization or any extraordinary
dividend or other extraordinary distribution in respect of the Stock (whether in
the form of cash, Stock or other property), or any split-up, spin-off,
extraordinary redemption, or exchange of outstanding Stock, or there shall occur
any other similar corporate transaction or event in respect of the Stock, or a
sale of substantially all the assets of the Corporation as an entirety, then the
Committee shall, in the manner and to the extent, if any, as it deems
appropriate and equitable to the Participants and consistent with the terms of
this Plan, and taking into consideration the effect of the event on the holders
of the Stock:
(1) proportionately adjust any or all of
(A) the number and type of shares of Stock, Share Units and Director
Stock Units which thereafter may be made the subject of Awards (including the
specific maximum numbers of shares of Stock or Share Units set forth elsewhere
in this Plan),
(B) the number, amount and type of shares of Stock, other property,
Share Units and Director Stock Units or cash subject to any or all outstanding
Awards,
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<PAGE>
(C) the grant, purchase or exercise price, or conversion ratio of any
or all outstanding Awards, or of the Stock, other property or Share Units and
Director Stock Units underlying the Awards,
(D) the securities, cash or other property deliverable upon exercise
or conversion of any or all outstanding Awards,
(E) subject to Section 4(b), the performance targets or standards
appropriate to any outstanding Performance-Based Awards, or
(F) any other terms as are affected by the event; or
(2) subject to any applicable limitations in the case of a transaction to
be accounted for as a pooling of interests under generally accepted accounting
principles, provide for
(A) an appropriate and proportionate cash settlement or distribution,
or
(B) the substitution or exchange of any or all outstanding Awards, or
the cash, securities or property deliverable on exercise, conversion or vesting
of the Awards.
Notwithstanding the foregoing, in the case of an Incentive Stock Option, no
adjustment shall be made which would cause this Plan to violate Section 424(a)
of the Code or any successor provisions thereto, without the written consent of
the Participant adversely affected thereby. The Committee may act prior to an
event described in this paragraph (a) (including at the time of an Award by
means of more specific provisions in the Award Agreement) if deemed necessary or
appropriate to permit the Participant to realize the benefits intended to be
conveyed by an Award in respect of the Stock in the case of an event described
in paragraph (a).
(b) Change of Control. The Committee may, in the Award Agreement, provide for
the effect of a Change of Control on an Award. Such provisions may include, but
are not limited to, any one or more of the following with respect to any or all
Awards: (i) the specific consequences of a Change of Control on the Awards; (ii)
a reservation of the Committee's right to determine in its discretion at any
time that there shall be full acceleration or no acceleration of benefits under
the Awards; (iii) that only certain or limited benefits under the Awards shall
be accelerated; (iv) that the Awards shall be accelerated for a limited time
only; or (v) that acceleration of the Awards shall be subject to additional
conditions precedent (such as a termination of employment following a Change of
Control).
In addition to any action required or authorized by the terms of an Award, the
Committee may take any other action it deems appropriate to ensure the equitable
treatment of Participants in the event of or in anticipation of a Change of
Control including, but not limited to, any one or more of the following with
respect to any or all Awards: (i) the acceleration or extension of time periods
for purposes of exercising, vesting in, or realizing gain from, the Awards; (ii)
the waiver of conditions on the Awards that were imposed for the benefit of the
Corporation; (iii) provision for the cash settlement of the Awards for their
equivalent cash value, as determined by the
13
<PAGE>
Committee, as of the date of the Change of Control; or (iv) such other
modification or adjustment to the Awards as the Committee deems appropriate to
maintain and protect the rights and interests of Participants upon or following
the Change of Control. The Committee also may accord any Participant a right to
refuse any acceleration of exercisability, vesting or benefits, whether pursuant
to the Award Agreement or otherwise, in such circumstances as the Committee may
approve.
Notwithstanding the foregoing provisions of this Section 7(b) or any provision
in an Award Agreement to the contrary, (i) in no event shall the Committee be
deemed to have discretion to accelerate or not accelerate or make other changes
in or to any or all Awards, in respect of a transaction, if such action or
inaction would be inconsistent with or would otherwise frustrate the intended
accounting for a proposed transaction as a pooling of interests under generally
accepted accounting principles; and (ii) if the vesting of any Award to any
Insider is accelerated to a date that is less than six months after the date of
the Award, the Committee may prohibit a sale of the underlying Stock (other than
a sale by operation or law in exchange for or through conversion into other
securities) until the expiration of such six-month period, and the Corporation
may impose legend and other restrictions on the Stock to enforce this
prohibition.
(c) Change of Control Definition. For purposes of this Plan, a "Change of
Control" of the Corporation 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 (ii)
below) of the Corporation, 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 Stock and other stock of the Corporation 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 of the adoption
of the Plan, held approximately 41% of the issued and outstanding Stock of the
Corporation, 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 the Corporation or any of its
Subsidiaries, or any employee benefit plan (or related trust) of the Corporation
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
14
<PAGE>
who were the beneficial owners, respectively, of the Stock and other voting
securities of the Corporation immediately prior to such acquisition in
substantially the same proportion as their ownership, immediately prior to such
acquisition, of the then outstanding shares of Stock of the Corporation and of
the combined voting power of the then outstanding voting securities of the
Corporation 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 stockholders of
the Corporation, 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 Corporation
(as such term is used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or
(3) approval by the stockholders of the Corporation of (A) a
reorganization, merger or consolidation of the Corporation, 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 the Corporation 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 the Corporation, or (C) the sale or other
disposition of all or substantially all of the assets of the Corporation.
(d) Business Acquisitions. Awards may be granted under this Plan on the terms
and conditions as the Committee considers appropriate, which may differ from
those otherwise required by this Plan, to the extent necessary to reflect a
substitution for or assumption of stock incentive awards held by employees of
other entities who become employees of the Corporation or a Subsidiary as the
result of a merger of the employing entity with, or the acquisition of the
property or stock of the employing entity by, the Corporation or a Subsidiary,
directly or indirectly.
15
<PAGE>
SECTION 8. Administration.
(a) Committee Authority and Structure. The Plan and all Awards granted under
the Plan will be administered by the Compensation and Benefits Committee, the
Compensation Review Committee and the Special Committee. For purposes of any
action taken by the Compensation and Benefits Committee, the Compensation Review
Committee or the Special Committee, whichever is applicable, a majority of the
members will constitute a quorum, and the action of the members present at any
meeting at which a quorum is present, or acts unanimously approved in writing,
will be the acts of the applicable committee. Notwithstanding the foregoing,
Awards under Section 9 and 10 have been authorized by the Board and may be
administered by the Board.
(b) Selection and Grant. Each Committee shall have the authority to determine
the Employees (if any) to whom Awards will be granted under this Plan, the type
of Award or Awards to be made, and the nature, amount, pricing, timing, and
other terms of Awards to be made to any one or more of these individuals, and to
establish the installments (if any) in which such Awards shall become
exercisable or shall vest, or determine that no delayed exercisability or
vesting is required, and establish the events of termination or reversion of
such Awards, subject to the terms of this Plan.
(c) Construction and Interpretation. The Compensation and Benefits Committee,
the Compensation Review Committee and the Special Committee have the full
authority and discretion to administer the Plan and to take any action that is
necessary or advisable in connection with the administration of the Plan,
including without limitation the authority and discretion to interpret and
construe any provision of the Plan or of any agreement, notification or document
evidencing the grant of an Award. The interpretation and construction by the
Compensation and Benefits Committee, the Compensation Review Committee or the
Special Committee, as applicable, of any such provision and any determination by
the Compensation and Benefits Committee, the Compensation Review Committee or
the Special Committee pursuant to any provision of the Plan or of any such
agreement, notification or document will be final and conclusive; provided, that
in the event the Compensation and Benefits Committee and the Compensation Review
Committee disagree (or either or both disagree with the Special Committee) with
respect to such interpretation, construction or determination, the Compensation
Review Committee's determination will be final and conclusive. If there is any
conflict between an Award Agreement and any non-discretionary provisions of this
Plan, the terms of this Plan shall govern.
16
<PAGE>
(d) Express Authority (and Limitations on Authority) to Change Terms of Awards.
Without limiting each Committee's authority under other provisions of this Plan
(including Sections 7, 10, and 11), but subject to any express limitations of
this Plan (including under Sections 7, 10, and 11), each Committee shall have
the authority to accelerate the exercisability or vesting of an Award, to extend
the term or waive early termination provisions of an Award (subject to the
maximum ten-year term under Section 4(b)), to cancel, modify or waive the
Corporation's rights with respect to an Award or restrictive conditions of an
Award (including forfeiture conditions), to modify, discontinue, suspend, or
terminate any or all outstanding Awards held by Employees or Officers, with or
without adjusting any holding period or other terms of the Award, in any case in
such circumstances as the Committee deems appropriate. The Committee may not,
however, reduce by amendment the exercise or purchase price of an outstanding
award.
(e) Exclusive Authority for Section 162(m). Notwithstanding any provision of
the Plan to the contrary, the Compensation Review Committee will have the
exclusive authority and discretion to take any action required or permitted to
be taken under the provisions of this Section, Section 4(b), Section 7 and
Section 11 with respect to Awards granted under the Plan that are intended to
comply with the requirements of Section 162(m) of the Code.
(f) Rule 16b-3 Conditions; Bifurcation of Plan. It is the intent of the
Corporation that Share-Based Awards be interpreted in a manner that, in the case
of Awards intended as exempt grants or purchases under Section 16 of the
Exchange Act to Participants who are or may be Insiders, satisfies any
applicable requirements of Rule 16b-3, so that these persons will be entitled to
the benefits of Rule 16b-3 or other exemptive rules under Section 16 and will
not be subjected to avoidable liability thereunder.
(g) Delegation and Reliance. Each Committee may delegate to the officers or
employees of the Corporation the authority to execute and deliver those
instruments and documents, to do all acts and things, and to take all other
steps deemed necessary, advisable or convenient for the effective administration
of this Plan in accordance with its terms and purpose, except that a Committee
may not delegate any discretionary authority to grant or amend an Award or with
respect to substantive decisions or functions regarding this Plan or Awards as
these relate to the material terms of Performance-Based Awards to Executive
Officers or to the timing, eligibility, pricing, amount or other material terms
of Awards to Insiders. In making any determination or in taking or not taking
any action under this Plan, the Board and each Committee may obtain and may rely
upon the advice of experts, including professional advisors to the Corporation.
No director, officer, employee or agent of the Corporation shall be liable for
any such action or determination taken or made or omitted in good faith.
(h) Exculpation and Indemnity. Neither the Corporation nor any member of the
Board of Directors or of any Committee, nor any other person participating in
any determination of any question under this Plan, or in the interpretation,
administration or application of this Plan, shall have any liability to any
person for any action taken or not taken in good faith under this Plan or for
the failure of an Award (or action in respect of an Award) to satisfy Code
requirements as to incentive stock options or to realize other intended tax
consequences, to qualify for exemption or
17
<PAGE>
relief under Rule 16b-3 or to comply with any other law, compliance with which
is not required on the part of the Corporation.
SECTION 9. Non-Employee Director Options.
(a) Participation. Awards under this Section 9 shall be nondiscretionary, shall
be made only to Non-Employee Directors and shall be evidenced by Award
Agreements setting forth the terms and conditions in this Section 9 and in
Sections 6(a)(1), 6(a)(2), 6(a)(3), 6(a)(4) and 6(b)(5).
(b) Annual Option Grants.
(1) Initial Award. After approval of this Plan by the stockholders of the
Corporation, if any person who is not then an officer or employee of the Company
shall become a director of the Corporation, there shall be granted automatically
to such person (without any action by the Board or Committee) a Nonqualified
Stock Option (the date of grant of which shall be the date such person takes
office) to purchase 5,000 shares of Stock.
(2) Subsequent Annual Awards. Immediately following the annual
stockholders meeting in each year during the term of this Plan there shall be
granted automatically (without any action by the Committee or the Board) a
Nonqualified Stock Option (the date of grant of which shall be such date) to
each Non-Employee Director then continuing in office to purchase 5,000 shares of
Stock.
(3) Maximum Number of Shares. A Non-Employee Director shall not receive
more than one Nonqualified Stock Option under this Section 9 in any calendar
year.
(c) Option Price. The purchase price per share of the Stock covered by each
Option granted under this Section 9 shall be 100% of the Fair Market Value of
the Stock on the date of grant. The exercise or purchase price of the Stock
issuable pursuant to any Option granted under this Section and any withholding
obligation under applicable tax laws shall be paid in cash or any one or
combination of (i) cash, (ii) a check payable to the order of the Corporation,
(iii) the delivery of shares of Stock, provided that any such shares used in
payment shall have been owned by the Participant at least six months prior to
the date of exercise or (iv) notice and third party payment to the Corporation
prior to any issue of Stock and otherwise in accordance with all applicable
legal requirements in such manner as may be authorized by the Committee for all
Participants. In the case of a payment by the means described in clause (iii)
above, the Stock to be so delivered shall be determined by reference to the Fair
Market Value of the Stock on the date as of which the payment is made.
(d) Option Period and Exercisability. Each Option granted under this Section 9
and all rights or obligations thereunder shall expire ten years after the date
of grant and shall be subject to earlier termination as provided below. Each
Option granted under this Section 9 shall become exercisable in four equal
annual installments on the first four anniversaries of the date of grant.
18
<PAGE>
(d) Termination of Directorship. If a Non-Employee Director's services as a
member of the Board of Directors terminate by reason of death, disability (the
inability of the Non-Employee Director to continue to perform his or her duties
as determined by the Committee) or retirement, an Option granted pursuant to
this Section held by such Participant shall immediately become and shall remain
fully exercisable for one year after the date of such termination or until the
expiration of the stated term of such Option, whichever first occurs. If a Non-
Employee Director's services as a member of the Board of Directors terminate for
any other reason, any portion of an Option granted pursuant to this Section 9
which is not then exercisable shall terminate and any portion of such Option
which is then exercisable may be exercised for three months after the date of
such termination or until the expiration of the stated term whichever first
occurs.
(e) Adjustments. Options granted under this Section 9 shall be subject to
adjustment as provided in Section 7, but only to the extent that (i) such
adjustment in the case of a Change of Control is effected pursuant to the terms
of a reorganization agreement approved by stockholders of the Corporation, and
(ii) such adjustment is consistent with adjustments to Options held by persons
other than Executive Officers or directors of the Corporation.
(f) Acceleration Upon a Change of Control. Upon the occurrence of a Change of
Control, each Option granted under this Section 9 shall become and shall remain
fully exercisable for one year after the date of such Change of Control or until
the expiration of the stated term of such Option, whichever first occurs;
provided, however, that none of the Options granted under this Section 9 shall
be accelerated to a date that is less than six months after the date of grant of
such Option but (if not otherwise terminated before such time) shall then be
accelerated. To the extent that any Option granted under this Section 9 is not
exercised before (i) a dissolution of the Corporation or (ii) a merger or other
corporate event that the Corporation does not survive, and no provision is (or
consistent with the provisions of this Section 9 can be) made for the
assumption, conversion, substitution or exchange of the Option, the Option shall
terminate upon the occurrence of such event.
SECTION 10. Non-Employee Director Stock Units.
Subject to the provisions of this Plan and such rules and procedures
as the Committee or the Board may establish from time to time, any Non-Employee
Director may irrevocably elect to defer or receive in Director Stock Units all
or a portion of the Retainer and/or fees payable to the Non-Employee Director
for services on the Board of Directors and its committees or for attendance at
Board meetings or committee meetings. The specific terms, conditions and
provisions for each Director Stock Unit Award and elections (and of deferred
compensation stock unit accounts under the Deferral Plan that have been
converted into Director Stock Unit Accounts under this Plan) are set forth in
Appendix A to this Plan, incorporated herein and in each Award Agreement under
this Section 10 by this reference.
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<PAGE>
SECTION 11. Amendment and Termination of this Plan and Award Agreements.
The Board of Directors may at any time amend, suspend or discontinue
this Plan, subject to any stockholder approval that may be required under
applicable law. The Board or the Committee may at any time alter or amend any
or all Award Agreements under this Plan in any manner that would be authorized
for a new Award under this Plan including, but not limited to, any manner set
forth in Section 8(d) (subject to any applicable limitations thereunder and any
applicable Code Section 162(m) considerations). Notwithstanding the foregoing,
no such action by the Board or a Committee shall, in any manner adverse to a
Participant (other than as expressly permitted by the terms of an Award
Agreement and Section 7), affect any Award then outstanding and evidenced by an
Award Agreement, without the consent in writing of the Participant (or a
Beneficiary who has become entitled to an Award).
SECTION 12. Miscellaneous.
(a) Unfunded Plans. This Plan shall be unfunded. Neither the Corporation nor
the Board of Directors nor the Committee shall be required to segregate any
assets that may at any time be represented by Awards made pursuant to this Plan.
Neither the Corporation, the Committee, nor the Board of Directors shall be
deemed to be a trustee of any amounts to be paid or securities to be issued
under this Plan. To the extent that a Participant, Beneficiary or other person
acquires a right to receive payment pursuant to any Award hereunder, such right
shall be no greater than the right of any unsecured general creditor of the
Corporation.
(b) Rights of Employees and Officers and Other Participants.
(1) No Right to an Award. Status as an Employee or an Officer shall not be
construed as a commitment that any one or more Awards will be made under this
Plan to an Employee or Officer or to Employees or Officers generally. Status as
a Participant shall not entitle the Participant to any additional Award.
(2) No Assurance of Employment. Nothing contained in this Plan (or in any
other documents related to this Plan or to any Award) shall confer upon any
Employee or Participant any right to continue in the employ or other service of
the Corporation or any Subsidiary or constitute any contract (of employment or
otherwise) or limit in any way the right of the Corporation or any Subsidiary to
change a person's compensation or other benefits or to terminate the employment
of a person with or without cause, but, nothing contained in this Plan or any
document related hereto shall adversely affect any independent contractual right
of such person without his or her consent thereto.
(c) Effective Date; Duration. This Plan has been adopted by the Board of
Directors of the Corporation and became effective upon approval of the
stockholders of the Corporation at the annual meeting held May 22, 1996. This
Plan shall remain in effect until any and all Awards under this Plan have been
exercised, converted or terminated under the terms of this Plan and applicable
Award Agreements. Notwithstanding the foregoing, no Award may be granted under
20
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this Plan after March 19, 2006. Any Award granted prior to such date may be
amended after such date in any manner that would have been permitted prior to
such date, except that no such amendment shall increase the number of shares
subject to, comprising or referenced in such Award. Amendments to this Plan
effective January 30, 1996, May 1, 1997, and February 11, 1998, were approved by
the Board of Directors and did not require stockholder approval, nor did they
adversely affect any Award holder's rights or benefits under this Plan or under
the Deferral Plan.
(d) Compliance with Laws. This Plan, Award Agreements, and the grant, exercise,
conversion, operation and vesting of Awards, and the issuance and delivery of
shares of Stock and/or other securities or property or the payment of cash under
this Plan, Awards or Award Agreements, are subject to compliance with all
applicable federal and state laws, rules and regulations (including, but not
limited to, state and federal insider trading, registration, reporting and other
securities laws and federal margin requirements) and to such approvals by any
listing, regulatory or governmental authority as may, in the opinion of counsel
for the Corporation, be necessary or advisable in connection therewith. Any
securities delivered under this Plan shall be subject to such restrictions (and
the person acquiring such securities shall, if requested by the Corporation,
provide such evidence, assurance and representations to the Corporation as to
compliance with any thereof) as the Corporation may deem necessary or desirable
to assure compliance with all applicable legal requirements.
(e) Applicable Law. This Plan, Award Agreements and any related documents and
matters shall be governed in accordance with the laws of the State of
California, except as to matters of Federal law.
(f) Nonexclusivity of Plan. Nothing in this Plan shall limit or be deemed to
limit the authority of the Corporation, the Board or the Committee to grant
awards or authorize any other compensation, with or without reference to the
Stock, under any other plan or authority.
(g) Severability. In case any provision in this Plan shall be invalid, illegal
or unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining provisions, or of such provision in any other jurisdiction,
shall not in any way be affected or impaired thereby.
21
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APPENDIX A
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CATELLUS DEVELOPMENT CORPORATION
TERMS AND PROVISIONS
APPLICABLE TO DIRECTOR STOCK UNIT AWARDS
UNDER SECTION 10 OF THE
AMENDED AND RESTATED 1996 PERFORMANCE AWARD PLAN
These Terms supplement the terms of the 1996 Plan and the provisions
of individual Award Agreements contemplated by the 1996 Plan and shall apply to
any deferral election made under the Deferral Plan (as defined below) or Section
10 of the 1996 Plan, to the same extent as if included therein. These Terms
also are incorporated by reference in the applicable Director Stock Unit Award
Agreement.
1 Eligibility.
-----------
(a) Rollover Participants. Each Non-Employee Director has had
---------------------
the opportunity to make an irrevocable election to defer the Retainer payable
for services from September 1, 1996 through December 31, 1997 pursuant to the
terms of and conditions of the Catellus Development Corporation Non-Employee
Directors Deferred Compensation Plan, as approved by the Board on July 16, 1996
("Deferral Plan").
(b) Other Participants. All Non-Employee Directors are eligible
------------------
to irrevocably elect to defer all or a portion of their Retainer in Director
Stock Units pursuant to Section 10 of the 1996 Plan, these Terms, and applicable
Award Agreements. An eligible person who satisfies these requirements and who
executes a Director Stock Unit Award Agreement will be considered a
"Participant" for purposes of these Terms and the 1996 Plan.
2 Timing of Deferral Election.
---------------------------
(a) Rollover Accounts. The Board has decided to terminate the
-----------------
Deferral Plan as a separate plan and include its essential provisions in this
Appendix A to the 1996 Plan. These Terms continue the rights and benefits of
each Participant in the Deferral Plan. Each Non-Employee Director who elected
to participate in the Deferral Plan shall be a Participant in the 1996 Plan to
the extent of and in accordance with the terms of the deferral elected by such
Participant for 1996 and 1997. As of May 1, 1997, all stock units previously
credited to the Participant's stock unit account under the Deferral Plan shall
be deemed transferred to and converted into a carryover Director Stock Unit
Account for the Participant under the 1996 Plan. Election agreements under the
Deferral Plan shall be deemed Award Agreements under the 1996 Plan.
A-1
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(b) Ongoing Elections. A Non-Employee Director may irrevocably elect
-----------------
to defer a portion of his or her Retainer for services to be rendered during the
following calendar year in Director Stock Units by making an election on or
before the December 31 preceding such calendar year, in accordance with
procedures established by the Committee. Effective with respect to fees earned
in calendar years after 1997, a Non-Employee Director may also irrevocably elect
to defer a portion of his or her fees for service on Board committees or for
attendance at Board meetings or committee meetings during a calendar year by
making an election on or before the December 31 preceding such calendar year, in
accordance with procedures established by the Committee. The Committee may
permit any Non-Employee Director who first becomes eligible to participate in
the 1996 Plan on or after the first day of any calendar year to make a Stock
Unit deferral election within 30 days following his or her eligibility. All
elections shall be in writing in the form of Schedule 1 or such other form as
provided by the Committee.
(c) Installments Available. The portions of the Retainer and other
----------------------
fees subject to deferral under Section 2(b) of these Terms shall be limited to
increments of 25%, 50%, 75%, or 100%.
3 Stock Units; Stock Unit Accounts.
--------------------------------
(a) Crediting to Stock Unit Accounts. If a Participant elects to
--------------------------------
defer a portion of his or her Retainer, the Company shall, as of the beginning
of the year in which the Retainer will be earned (or, in the case of a
Participant who is first elected to the Board, as of the date of his or her
election) credit the Director's Stock Unit Account with a number of Stock Units
determined by dividing the applicable deferred portion of the Participant's
Retainer by 90% of the Fair Market Value of a share of Common Stock on the date
of the Award. If a Participant elects to defer a portion of his or her Board
meeting or committee meeting fees (collectively, the "Meeting Fees"), the
Company shall, as of the last day of the calendar year in which the fees are
earned, credit the Director's Stock Unit Account with a number of Stock Units
determined by dividing the applicable deferred portion of the Participant's fees
by 90% of the Fair Market Value of a share of Common Stock on such date.
Meeting Fees with respect to Board or committee meetings will be considered to
be earned in the calendar year in which the applicable meeting begins. A
Participant's Stock Unit Account shall consist of such subaccounts as are
necessary or convenient (the "Distribution Subaccounts") to separately account
for deferred Retainers and Meeting Fees, for deferrals in different years and
for Dividend Equivalents (as defined below) thereon which are subject to
different vesting provisions or distribution elections.
(b) Statements. The Company shall submit to each Participant, within
----------
120 days after the close of each calendar year, a statement in such form as the
Committee or its delegate deems desirable setting forth the balance of each
Participant's Director Stock Unit Account.
A-2
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4 Vesting of Stock Units.
----------------------
(a) Vesting. Director Stock Units credited to a Directors Stock Unit
-------
Account (other than Director Stock Units representing Dividend Equivalents which
are only credited to already vested Director Stock Units) for the calendar year
with respect to a Participant's deferred Retainer shall proportionately vest on
a per diem basis assuming a 365-day year and shall fully vest at the end of the
applicable calendar year. Director Stock Units credited to a Directors Stock
Unit Account with respect to deferred committee or meeting fees shall at all
times be fully vested. Units representing Dividend Equivalents shall at all
times be fully vested.
(b) Acceleration of Vesting of Accounts. The vesting of the rights of
-----------------------------------
each Participant in respect of any unvested Director Stock Units for a calendar
year shall be accelerated if a Participant ceases to be a member of the Board by
reason of death or disability during the year.
5 Limitations on Rights Associated with Units. A Participant's
-------------------------------------------
Director Stock Unit Account shall be a memorandum account on the books of the
Company. The Director Stock Units credited to a Participant Director's Stock
Unit Account shall be used solely as a device for the determination of the
number of shares of Common Stock to be eventually distributed to the Participant
under the 1996 Plan. The Director Stock Units shall not be treated as property
or as a trust fund of any kind. No Participant shall be entitled to any voting
or other stockholder rights with respect to Director Stock Units granted,
credited or vested under the 1996 Plan. The number of Director Stock Units
credited and vested (and the Common Stock to which the Participant is entitled
under the 1996 Plan) shall be subject to adjustment in accordance with Section 8
hereof and Section 7 of the 1996 Plan. These Terms shall create only a
contractual obligation on the part of the Company as to such amounts and shall
not be construed as creating a trust. The 1996 Plan, in and of itself, has no
assets. A Participant shall have only the rights of a general unsecured
creditor of the Company with respect to amounts credited and rights no greater
than the right to receive the Common Stock (or equivalent value) as a general
unsecured creditor.
6 Dividend Equivalent Credits to Stock Unit Account. As of the
-------------------------------------------------
applicable dividend payment date ("Award Date"), an Eligible Director's Stock
Unit Account shall be credited with additional Director Stock Units in an amount
equal to (x) the amount of the Dividend Equivalents representing dividends paid
on that number of shares equal to the aggregate Director Stock Units vested in
the Participant's Director Stock Unit Account as of that date divided by (y) 90%
of the Fair Market Value of a share of Common Stock as of that date.
7 Distribution of Benefits.
------------------------
(a) Time and Manner of Distribution with respect to Deferral of 1996
----------------------------------------------------------------
Retainers. With respect to all deferrals of Retainers earned in 1996, a
- ---------
Participant shall be entitled to receive a distribution of the vested amount
deferred under the method previously selected by such Participant from the
following options:
A-3
<PAGE>
(i) A lump sum payable promptly upon termination of service on
the Board for any reason; or
(ii) A specified number of annual installments (not to exceed
five) commencing upon termination of service on the Board for any reason.
(b) Time and Manner of Distribution with respect to Deferrals for
-------------------------------------------------------------
Years after 1996. With respect to an election filed for Retainers, Meeting Fees
- ----------------
and/or other fees earned after 1996, a Participant shall be entitled to receive
a distribution of the vested amount deferred under such election (together with
Dividend Equivalents credited pursuant to Section 8) in accordance with the
Participant's election made pursuant to the Participant's Award Agreement in
substantially the form of Schedule 1.
(c) Change in the Manner of Distribution. Subject to Section 12(a), a
------------------------------------
Participant may change the manner of any distribution election from a lump sum
to annual installments over a period of up to five years (or vice versa) made
with respect to any Retainer, Meeting Fees or other fee deferred under Section
2(b) by filing a new election with the Committee; provided, however, that no
-------- -------
such election shall be effective until 12 months after such election is filed
with the Committee, nor made with respect to any Distribution Subaccount after
benefits with respect to such Distribution Subaccount have commenced. An
election made pursuant to this Section 7(c) shall not affect the date of the
commencement of benefits.
(d) Change in Election of Timing of Distribution. Subject to Section
--------------------------------------------
12(a), a Participant may elect to accelerate or further defer the commencement
of any distribution with respect to the Retainer, Meeting Fees or other fee
deferred under Section 2(b), for any calendar year by filing a new election with
the Committee; provided, however, that no such election shall be effective until
12 months after such election is filed with the Committee, nor made with respect
to any Distribution Subaccount after benefits with respect to such Distribution
Subaccount have commenced; further provided that no such new election shall be
valid if it would not have been valid had it been made as the Participant's
initial election. An election made pursuant to this Section 7(d) shall not
affect the manner (i.e., lump sum versus installments) of distribution.
----
(e) Effect of Death, Disability or Change in Control. Notwithstanding
------------------------------------------------
Sections 7(a), (b), (c) and (d), if a Participant dies or becomes disabled or a
Change in Control shall occur and the Participant's service as a Director shall
terminate, the Participant's Director Stock Unit Accounts to the extent then
credited and whether or not then vested for the remainder of the then current
calendar year shall be fully vested and shall be distributed immediately in a
lump sum.
(f) Form of Distribution.
--------------------
Director Stock Units credited to an Eligible Director's
Distribution Subaccounts shall be distributed in an equivalent
whole number of shares of the Company's Common Stock. Fractions
shall be disregarded in connection with any distribution, but may
be accumulated. Notwithstanding anything else contained herein to
the
A-4
<PAGE>
contrary, if the number of Units remaining in the Director Stock
Unit Account is less than 100, then the remaining balance shall be
distributed in a lump sum.
8 Adjustments in Case of Changes in Common Stock.
----------------------------------------------
If any stock dividend, stock split, recapitalization, merger,
consolidation, combination or other reorganization, exchange of shares, sale of
all or substantially all of the assets of the Company, split-up, split-off,
spin-off, extraordinary redemption, liquidation or similar change in
capitalization or any distribution to holders of the Company's Common Stock
(other than cash dividends and cash distributions) shall occur, proportionate
and equitable adjustments consistent with the effect of such event on
stockholders generally (but without duplication of benefits if Dividend
Equivalents are credited) shall be made in the number and type of shares of
Common Stock or other securities, property and/or rights contemplated hereunder
and of rights in respect of Director Stock Units and Director Stock Unit
Accounts credited under the 1996 Plan so as to preserve the benefits intended.
9 Company's Right to Withhold.
---------------------------
The Company shall satisfy any income tax withholding obligation
arising upon distribution of a Participant's Stock Unit Account by reducing the
number of shares of Common Stock otherwise deliverable to the Participant. The
appropriate number of shares required to satisfy such tax withholding obligation
in the case of Stock Units will be based on the Fair Market Value of a share of
Common Stock on the day prior to the date of distribution. If the Company, for
any reason, cannot satisfy the withholding obligation in accordance with the
preceding sentence, the Participant shall pay or provide for payment in cash of
the amount of any taxes which the Company may be required to withhold with
respect to the benefits hereunder.
10 Limitation on Eligible Directors'. Participation in the 1996
---------------------------------
Plan shall not give any person the right to continue to serve as a member of the
Board or any rights or interests other than as herein provided.
11 Beneficiaries.
-------------
(a) Beneficiary Designation. Upon forms provided by and subject to
-----------------------
conditions imposed by the Company, each Participant may designate in writing the
Beneficiary or Beneficiaries (as defined in Section 8.2(b)) whom such
Participant desires to receive any amounts payable under the 1996 Plan after his
or her death. The Company and the Committee may rely on the Participant's
designation of a Beneficiary or Beneficiaries last filed in accordance with the
terms of the 1996 Plan.
(b) Definition of Beneficiary. A Participant's "Beneficiary" or
-------------------------
"Beneficiaries" shall be the person, persons, trust or trusts (or similar
entity) designated by the Participant or, in the absence of a designation,
entitled by will or the laws of descent and distribution to receive the
Participant's benefits under the 1996 Plan in the event of the Participant's
death, and shall mean
A-5
<PAGE>
the Participant's executor or administrator if no other Beneficiary is
identified and able to act under the circumstances.
12 Other Provisions.
----------------
(a) Irrevocability of Payout Elections. Subject to Section 8.6 of the
----------------------------------
1996 Plan, a Participant may, subject to the approval of the Committee,
prospectively change an election under Section 7(b) or (c) by a subsequent
election that will take effect at least 12 months after the subsequent election
is received by the Company if, in the opinion of counsel to the Company, the
subsequent election would not adversely affect the efficacy of deferrals under
the Code in respect of other Participants in the 1996 Plan. Notwithstanding the
preceding sentence, a Participant shall not be permitted to change an election
with respect to any Distribution Subaccount from which benefits have commenced
to be distributed.
(b) Notices. Any notices to be given under the terms of the 1996
-------
Plan, these Terms or a Stock Unit Award Agreement shall be in writing and
addressed to the Company at its principal executive office, to the attention of
the Corporate Secretary and to the Participant at the address given beneath the
Participant's signature on the Stock Unit Award Agreement or to his or her last
address of record in the records of the Company.
(c) Amendments. The Board shall have the right to amend these Terms
----------
in whole or in part from time to time, subject to Section 8.7 of the 1996 Plan.
(d) Governing Law; Severability. The validity of these Terms or any
---------------------------
of its provisions and provisions of Stock Unit Award Agreements shall be
construed, administered and governed in all respects under and by the laws of
the State of California. If any provisions of these Terms shall be held by a
court of competent jurisdiction to be invalid or unenforceable, the remaining
provisions shall continue to be fully effective.
(e) Compliance with Laws. The 1996 Plan, these Terms, and the offer,
--------------------
issuance and delivery of shares of Common Stock through the deferral of
compensation under the 1996 Plan are subject to compliance with all applicable
federal and state laws, rules and regulations (including but not limited to
state and federal securities law) and to such approvals by any listing, agency
or regulatory or governmental authority as may, in the opinion of counsel for
the Company, be necessary or advisable in connection therewith. Any securities
delivered under the 1996 Plan shall be subject to such restrictions, and the
person acquiring such securities shall, if requested by the Company, provide
such assurances and representations to the Company as the Company may deem
necessary or desirable to assure compliance with all applicable securities laws
and other legal requirements.
(f) Restrictions on Transfer. Neither the Stock Units, nor any
------------------------
interest therein, nor amount payable or Common Stock deliverable in respect
thereof, may be sold, assigned, transferred, pledged or otherwise disposed of,
alienated or encumbered, either voluntarily or involuntarily, other than by will
or the laws of descent and distribution. Common Stock issued upon payment of a
Director Stock Unit Account shall be subject to only such restrictions on
A-6
<PAGE>
transfer as may be necessary or advisable, in the opinion of legal counsel to
the Company, to assure compliance with applicable securities laws.
A-7
<PAGE>
Schedule 1
----------
CATELLUS DEVELOPMENT CORPORATION
STOCK UNIT AWARD AGREEMENT
FOR NON-EMPLOYEE DIRECTORS
(DEFERRAL FOR 199__ PLAN YEAR)
THIS DIRECTOR STOCK UNIT AWARD AGREEMENT ("AGREEMENT") is dated as of
the ____ day of _______, 199_, between CATELLUS DEVELOPMENT CORPORATION, a
Delaware corporation (the "Company"), and _____________________ (the
"Participant").
In consideration of the services rendered and to be rendered by the
Participant, the Company and the Participant agree as follows:
1 Stock Unit Deferral Election. The Participant hereby irrevocably
----------------------------
elects to defer under Section 10 of the Company's Amended and Restated 1996
Performance Award Plan (the "1996 Plan") the following percentage(s) of the
Retainer(s) and/or Meeting Fees that will become payable to the Participant for
services to be rendered during the year commencing January 1, _____ (the "Plan
Year") (fill in percentage and initial your election):
-
Retainer ____% (Fill in 0%, 25%, 50%, 75% or 100%)
Meeting Fees ____% (Fill in 0%, 25%, 50%, 75% or 100%)
Chairman's Retainer ____% (Fill in 0%, 25%, 50%, 75% or 100%)
Such amounts shall be credited in Stock Units in accordance with Section 10 of
the 1996 Plan. Capitalized terms not otherwise defined herein shall have the
meaning assigned to such terms in the 1996 Plan.
2 Timing and Manner of Distribution of Stock Units. Participant
------------------------------------------------
hereby further irrevocably elects to receive a distribution of his or her vested
Stock Units deferred, in accordance with the choice indicated below (check one
and initial the option you choose):
____ A single lump sum deliverable on the January 1 following his or
her termination of service on the Board; or
____ Substantially equal annual installments over ______ [specify
number, not to exceed five] years commencing on the January 1
following his or her termination of service on the Board; or
S-1
<PAGE>
[_] ____ A single lump sum deliverable on the earlier of January 1, ____
------- --
[fill in year which is not less than three years after the Plan
Year*] or on the January 1 following his or her termination of
service on the Board; or
[_] ____ Substantially equal annual installments over _____ [specify
number, not to exceed five] years commencing on the earlier of
------- --
January 1, ______ [fill in year which not less than three years
after the Plan Year] or on the January 1 following his or her
termination of service on the Board; or
[_] ____ A single lump sum deliverable on the later of January 1, _____
----- --
[fill in year which is not less than three years after the Plan
Year] or on the January 1 following his or her termination of
service on the Board; or
[_] ____ Substantially equal annual installments over _____ [specify
number, not to exceed five] commencing on the later of January 1,
----- --
_____ [fill in year which not less than three years after the
Plan Year] or on the January 1 following his or her termination
of service on the Board.
Distributions will be made on or as soon as administratively practicable after
the specified delivery date.
3 General Terms. The deferral in and vesting of Stock Units and
-------------
this Agreement are subject to, and the Company and the Participant agree to be
bound by, the applicable provisions of the 1996 Plan, incorporated herein by
this reference. The Participant acknowledges receiving a copy of the 1996 Plan
and understanding its applicable provisions. Provisions of the Plan that grant
further discretionary authority to the Company, the Board or the Committee shall
not create any rights in the Participant, unless such rights are expressly set
forth herein.
4 Effect of Agreement. This Agreement shall only be effective with
-------------------
respect to the Retainer and fees for the Plan Year. The Participant and the
Company must enter into a separate Stock Unit Award Agreement in order to
provide for the deferral of any Retainer or Meeting Fees in respect of future
calendar years.
_____________________
1 For example, for deferral of the 1998 Retainer, the year may be no earlier
than 2001.
S-2
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first written above.
CATELLUS DEVELOPMENT CORPORATION
"Company"
By: ________________________________
Title: _____________________________
PARTICIPANT
____________________________________
(Signature)
____________________________________
(Print Name)
____________________________________
(Address)
____________________________________
(City, State, Zip Code)
____________________________________
(Social Security Number)
S-3
<PAGE>
CONSENT OF SPOUSE
-----------------
In consideration of the execution of the foregoing Director Stock Unit
Award Agreement, I, _________________, the spouse of the Participant herein
named, do hereby join with my spouse in executing the Agreement and do hereby
agree to be bound by all of the terms and provisions thereof and of the 1996
Plan and the General Provisions.
DATED: _______________, 19__. ____________________________
Signature of Spouse
S-4
<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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 26,950
<SECURITIES> 0
<RECEIVABLES> 46,298
<ALLOWANCES> 3,147
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,727,374
<DEPRECIATION> 272,915
<TOTAL-ASSETS> 1,669,368
<CURRENT-LIABILITIES> 0
<BONDS> 902,153
0
0
<COMMON> 1,069
<OTHER-SE> 506,032
<TOTAL-LIABILITY-AND-EQUITY> 1,669,368
<SALES> 75,093
<TOTAL-REVENUES> 124,055
<CGS> 59,801
<TOTAL-COSTS> 87,202
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,406
<INCOME-PRETAX> 27,447
<INCOME-TAX> 11,067
<INCOME-CONTINUING> 16,380
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,380
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
