SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Schedule 14A Information
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant |X| Filed by a Party other than the Registrant |_|
Check the appropriate box: |_| Preliminary Proxy Statement |_| Confidential,
for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss. 240.14a-11(c) or
ss. 240.14a-12
COLONIAL PROPERTIES TRUST
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1)Title of each class of securities to which transaction
applies:
(2)Aggregate number of securities to which transaction
applies:
(3)Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4)Proposed maximum aggregate value of transaction:
(5)Total fee Paid:
|_| Fee paid previously with preliminary materials.
|_|Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1)Amount Previously Paid:
(2)Form, schedule or registration statement no.:
(3)Filing party:
(4)Date filed:
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March 24, 1998
Dear Fellow Shareholder:
You are cordially invited to attend the Annual Meeting of
Shareholders of Colonial Properties Trust to be held on Thursday, April 23,
1998, at 10:30 a.m., central daylight savings time, in the auditorium on the
lobby (second) floor of Colonial Plaza, 2101 6th Avenue North, Birmingham,
Alabama 35203-2775.
The matters to be acted on at the meeting - the election of trustees,
the adoption of the Second Amended and Restated Employee Share Option and
Restricted Share Plan, and the ratification of the selection of the Company's
independent accountants - are described in the accompanying Notice and Proxy
Statement. A proxy card on which to indicate your vote and an envelope, postage
paid, in which to return your proxy are enclosed. A copy of the Company's Annual
Report to Shareholders also is enclosed.
We realize that each of you cannot attend the meeting and vote your
shares in person. However, whether or not you plan to attend the meeting, we
need your vote. We urge you to complete, sign, and return the enclosed proxy so
that your shares will be represented. If you later decide to attend the meeting,
you may revoke your proxy at that time and vote your shares in person.
Remember, this is your opportunity to voice your opinion on matters
affecting the Company. We look forward to receiving your proxy and perhaps
seeing you at the annual meeting.
Sincerely,
/s/ Thomas H. Lowder
Thomas H. Lowder
Chairman of the Board, President
and Chief Executive Officer
Enclosures
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COLONIAL PROPERTIES TRUST
COLONIAL PLAZA
2101 6TH AVENUE NORTH, SUITE 750
BIRMINGHAM, ALABAMA 35203
--------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on April 23, 1998
You are cordially invited to attend the 1998 Annual Meeting of
Shareholders of Colonial Properties Trust (the "Company") to be held on
Thursday, April 23, 1998, at 10:30 a.m., central daylight savings time, in the
auditorium on the lobby (second) floor of Colonial Plaza, 2101 6th Avenue North,
Birmingham, Alabama 35203, to consider the following proposals:
1. To elect four trustees, three to serve for an ensuing
three-year term and a fourth to
serve for an ensuing one-year term;
2. To adopt and approve the Second Amended and Restated
Employee Share Option and Restricted Share Plan;
3. To ratify the appointment of Coopers & Lybrand L.L.P. as independent
auditors of the Company for the fiscal year ending December 31, 1998;
and
4. To transact such other business as may properly come before such
meeting or any adjournments thereof.
Only shareholders of record at the close of business on March 9, 1998 will
be entitled to vote at the meeting or any adjournments thereof.
IF YOU ARE UNABLE TO BE PRESENT AT THE MEETING IN PERSON, PLEASE SIGN AND
DATE THE ENCLOSED PROXY, WHICH IS BEING SOLICITED BY THE BOARD OF TRUSTEES, AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
BY ORDER OF THE BOARD OF TRUSTEES
/s/ Douglas B. Nunnelley
Douglas B. Nunnelley
Senior Vice President and
Secretary
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COLONIAL PROPERTIES TRUST
COLONIAL PLAZA
2101 6TH AVENUE NORTH, SUITE 750
BIRMINGHAM, ALABAMA 35203
--------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
To be held on April 23, 1998
This Proxy Statement is furnished to shareholders of Colonial Properties
Trust (the "Company"), an Alabama real estate investment trust, in connection
with the solicitation of proxies for use at the Annual Meeting of Shareholders
(the "Meeting") of the Company to be held on Thursday, April 23, 1998, at 10:30
a.m., central daylight savings time, for the purposes set forth in the Notice of
Meeting. This solicitation of proxies is made on behalf of the board of trustees
of the Company (the "Board of Trustees").
Holders of record of common shares of beneficial interest (the "Common
Shares") of the Company as of the close of business on the record date, March 9,
1998, are entitled to receive notice of, and to vote at, the Meeting. The Common
Shares constitute the only class of securities entitled to vote at the Meeting,
and each Common Share entitles the holder thereof to one vote. At the close of
business on March 9, 1998, there were 21,613,174 Common Shares issued and
outstanding.
Shares represented by proxies in the form enclosed, if such proxies are
properly executed and returned and not revoked, will be voted as specified.
Where no specification is made on a properly executed and returned form of
proxy, the shares will be voted FOR the election of all nominees for Trustee,
FOR the proposal to adopt and approve and adopt the Second Amended and Restated
Employee Share Option and Restricted Share Plan and FOR the proposal to ratify
the appointment of Coopers & Lybrand L.L.P. as independent auditors. The Company
knows of no business other than that set forth above to be transacted at the
meeting. If other matters requiring a vote do arise, it is the intention of the
persons named in the Proxy to vote in accordance with their judgment on such
matters.
To be voted, proxies must be filed with the Secretary of the Company prior
to the time of voting. Proxies may be revoked at any time before exercise
thereof by filing a notice of such revocation or a later dated proxy with the
Secretary of the Company or by voting in person at the Meeting.
The Company's 1997 Annual Report to Shareholders for the fiscal year ended
December 31, 1997 is enclosed with this Proxy Statement. This Proxy Statement,
the proxy card and the 1997 Annual Report to Shareholders were mailed to
shareholders on or about March 24, 1998. The executive offices of the Company
are located at Colonial Plaza, 2101 6th Avenue North, Suite 750, Birmingham,
Alabama 35203.
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ELECTION OF TRUSTEES
(Proposal 1)
Board of Trustees
The Board of Trustees of the Company is comprised of nine members divided
into three classes, with one-third of the trustees elected by the shareholders
annually. The trustees whose terms will expire at the Meeting are M. Miller
Gorrie, James K. Lowder and Herbert A. Meisler, each of whom has been nominated
for election at the Meeting as trustees to hold office until the 2001 Annual
Meeting of Shareholders and until their successors are elected and qualified.
William M. Johnson, a member of the class of trustees whose terms expire in
1999, became a trustee on July 31, 1997, pursuant to a vote of the Board of
Trustees, in connection with the Company's acquisition from Mr. Johnson and
certain of his affiliates of various office and retail properties located in
Atlanta, Georgia. Because Alabama law provides that trustees appointed by the
Board of Trustees may serve only until the next Annual Meeting of Shareholders,
Mr. Johnson is being nominated at this time to serve as a member of the class of
trustees whose terms expire in 1999, to hold office until the 1999 Annual
Meeting of Shareholders and until his successor is elected and qualified.
Four nominees for trustee will be elected upon a favorable vote of a
plurality of the Common Shares present and entitled to vote, in person or by
proxy, at the Meeting. The Board of Trustees of the Company recommends a vote
FOR M. Miller Gorrie, James K. Lowder and Herbert A. Meisler as trustees to hold
office until the 2001 Annual Meeting of Shareholders and until their successors
are elected and qualified and FOR William M. Johnson as trustee to hold office
until the 1999 Annual Meeting of Shareholders and until his successor is elected
and qualified. Should any or all of these nominees become unable to serve for
any reason, the Board of Trustees may designate substitute nominees, in which
event the persons named in the enclosed proxy will vote for the election of such
substitute nominee or nominees, or may reduce the number of trustees on the
Board of Trustees.
Nominees for Election to Term Expiring 2001
M. Miller Gorrie, 62, is a trustee of the Company and a director of
Colonial Properties Holding Company, Inc. ("CPHC"), a wholly owned subsidiary of
the Company which serves as the general partner of Colonial Realty Limited
Partnership (the "Operating Partnership"). The Operating Partnership owns
substantially all of the Company's properties. Mr. Gorrie is chairman of the
board and chief executive officer of Brasfield & Gorrie, L.L.C., a general
contracting firm located in Birmingham, Alabama that is ranked consistently
among ENR's "Top 100 Contractors." He serves on the board of directors of, among
other organizations, American Cast Iron Pipe Co., Winslow Furniture Co. and the
Metropolitan Development Board. He is a past director of AmSouth Bank of
Alabama, the Southern Research Institute, the Alabama Chamber of Commerce, the
Associated General Contractors, the Building Science Advisory Board of Auburn
University, the Business Council of Alabama and the United Way of Alabama. Mr.
Gorrie is chairman of the Executive Committee and is a member of the Executive
Compensation Committee of the Board of Trustees. He also is chairman of the
executive committee and a member of the executive compensation committee of the
board of directors of CPHC, and is a member of the executive compensation
committee of the board of directors of Colonial Properties Services, Inc. (the
"Management Corporation"), which conducts the Company's third-party management,
leasing and brokerage operations.
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James K. Lowder, 48, has been a trustee of the Company since its formation
in July 1993 and is a director of CPHC. Mr. Lowder is also chairman of the board
and chief executive officer of The Colonial Company, chairman of the board of
Lowder Construction Company, Inc. and chairman of the board of Lowder New Homes,
Inc. and Lowder Realty Company, Inc. He also is a member of the Alabama
Association of Realtors, the Montgomery Board of Realtors, the Home Builders
Association of Alabama, and the Greater Montgomery Home Builders Association,
and is a member of the board of directors of Alabama Power Company. Mr. Lowder
is a member of the Executive Compensation Committee of the Board of Trustees and
the executive compensation committee of the board of directors of CPHC. Mr.
Lowder is the brother of Thomas H. Lowder, the president and chief executive
officer of the Company and the chairman of the Board of Trustees.
Herbert A. Meisler, 70, is a trustee of the Company and a director of
CPHC. Together with Mr. Ripps, he formed The Rime Companies, a real estate
development, construction and management firm specializing in the development of
multifamily properties. In December 1994, the Company purchased ten multifamily
properties from partners associated with The Rime Companies. While with The Rime
Companies, Mr. Meisler oversaw the development and construction of approximately
15,000 multifamily apartment units in the southeastern United States. He
currently serves on the board of directors of the Community Foundation of South
Alabama and the Mobile Airport Authority. He is a past director of the Alabama
Eye and Tissue Bank and past president of the Mobile Jewish Welfare Fund. Mr.
Meisler is a member of the Executive Compensation Committee (and its Option Plan
Subcommittee) and the Audit Committee of the Board of Trustees. He also is a
member of the executive compensation committee of the board of directors of
CPHC.
Nominee for Election to Term Expiring 1999
William M. Johnson, 51, is a trustee of the Company and a director of
CPHC. Mr. Johnson is president and chief executive officer of Johnson
Development Company, a real estate development, construction and management firm
which he founded in 1978. As chief executive officer, he directed the
development of 1.2 million square feet of office, warehouse, retail and hotel
space having a value in excess of $117 million. In July 1997, the Company
acquired from Mr. Johnson, by merger, six office buildings representing 352,000
square feet in Mansell 400 Business Center, the largest Class-A multi-tenant
office park in the North Fulton (Atlanta, Georgia) area. Mr. Johnson was
appointed a trustee of the Company in connection with the transaction. The
Company expects to complete the merger in June 1998, after which Mr. Johnson
will have contributed to the Company a total of 560,600 square feet of Class A
office and retail space. Mr. Johnson has been an active member of the Roswell
United Methodist Church and the North Fulton Chamber of Commerce, was the
founding chairman of the board of the Coalition for Drug-Free North Fulton, and
is a member of the board of directors and the executive committee of the
American Tract Society Ministry. Mr. Johnson is a member of the Executive
Compensation Committee of the Board of Trustees and a member of the executive
compensation committee of the board of directors of CPHC.
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Incumbent Trustees - Term Expiring 1999
Claude B. Nielsen, 47, has been a trustee of the Company and a director of
CPHC since September 1993. Since 1990, Mr. Nielsen has been president of
Coca-Cola Bottling Company United, Inc., headquartered in Birmingham, Alabama,
serving also as chief operating officer from 1990 to 1991 and as chief executive
officer since 1991. Prior to 1990, Mr. Nielsen served as president of Birmingham
Coca-Cola Bottling Company. Mr. Nielsen is on the board of directors of AmSouth
Bancorporation. He also currently serves as a board member of the Birmingham
Civil Rights Institute and the Birmingham Airport Authority and as chairman of
the 1998 United Way Campaign for Central Alabama. Mr. Nielsen is chairman of the
Executive Compensation Committee of the Board of Trustees and is chairman of its
Option Plan Subcommittee. Mr. Nielsen also is chairman of the executive
compensation committee of the board of directors of CPHC.
Donald T. Senterfitt, 78, has been a trustee of the Company and a director
of CPHC since September 1993. Mr. Senterfitt is a former director and vice
chairman of SunTrust Banks, Inc., a bank holding company. He is past president
of the American Bankers Association and former General Counsel to the Florida
Bankers Association, and served both organizations in a variety of other
capacities. He currently serves as president and chief executive officer of The
Pilot Group, L.C., a financial institutions consulting firm headquartered in
Orlando, Florida. Mr. Senterfitt is a member of the Audit Committee of the Board
of Trustees.
Incumbent Trustees - Term Expiring 2000
Carl F. Bailey, 67, has been a trustee of the Company and a director of
CPHC and the Management Corporation since September 1993. Mr. Bailey is a former
co-chairman of BellSouth Telecommunications, Inc. and former chairman and chief
executive officer of South Central Bell Telephone Company, positions from which
he retired in 1991. He worked for South Central Bell in a number of capacities
over the past three and a half decades and was elected president and a member of
the board of directors in 1982. Mr. Bailey is president of BDI and is a member
of the board of directors of SouthTrust Corporation. Mr. Bailey serves on the
board of trustees of Birmingham Southern College. Mr. Bailey is a member of the
Executive Committee and is chairman of the Audit Committee of the Board of
Trustees. He also is a member of the executive committee of the board of
directors of CPHC.
Thomas H. Lowder, 48, has been a trustee of the Company since its
formation in July 1993. He is the chairman of the board, president and chief
executive officer of the Company and CPHC. Mr. Lowder became President of
Colonial Properties, Inc., the Company's predecessor, in 1976 and since that
time has been actively engaged in the acquisition, development, management,
leasing and sale of multifamily, retail and office properties for the Company.
Mr. Lowder is a member and past president of the Alabama Chapter of the
Commercial Investment Real Estate Institute. Mr. Lowder is a former state
Chairman of the Young Presidents' Organization and is a member of the Birmingham
Area Board of Realtors, the National Association of Industrial Office Parks, the
International Council of Shopping Centers and the National Association of Real
Estate Investment Trusts (NAREIT). He serves on the Board of Directors of, among
other companies, the Children's Hospital of Alabama, American Red Cross
- -Birmingham Area Chapter and the United Way of Central Alabama. Mr. Lowder is a
member of the Executive Committee of the Board of Trustees, a member of the
executive committee of the board of directors of CPHC, and a member of the board
of directors of the Management Corporation.
Harold W. Ripps, 59, is a trustee of the Company and a director of CPHC.
Together with Mr. Meisler, they formed The Rime Companies, a real estate
development, construction and management firm specializing in the development of
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multifamily properties. In December 1994, the Company purchased ten multifamily
properties from partners associated with The Rime Companies. While with The Rime
Companies, Mr. Ripps oversaw the development and construction of approximately
15,000 multifamily apartment units in the southeastern United States. He is a
member of the executive committee of the Birmingham Council of Boy Scouts of
America, the President's Advisory Committee of Birmingham Southern College and
the President's Council of the University of Alabama in Birmingham. Mr. Ripps is
a member of the Executive Committee of the Board of Trustees. He also is a
member of the executive committee of the board of directors of CPHC and is a
member of the board of directors and the executive compensation committee of the
Management Corporation.
Committees of the Board of Trustees; Meetings
In accordance with the Bylaws of the Company, the Board of Trustees has
established an Executive Committee, an Audit Committee, and an Executive
Compensation Committee. The membership of these Committees is set forth in the
preceding section of this Proxy Statement.
The Executive Committee has the authority, subject to the Company's
conflict of interest policies, to acquire and dispose of real property and the
power to authorize, on behalf of the full Board of Trustees, the execution of
certain contracts and agreements, including those related to the borrowing of
money by the Company (and, consistent with the Second Amended and Restated
Agreement of Limited Partnership of the Operating Partnership, as amended, to
cause the Operating Partnership to take such actions). The Executive Committee
met eight times in 1997.
The Audit Committee, which consists of independent trustees, was
established to make recommendations concerning the engagement of independent
public accountants, review with the independent public accountants the plans and
results of the audit engagement, review professional services provided by the
independent public accountants, review the independence of the independent
public accountants, consider the range of audit and non-audit fees, and review
the adequacy of the Company's internal accounting controls. The Audit Committee
met four times during 1997.
The Executive Compensation Committee was established to determine
compensation for the Company's executive officers and to administer the
Company's stock option and annual incentive plans. Grants of options and
restricted shares are made by the committee's Option Plan Subcommittee. The
Executive Compensation Committee met one time during 1997.
The Board of Trustees held four meetings during 1997. During 1997, each
member of the Board of Trustees (other than Mr. Nielsen) attended more than 75%
of the aggregate of (i) all meetings of the Board of Trustees (or, in Mr.
Johnson's case, all meetings held after his election to the Board of Trustees)
and (ii) all meetings of committees of which such trustee was a member.
Compensation of Trustees
The Company pays its trustees who are not officers of the Company fees for
their services as trustees. Trustees receive annual compensation of $18,000 plus
a fee of $1,000 (plus out-of-pocket expenses) for attendance (in person or by
telephone) at each meeting of the Board of Trustees, and a fee of $500 for
attendance (in person or by telephone) at each committee meeting. (Herbert A.
Meisler has waived his right to trustee fees and has requested that the Company
donate a like amount to religious or charitable organizations.) Trustees who are
not employees of the Company may elect, pursuant to the Non-employee Trustee
Share Plan, to receive Common Shares in lieu of all or a portion of their annual
trustee and committee fees. Participating trustees receive Common Shares having
a fair market value equal to 125% of the amount of fees foregone.
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Pursuant to the Company's Non-employee Trustee Share Option Plan, each
newly elected trustee who is not an employee of the Company receives, upon
election, an option to purchase 5,000 Common Shares for a price equal to the
fair market value of such shares on the date of grant. Each non-employee trustee
also receives an automatic grant of an option, exercisable for 5,000 Common
Shares, following each annual election of trustees after the trustee has
completed at least one year of service.
Officers of the Company who are trustees are not paid any trustee fees nor
are they eligible to participate in the Non-employee Trustee Share Option Plan
or the Non-employee Trustee Share Plan.
ADOPTION AND APPROVAL OF THE SECOND AMENDED AND RESTATED
EMPLOYEE SHARE OPTION AND RESTRICTED SHARE PLAN
(Proposal 2 )
The Board of Trustees has approved, and recommends that the shareholders
approve, the Second Amended and Restated Employee Share Option and Restricted
Share Plan (the "Plan"). The Plan is an amended version of the First Amended and
Restated Employee Share Option and Restricted Share Plan, as amended (the
"Current Plan"). (No further awards will be made under the Current Plan after
the Meeting.) Like the Current Plan, the Plan has been approved by the boards of
directors of CPHC and the Management Corporation as well as the Board of
Trustees. There is no specified termination date for the Plan, but it may be
terminated by the Board of Trustees at any time.
The purposes of the Plan are to enhance the Company's ability to attract
and retain highly qualified individuals to serve as executive officers and other
key employees of the Company and to provide additional incentives to executive
officers and other key employees to promote the success of the Company. The Plan
provides for the grant of options and restricted shares which give the grantees
an opportunity to acquire or increase a proprietary interest in the Company. (To
facilitate employee recognition programs, the Plan also permits the chief
executive officer of the Company to award up to ten "bonus shares" each month to
eligible employees of the Company.) Options granted under the Plan may be
incentive stock options ("ISOs"), intended to qualify as such under Section 422
of the Internal Revenue Code of 1986, as amended (the "Code").
The Board's primary reason for amending the Current Plan is to increase
the number of shares available for grants of options, restricted shares and
bonus shares. The Current Plan authorizes 675,000 shares, and the Plan increases
the number authorized to 3,200,000, with a provision that the number of
authorized shares will increase automatically as the Company issues additional
securities to equal 10% of the sum of (i) the number of issued and outstanding
Common Shares and (ii) the number of issued and outstanding units of limited
partnership interest of the Operating Partnership ("Units"). As explained in
more detail in the Report on Executive Compensation below, the proposed increase
was recommended by FPL Associates ("FPL"), an independent executive compensation
consulting firm retained by the Company to analyze the Company's executive
compensation plans and policies. FPL recommended the proposed increase to
provide greater flexibility to the Option Plan Subcommittee of the Executive
Compensation Committee in sizing options to incentivize the Company's employees
to achieve certain performance objectives. As of March 9, 1998, 31,634 Common
Shares had been issued under the Current Plan as restricted shares, 8,623 Common
Shares had been issued upon the exercise of options granted under the Current
Plan, and 214,087 Common Shares were subject to outstanding options. As of that
date, the closing price of the Common Shares on the New York Stock Exchange was
$29.5625 per share.
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Description of the Plan
The following is a general description of certain material provisions of
the Plan. The description is only a summary and is qualified by reference to the
Plan itself, a copy of which is included as Appendix A to this Proxy Statement.
Administration. The Plan will be administered by the Executive
Compensation Committee (or other committee designated by the Board of Trustees
from time to time, subject to the chief executive officer's authority to issue
bonus shares as described above). The committee must at all times consist of no
fewer than two members of the Board of Trustees of the Company, and each member
of the committee must qualify in all respects as a "non-employee director" as
defined in Rule 16b-3 under the Exchange Act and as an "outside director" as
defined in Treasury Regulations ss. 1.162-27(e)(3). Subject to the limitations
set forth in the Plan, the committee has the authority to determine, among other
things: (i) the eligible persons to whom options and restricted shares will be
granted, (ii) the type or types of grants to be made, (iii) the number of shares
subject to each grant, and (iv) the terms and conditions of the options and
restricted shares. Subject to the express provisions of the Plan, the committee
will have the full authority to administer and interpret the Plan.
Eligibility. The committee will have discretion to grant options and
restricted shares under the Plan to (i) employees (including officers) of the
Company, the Operating Partnership or their affiliates, and (ii) any other
person whose participation in the Plan is determined by the committee to be in
the best interests of the Company. Subject to the restrictions set forth in the
Plan, an eligible person may receive successive grants of options and restricted
shares. No grantee, however, may receive an option to purchase more than 500,000
shares in any calendar year.
Shares Subject to the Plan. Assuming approval of the Plan at the Meeting,
3,159,743 authorized but unissued Common Shares (including shares reserved under
the Current Plan) will be reserved for issuance pursuant to future awards made
under the Plan and the exercise of outstanding options previously granted under
the Current Plan. The number of shares issued under the Plan as restricted
shares may not exceed 750,000 (including restricted shares issued under the
Current Plan), provided that restricted shares that are forfeited pursuant to
the terms of an award will again be available for issuance as restricted shares.
In addition, no more than 3,200,000 shares may be issued pursuant to ISOs. In
the event any change is made to the Common Shares subject to the Plan (whether
by reason of recapitalization, reclassification, share split, reverse split,
combination of shares, exchange of shares, share dividend, or other increase,
decrease or change in such shares), the Company will adjust proportionately and
accordingly the number and kinds of shares that may be issued under the Plan or
purchased upon exercise of an outstanding option. Any such adjustment in an
outstanding option, however, will be made without a change in the total price
applicable to the unexercised portion of the option, but with a corresponding
adjustment in the per share price. Common Shares underlying any option that
expires unexercised, or any award of restricted shares that is forfeited, will
again be available for issuance pursuant to the Plan.
Options.
General. All options granted under the Plan are intended to be treated as
nonstatutory stock options, unless the committee specifically designates a stock
option as an ISO within the limitations of the Plan. The exercise price of
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options granted under the Plan will be determined by the committee in accordance
with the Plan. For both ISOs and nonstatutory options, the exercise price per
share will be equal to 100% of the fair market value (determined in accordance
with the Plan) of a Common Share on the Grant Date (as defined in the Plan), but
not less than the par value per share. No person may receive an ISO if, at the
time of grant, such person owns directly or indirectly more than 10% of the
total combined voting power of the Company, unless the option exercise price is
at least 110% of the fair market value of the Common Shares and the exercise
period of such ISO is limited to five years. There also is a $100,000 limit on
the value of shares (determined at the time of grant) with respect to which ISOs
granted to an optionee may first become exercisable in any calendar year.
Vesting. The committee will determine the exercise period and any vesting
requirements for options granted under the Plan, provided that no option may be
exercised after ten years following the date of its grant. The committee will
also have the authority to accelerate the vesting of any outstanding option, in
its sole discretion, at any time. Generally, options granted under the Current
Plan have been granted to vest in three equal annual installments beginning on
the first anniversary of the Grant Date, subject to acceleration of vesting upon
a change in control of the Company (unless the options are assumed or continued
in connection with such change in control). In the future, it is expected that
options generally will be granted to vest in five (rather than three) equal
annual installments. Options will expire prior to their scheduled termination
upon termination of the optionee's employment with the Company (other than, for
individuals, by reason of death or "permanent and total disability" within the
meaning of Section 22(e)(3) of the Code). Special rules will govern the vesting
and expiration of options following the death or permanent and total disability
of an optionee. The committee may extend the period during which an option may
be exercised (but not to a date that is later than the date the option would
otherwise expire).
Transferability. Options granted under the Plan will be exercisable only
by the optionee or his or her permitted transferees during the optionee's
lifetime. Options will be transferable by the optionee only as provided in the
agreement evidencing the grant or as may be provided by will or the laws of
descent and distribution.
Payment of Option Exercise Price. Payment for shares purchased upon
exercise of an option may be made in cash or cash equivalents, by exchanging
Common Shares of the Company valued at their fair market value on the date of
exercise, or by a combination of the foregoing. Where permitted under the
agreement evidencing the grant of an option, an optionee may also pay the
exercise price by directing that the certificates for the shares purchased upon
exercise be delivered to a licensed broker acceptable to the Company as agent
for the optionee and that the broker tender to the Company cash or cash
equivalents equal to the option exercise price plus the amount of any taxes that
the Company may be required to withhold in connection with the exercise of the
option.
Restricted Shares. The committee may grant to eligible persons Common
Shares that are subject to vesting based on the passage of time, the achievement
by the grantee or the Company of specified performance objectives, or other
conditions deemed appropriate by the committee. The committee will establish the
conditions to vesting, and the period of time during which the conditions will
apply, at the time of grant. Restricted share awards under the Current Plan have
provided, and restricted share awards under the Plan are expected to provide,
that the restricted shares will not begin vesting until three years after the
Grant Date (subject to acceleration of vesting upon the Company's satisfaction
of specified performance conditions).
Until vesting conditions are satisfied, restricted shares may not be
transferred by the employee. In its discretion, the committee may shorten or
terminate vesting conditions or waive any other restrictions applicable to the
award.
8
<PAGE>
If the termination of a grantee's employment with the Company occurs
before restricted shares have vested, the award will be forfeited unless the
committee, in its discretion, determines otherwise. Special rules will apply to
the vesting of an award upon the death or permanent and total disability of a
grantee.
Grantees of restricted shares shall generally be entitled to vote and
receive distributions on their restricted shares. Upon vesting of an award of
restricted shares, including the satisfaction, lapse or waiver of all applicable
restrictions and conditions, the grantee will be entitled to receive a share
certificate representing the vested shares.
Bonus Shares. The chief executive officer of the Company, on behalf of the
Board of Trustees, may from time to time grant up to ten bonus shares per month
to such eligible persons as the chief executive officer may designate. The chief
executive officer currently awards four bonus shares each month to an employee
who has demonstrated superior job performance.
Federal Income Tax Consequences of Company Grants Under the
Plan
The grant of an option will not be a taxable event for the optionee or the
Company.
An optionee will not recognize taxable income upon exercise of an ISO, and
any gain realized upon a disposition of Common Shares received pursuant to the
exercise of an ISO will be taxed as long-term capital gain if the optionee holds
the shares for at least two years after the date of grant and for one year after
the date of exercise. However, the excess of the fair market value of shares
subject to an ISO on the exercise date over the option exercise price will be
included in the optionee's alternative minimum taxable income in the year of
exercise (except that, if the optionee is subject to certain securities law
restrictions, determination of the amount included in alternative minimum
taxable income will be deferred, unless the optionee elects within 30 day
following exercise to have income determined without regard to such
restrictions) for purposes of the alternative minimum tax. An optionee may be
entitled to a credit against regular tax liability in future years for minimum
taxes paid with respect to the exercise of ISOs. The Company will not entitled
to any business expense deduction with respect to the exercise of an ISO, except
as discussed below.
For the exercise of an option to qualify for the foregoing tax treatment,
the optionee generally must be an employee of the Company or a subsidiary from
the date the option is granted through a date within three months before the
date of exercise of the option. In the case of an optionee who is disabled, the
three-month period for exercise following the termination of employment is
extended to one year. In the case of an employee who dies, both the time for
exercising ISOs after termination of employment and the holding period for
shares received pursuant to the exercise of the option are waived.
If all of the foregoing requirements are met except the special holding
period rules mentioned above, the optionee will recognize ordinary income upon
the disposition of the shares in an amount generally equal to the excess of the
fair market value of the shares at the time the option was exercised over the
option exercise price (but not in excess of the gain realized on the sale). The
balance of the realized gain, if any, will be capital gain. The Company will be
allowed a business expense deduction to the extent the optionee recognizes
ordinary income.
If an optionee exercises an ISO by tendering Common Shares with a fair
market value equal to part of all of the option exercise price, the exchange of
shares will be treated as a nontaxable exchange (except that this treatment
would not apply if the optionee had acquired the shares being transferred
9
<PAGE>
pursuant to the exercise of an ISO and had not satisfied the special holding
period requirement summarized above). If the exercise is treated as a tax free
exchange, the optionee would not have taxable income from the exchange and
exercise (other than minimum taxable income as discussed above) and the tax
basis of the shares exchanged would be treated as the substituted basis for the
shares received. If the optionee used shares received pursuant to the exercise
of an ISO (or another nonstatutory option) as to which the optionee had not
satisfied the applicable holding period requirement, the exchange would be
treated as a taxable disqualifying disposition of the exchanged shares.
Upon exercising a nonstatutory option, an optionee will recognize ordinary
income in an amount equal to the difference between the exercise price and the
fair market value of the shares on the date of exercise (except that, if the
optionee is subject to certain restrictions imposed by the securities laws, the
measurement date will be deferred, unless the optionee makes a special tax
election within 30 days after exercise to have income determined without regard
to the restrictions). If the Company complies with applicable reporting
requirements, it will be entitled to a business expense deduction in the same
amount and at the same time as the optionee recognizes ordinary income. Upon the
subsequent sale or exchange of shares acquired pursuant to the exercise of a
nonstatutory option, the optionee will have taxable gain or loss, measured by
the difference between the amount realized on the disposition and the tax basis
of the shares (generally, the amount paid for the shares plus the amount treated
as ordinary income at the time the option was exercised).
If the optionee surrenders Common Shares in payment of part or all of the
exercise price for nonstatutory options, no gain or loss will be recognized with
respect to the shares surrendered (regardless of whether the shares were
acquired pursuant to the exercise of an ISO) and the optionee will be treated as
receiving an equivalent number of shares pursuant to the exercise of the option
in a nontaxable exchange. The basis of the shares surrendered will be treated as
the substituted tax basis for an equivalent number of option shares received and
the new shares will be treated as having been held for the same holding period
as had expired with respect to the transferred shares. The difference between
the aggregate option exercise price and the aggregate fair market value of the
shares received pursuant to the exercise of the option will be treated as
ordinary income. The optionee's basis in the additional shares will be equal to
the amount included in the optionee's income.
An award of restricted shares will create no immediate tax consequences
for the employee or the Company unless the employee makes an election pursuant
to Section 83(b) of the Code. The employee will, however, realize ordinary
income when restricted shares become vested, in an amount equal to the fair
market value of the underlying Common Shares on the date of vesting less any
consideration paid by the employee for such shares. If the employee makes an
election pursuant to Section 83(b) of the Code with respect to a grant of
restricted shares, the employee will recognize income at the time the restricted
shares are awarded (based upon the value of such shares at the time of award),
rather than when the restricted shares become vested. The Company will be
allowed a business expense deduction for the amount of any taxable income
recognized by the employee at the time such income is recognized (assuming the
Company complies with applicable reporting requirements).
An award of bonus shares will result in ordinary income to the grantee at
the time of grant in an amount equal to the value of the shares on the date of
grant, less any consideration paid by the grantee for the bonus shares. The
Company will be allowed a business expense deduction for the amount of any
taxable income recognized by the employee at the time such income is recognized
(assuming the Company complies with applicable reporting requirements).
10
<PAGE>
The foregoing provides only a general description of the federal income
tax consequences of transactions contemplated by the Plan. Participants should
consult a tax advisor as to their individual circumstances.
The approval of the Plan requires the approval of a majority of the votes
cast on the proposal at the Meeting, provided that the total votes cast
represent more than 50% of the Common Shares outstanding. The Board recommends a
vote FOR the proposal to adopt and approve the Second Amended and Restated
Employee Share Option and Restricted Share Plan.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(Proposal 3)
The Board of Trustees of the Company, upon the recommendation of the Audit
Committee, has appointed the accounting firm of Coopers & Lybrand L.L.P. to
serve as independent auditors of the Company for the fiscal year ending December
31, 1998. Coopers & Lybrand L.L.P. has served as independent auditors of the
Company since the Company's commencement of operations. The Company has been
advised by Coopers & Lybrand L.L.P. that neither the firm nor any member thereof
has any financial interest, direct or indirect, in the Company or any of its
subsidiaries in any capacity. Representatives of Coopers & Lybrand L.L.P. will
be present at the Meeting, will have the opportunity to make a statement if they
so desire, and will be available to respond to appropriate questions.
The ratification of the appointment of Coopers & Lybrand L.L.P. requires
the approval of a majority of the Common Shares present or represented by proxy
and entitled to vote at the Meeting. The Board of Trustees of the Company
recommends a vote FOR the proposal to ratify the appointment of Coopers &
Lybrand L.L.P. as independent auditors of the Company for the fiscal year ending
December 31, 1998.
11
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the annual
and long-term compensation for the chief executive officer and the four other
most highly compensated executive officers of the Company (the "Named Executive
Officers"): <TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation Long-Term Compensation
Restricted Securities All
Other Annual Share Underlying Other
Name and Principal Position Year Salary ($) Bonus ($) Compensation Awards($)(1) Options (#) Compensation(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas H. Lowder 1997 $295,000 $225,000 -- $89,250 16,000 $3,453
Chairman of the Board, 1996 285,000 30,000 -- 68,950 16,000 4,500
President and Chief Executive 1995 285,000 110,000 -- 62,775 15,835 4,500
Officer
Howard B. Nelson, Jr. 1997 198,000 120,000 -- 51,000 10,000 3,453
Chief Financial Officer 1996 171,726 23,000 -- 34,475 8,500 4,500
1995 145,000 68,000 -- 26,100 6,450 4,159
Paul F. Earle... 1997 125,000 75,000 -- 19,125 3,500 3,453
Executive Vice President - 1996(3) 107,006 21,006 -- -- -- 3,841
Multifamily Division
John N. Hughey.. 1997 120,000 75,000 -- 19,125 3,500 3,453
Executive Vice President - 1996 104,998 50,000 -- 14,775 3,500 3,145
Retail Division 1995 95,000 62,000 -- 13,388 3,295 3,088
Charles A. McGehee 1997 125,000 75,000 -- 19,125 3,500 3,453
Executive Vice President - 1996 120,000 20,000 -- 17,238 4,000 4,500
Land, Brokerage and 1995 110,000 63,000 -- 15,413 3,815 3,276
Dispositions
<FN>
(1) The number and value of restricted shares held by the Named Executive
Officers as of December 31, 1997 were as follows: Mr. Lowder - 6,156
shares ($185,450); Mr. Nelson - 3,184 shares ($95,918); Mr. Earle - 600
shares ($18,075); Mr. Hughey - 1,316 shares ($39,705); and Mr. McGehee -
1,984 shares ($59,768). Dividends are paid on restricted shares at the
same rate paid to all other holders of Common Shares.
(2) All Other Compensation consists solely of employer contributions to the
Company's 401(k) Plan.
(3) Mr. Earle became an executive officer of the Company in 1996. </FN> </TABLE>
The following table sets forth certain information concerning exercised
and unexercised options held by the Named Executive Officers at December 31,
1997: <TABLE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-End Option Values
<CAPTION>
Number of Value of Unexercised
Shares Securities Underlying In-the-Money
Acquired Value Unexercised Options Options
Name on Exercise(#) Realized($) at December 31, 1997 at December 31, 1997(1)
- --------------------------------------------------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas H. Lowder -- -- 31,890 31,945 $218,550 $96,274
Howard B. Nelson, Jr. -- -- 10,593 17,817 70,873 46,485
Paul F. Earle -- -- 833 5,167 4,583 9,167
John N. Hughey -- -- 6,193 6,932 41,591 20,659
Charles A. McGehee -- -- 6,977 7,438 47,542 23,727
- ------------------------
<FN>
(1)Based on the closing price of $30.125 per Common Share on December 31, 1997,
as reported by the New York Stock Exchange.
</FN>
</TABLE>
12
<PAGE>
The following table sets for the certain information relating to options
to purchase Common Shares granted to the Named Executive Officers during 1997:
<TABLE>
Option Grants in Last Fiscal Year
<CAPTION>
Individual Grants
- ---------------------------------------------------------
Percent Potential Realizable
Number of of Total Value at Assumed
Securities Options Annual Rates of Share
Underlying Granted to Exercise Price Appreciation for
Options Employees in Price Expiration Option Term
Name Granted(#) Fiscal Year ($/Sh) Date 5% 10%
- ------------------------------------------------------------------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas H. Lowder 16,000 20.25% $31.875 1/22/07 $320,736 $812,809
Howard B. Nelson, Jr. 10,000 12.66% 31.875 1/22/07 200,460 508,005
Paul F. Earle 3,500 4.43% 31.875 1/22/07 70,161 177,802
John N. Hughey 3,500 4.43% 31.875 1/22/07 70,161 177,802
Charles A. McGehee 3,500 4.43% 31.875 1/22/07 70,161 177,802
</TABLE>
All options granted in 1997 become exercisable in three equal annual
installments beginning on the first anniversary of the date of grant and have a
term of ten years.
Defined Benefit Plan
The Company maintains a Retirement Plan (the "Plan") for all of the
employees of the Company and its subsidiaries. The Plan also has been adopted by
the Management Corporation. An employee becomes eligible to participate in the
Plan on January 1 or July 1 following the first anniversary of the person's
employment by the Company or one of its consolidated or unconsolidated
subsidiaries or age 21 if later. Benefits are based upon the number of years of
service (maximum 25 years), and the average of the participant's earnings during
the five highest years of compensation during the final 10 years of employment.
Each participant accrues a benefit at a specified percentage of compensation up
to the Social Security wage base, and at a higher percentage of compensation
above the Social Security wage base. Employment by Colonial, the Company's
predecessor, or certain of its affiliated entities is treated as covered service
for purposes of the Plan. A participant receives credit for a year of service
for every year in which 1,000 hours are completed in the employment of the
Company or its subsidiaries.
13
<PAGE>
The following table reflects estimated annual benefits payable upon
retirement under the Plan as a single life annuity commencing at age 65. These
benefits ignore the lower benefit rate applicable to earnings below the Social
Security covered compensation level. <TABLE>
Pension Plan Table
<CAPTION>
Years of Service
--------------------------------------------------
Remuneration 5 10 15 20 25
- ------------
<S> <C> <C> <C> <C> <C>
$100,000 $ 7,600 $15,200 $22,800 $30,400 $38,000
125,000 $ 9,500 $19,000 $28,500 $38,000 $47,500
150,000 $11,400 $22,800 $34,200 $45,600 $57,000
$160,000 or $12,160 $24,320 $36,480 $48,640 $60,800
over
</TABLE>
The benefits shown are limited by the current statutory limitations which
restrict the amount of benefits which can be paid from a qualified retirement
plan. The statutory limit on compensation which may be recognized in calculating
benefits is $160,000 in 1998. This limit is scheduled to increase periodically
with the cost of living.
Covered compensation under the Plan includes only the employees' base
salary. Thomas H. Lowder has 23 years of covered service under the Plan, Howard
B. Nelson, Jr. has 13 years of service, Paul F. Earle has six years of service,
John N. Hughey has 15 years of service, and Charles A. McGehee has 17 years of
service.
Employment Agreement
Thomas H. Lowder, the chief executive officer of the Company, entered into
an employment agreement with the Company in September 1993. This agreement
provided for an initial term of three years, and is renewable automatically for
successive one year terms if neither party delivers notice of non-renewal at
least six months prior to the next scheduled expiration date. The agreement
provides for annual compensation of at least $275,000 and incentive compensation
on substantially the same terms as set forth in the description of the Annual
Incentive Plan. See "Report on Executive Compensation -- Annual Incentive Plan."
The agreement includes provisions restricting Mr. Lowder from competing with the
Company during employment and, except in certain circumstances, for two years
after termination of employment. The employment agreement provides for certain
severance payments in the event of disability or termination by the Company
without cause or by the employee with cause.
14
<PAGE>
PERFORMANCE GRAPH
The graph set forth below compares the yearly change in the Company's
cumulative total shareholder return on its Common Shares from the date of the
Company's initial public offering in 1993 through December 31, 1997, to the
cumulative total return of the Standard and Poor's 500 Stock Index ("S&P 500
Index") and the National Association of Real Estate Investment Trusts Equity
Index ("NAREIT Index") for the same period (total shareholder return equals
price appreciation plus dividends). The performance graph assumes an investment
of $100 in the Company's Common Shares and each index on September 30, 1993 and
assumes reinvestment of dividends. The performance shown in the graph is not
necessarily indicative of future price performance. <TABLE>
Comparison of Cumulative Total Return
Colonial Properties Trust, S&P 500 Index and NAREIT Index
September 30, 1993- December 31, 1997
<CAPTION>
PERFORMANCE GRAPH APPEARS HERE
Colonial Properties
NAREIT
Measurement Period Trust S&P 500 Index
- ------------------ ----- ------- -----
<S> <C> <C> <C>
Sept. 30, 1993 $100 $100 $100
Dec. 31, 1993 $93 $102 $94
Mar. 31, 1994 $100 $98 $96
June 30, 1994 $103 $99 $98
Sept. 30, 1994 $100 $104 $96
Dec. 31, 1994 $106 $104 $95
Mar. 31, 1995 $110 $114 $96
June 30, 1995 $113 $125 $102
Sept. 30, 1995 $124 $134 $107
Dec. 31, 1995 $130 $142 $112
Mar. 31, 1996 $123 $150 $115
June 30, 1996 $129 $156 $120
Sept. 30, 1996 $142 $161 $127
Dec. 31, 1996 $167 $175 $151
Mar. 31, 1997 $163 $180 $150
June 30, 1997 $168 $211 $157
Sept. 30, 1997 $174 $227 $176
Dec. 31, 1997 $178 $234 $179
</TABLE>
Notwithstanding anything to the contrary set forth in any of the
Company's filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate other
filings with the Securities and Exchange Commission, including this Proxy
Statement, in whole or in part, the following Performance Graph and Report on
Executive Compensation shall not be incorporated by reference into any such
filings.
15
<PAGE>
REPORT ON EXECUTIVE COMPENSATION
This report outlines how the Executive Compensation Committee (the
"Committee") of the Board of Trustees determined 1997 compensation levels for
the Company's executive officers, including the Named Executive Officers. The
Committee, which is composed entirely of non-employee trustees, is responsible
for all aspects of the Company's officer compensation programs and some aspects
of non-officer compensation, and works closely with the entire Board in the
execution of its duties. The responsibility for granting awards of options and
restricted shares under the Current Plan and the proposed Plan (see Proposal 2)
has been delegated to the Option Plan Subcommittee of the Committee.
Executive Compensation Policy and Philosophy
The Company's executive compensation programs are based on the following
guiding principles:
Pay-for-Performance - The Company places considerable emphasis on
incentive compensation programs that reward executives for achieving
specific operating and financial objectives, including total
shareholder returns and funds from operations ("FFO") per share.
These incentive programs focus on both annual and long-term
performance.
Pay Competitiveness - The Company believes it must offer competitive
total compensation to attract, motivate and retain executive talent.
The Company's philosophy is to target the market median (50th
percentile) for all components of executive compensation, including
base salary, annual incentives and long-term incentives. Actual
compensation levels, however, will vary in competitiveness from year
to year, depending on corporate, business unit and individual
performance.
The Company determines competitive levels of compensation using
published compensation surveys, information obtained from
compensation consultants (most recently FPL) and an analysis of
compensation data contained in the proxy statements for industry peer
companies selected on the basis of asset class and market
capitalization. These companies differ from those used in the peer
group index that appears in the Company's total shareholder return
graph. The published survey data and consultant data reflect real
estate investment trust organizations with assets comparable to those
of the Company.
Executive Share Ownership - The Company believes that a significant
portion of each executive's compensation and wealth accumulation
opportunities should be tied to the Company's share price and
dividend performance. The Company maintains a long-term incentive
plan consisting of share options and performance-accelerated
restricted shares so that a significant portion of executive
compensation is provided in the form of share-based compensation.
16
<PAGE>
In late 1997, the Committee undertook an analysis to determine whether its
compensation practices were adequate to motivate and retain the executive talent
required to achieve the Company's growth objectives and opportunities. To assist
in its analysis, the Committee engaged FPL to analyze the Company's compensation
philosophy, the level of compensation paid to executive officers and other
management employees, and the competitiveness of the Company's compensation
programs, individually and in the aggregate. Because of the Company's
diversified strategy, FPL compared the Company's compensation program with those
of comparable multi-family, retail and office REITs.
FPL rendered its report and recommendations to the Committee in January
1998. Generally, FPL concluded that most officers of the Company are compensated
below median market practices. FPL noted in particular that base salaries
generally trail the marketplace 50th percentile and that the Company has
significantly under-utilized its option plan in providing adequate long-term
incentives to its employees. As a result, the Company concluded that its
executive compensation program was insufficient to attract and retain qualified
executive officers and other key employees, particularly in an environment where
competition for executive talent is intensifying and the maturation of the real
estate industry is putting upward pressure on compensation levels.
With the assistance of FPL, the Committee reaffirmed its compensation
philosophy and the guiding principles discussed above but determined that, for
1998 and beyond, the Company should restructure its compensation programs to
better achieve the Company's objectives and to compensate the Company's
executive officers at the median of comparable REITs. The changes to the
executive compensation program being implemented by the Committee will affect
each component of the executive compensation program: the base salary program,
the annual incentive plan, and long-term incentive compensation.
Base Salary Program
The Company's base salary levels are determined based on the Committee's
assessment of market compensation rates, each employee's performance over time
and each individual's role in the Company. Consequently, employees with higher
levels of sustained performance over time and/or employees assuming greater
responsibilities will be paid correspondingly higher salaries. Salaries for
executives as a group are reviewed annually and take into account a variety of
factors, including individual performance, general levels of market salary
increases and the Company's overall financial results (as described below under
"Annual Incentive Plan"). Although all salary increases are granted within a
pay-for-performance framework, performance criteria vary significantly by
person. Performance is assessed qualitatively, and no specific weighting is
attached to performance factors considered for base salary determinations.
Salary adjustments are not affected by any contractual requirements.
Some executive officers, including certain Named Executive Officers,
received base salary increases in 1997 as a result of the annual review. In
approving the increases, the Committee considered individual performance and
experience, the position of salaries in relation to survey information and
overall corporate performance. For 1998, the Committee has increased base salary
levels for employees identified by FPL as receiving base compensation below the
marketplace median, with a view toward increasing their salaries to the median
level over a multi-year period.
17
<PAGE>
Annual Incentive Plan
The Company's annual incentive plan is designed to reward and motivate key
employees based on Company, business unit and individual performance and to give
plan participants competitive cash compensation opportunities. As a
pay-for-performance element of compensation, incentive awards are paid annually
based on the achievement of performance objectives for the most recently
completed fiscal year. In 1997, the corporate performance measure used in the
annual incentive plan was FFO per share. Business unit performance measures used
in 1997 varied by unit (and therefore by individual executive officer) but
included cash flow, square footage leased and lease income. The weighting of
these measures also varied by business unit.
The size of the actual annual incentive award for senior executives in
1997 was based largely on corporate FFO per share performance as compared to a
targeted market median. For senior executives, these 1997 awards, calculated on
the basis of this formula, were subject to a discretionary adjustment of as much
as + 30 percent to reflect individual performance on specific qualitative
criteria for each individual.
Based on the recommendations of FPL, the amounts potentially payable to
executive officers pursuant to the annual incentive plan have been increased for
1998, but the amount actually paid will depend upon the individual employee's
contribution relative to specified corporate, business unit and business
function measures and standards. In addition, to further align the interests of
the Company's employees with the interests of shareholders and to encourage
employees to take a long-term view of the Company' performance, future annual
incentive awards can be paid partly in cash and partly in restricted shares.
Long-Term Incentive Compensation
The Company believes that its executives should have an ongoing stake in
the success of the business and that key employees should have a considerable
portion of their total compensation paid in the form of Common Shares, since
share-related compensation is directly tied to shareholder value.
In 1997, the Committee granted long-term incentive awards in the form of
both stock options and performance-accelerated restricted shares. Award
opportunities under these two programs had been targeted at the market median.
Based on FPL's analysis and recommendations, the Board of Trustees voted in
January 1998 to amend and restate the Current Plan to, among other things,
increase the number of shares available for issuance under the Plan (see
Proposal 2). The purpose of the proposed increase is to permit the Committee to
make incentive awards that are consistent with median market practices. If
Proposal 2 is approved by the Company's shareholders at the Meeting, the
Committee anticipates that it will make larger annual grants of options to
executive officers, provided that the Company exceeds certain performance
measures designed to maximize shareholder return. At the same time, the
Committee intends to reduce its reliance on restricted share awards as a
long-term incentive.
The size of option grants in the future will depend on the individual
grantee's position with the Company and Company performance. Target awards to be
granted in 1999 for 1998 performance have already been established. In
anticipation of making larger option grants in 1999 for 1998 performance, and
consistent with the Committee's new practice of granting options based on
achievement of identified performance goals, the Committee did not grant options
or restricted shares to executive officers in 1998 for 1997 performance.
18
<PAGE>
Share options provide a strong tie between pay and performance, since
executives realize value from options only if the Company's share price rises
after the date of grant. All stock options granted in 1997 vest at a rate of
one-third per year over three years. The total number of options granted to each
executive officer was determined based on competitive market practice, the
Company's financial success and each individual's position and level of
responsibility within the Company.
Performance-accelerated restricted share grants made in 1997 are fully at
risk based on the continued employment of the officer. This means that
restricted shares that are granted may be earned by the officer (i.e., will
vest) if the officer remains in the employ of the Company for the specified
period (eight years from the date of grant). However, the restrictions may lapse
sooner if certain levels of total shareholder return are exceeded and maintained
for 20 consecutive trading days, thus providing an effective incentive to
achieve significant returns for shareholders. During 1997, 40% of the grants
issued on January 14, 1994, 40% of the grants issued on January 6, 1995 and 20%
of the grants issued on March 11, 1996 vested due to the shareholders return
exceeding the performance criteria.
1997 Chief Executive Officer Compensation
The Committee considers several factors in developing an executive
compensation package. For the chief executive officer ("CEO"), these include
competitive market pay practices, individual performance level, experience,
achievement of strategic goals and the financial success of the Company.
Specific actions taken by the Committee regarding the CEO's compensation in 1997
are summarized below.
Base Salary. The Committee increased Mr. Lowder's annual salary to
$295,000, representing a $10,000 increase over its 1996 level. The Committee
seeks to assure that Mr. Lowder's base salary, together with his incentive
compensation participation levels, provides a competitive overall package. Based
on the findings and recommendations of FPL, the Committee has increased Mr.
Lowder's base salary to $310,000 for 1998.
Annual Incentive. Mr. Lowder's targeted award level was set at a percentage
of salary based on competitive market practice and on his scope of operations
and responsibilities as CEO. The actual annual incentive paid ($225,000) was
based primarily on corporate performance measured by FFO performance.
Long-Term Incentive. To increase his variable pay levels in support of the
Company's compensation philosophy, Mr. Lowder has been included in the current
long-term incentive plan, which provides for grants of both share options and
restricted shares subject to accelerated vesting. The size of the 1997 awards
made to Mr. Lowder was intended to be consistent with median market practices.
Share options reward corporate performance, since the executive receives income
only if the Company's share price increases after the grant date. Restricted
share awards encourage executives to improve corporate performance, since the
vesting of these awards will be accelerated based on total shareholder return
achievements, and the ultimate value of the award is tied directly to the
Company's share price.
$1 Million Pay Deductibility Limit
Section 162(m) of the Internal Revenue Code of 1986, as amended, prohibits
publicly traded companies from taking a tax deduction for compensation in excess
of $1 million paid to the chief executive officer or any of its four other most
19
<PAGE>
highly compensated executive officers for any fiscal year. Certain
"performance-based compensation" is excluded from this $1 million cap. Both the
Company's Current Plan and the proposed Plan have been structured in such a way
that the Committee expects options granted under the plans to be treated as
performance-based compensation which may be excluded from the deductibility
limit. At this time, none of the Company's executive officers' compensation
subject to the deductibility limits exceeds $1 million. Accordingly, in the
Committee's view, the Company is not likely to be affected by the
nondeductibility rules in the near future.
Colonial Properties Services, Inc.
Each of the executive officers of the Company also is employed by the
Management Corporation, in which the Company owns 99 percent of the economic
interest but does not control the voting stock. A substantial portion of each
executive officer's total cash compensation is paid by the Management
Corporation for services rendered to that entity. All base salary and annual
bonus compensation decisions made by the Committee with respect to the Company's
executive officers are made after consultation with the board of directors of
the Management Corporation and its executive compensation committee (of which
Messrs. Gorrie and Ripps are the sole members). In making its base salary and
annual bonus compensation decisions with respect to these executive officers,
the Management Corporation's board of directors considers all of the factors
described above, along with the extent of services provided to the Management
Corporation. The compensation of the Named Executive Officers described in this
Proxy Statement includes all amounts paid to the Named Executive Officers during
the fiscal year, including amounts paid by the Management Corporation.
THE EXECUTIVE COMPENSATION COMMITTEE
M. Miller Gorrie
William M. Johnson
James K. Lowder
Herbert A. Meisler
Claude B. Nielsen
EXECUTIVE COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
None of the five members of the Executive Compensation Committee is an
employee of the Company. As described below, M. Miller Gorrie, William M.
Johnson, James K. Lowder and Harold W. Ripps, who are members of the Committee,
own interests in certain entities that, during 1997, were parties to certain
transactions involving the Company.
On March 24, 1997, the Company acquired Inverness Family Medical Center, a
28,000 square foot community shopping center, from a partnership in which
Messrs. Gorrie and J. Lowder, among other, owned interests, for approximately
$3.0 million. The Company paid the purchase price with approximately $1.5
million in cash and 16,303 units of limited partnership interest in the
Operating Partnership ("Units"). In connection with the transaction, Mr. Gorrie
received 369 Units, and Equity Partner Joint Venture ("EPJV"), a partnership in
which each of Messrs. J. Lowder, T. Lowder and Robert E. Lowder owns a one-third
interest, received 12,244 Units. In addition, Howard B. Nelson, Jr., the
Company's chief financial officer, received 369 Units in the transaction.
On April 1, 1997, the Company acquired Colonial Village at Trussville, a
multi-family property located in Birmingham, Alabama, from an entity owned in
part by Mr. Ripps. The Company paid a total purchase price of $20.5 million for
the property, including the issuance of 57,072 Units to Mr. Ripps.
20
<PAGE>
On July 11, 1997, the Company acquired Colonial Village at Timothy Woods, a
multi-family property located in Athens, Georgia, from Colonial Commercial
Investments, Inc. ("CCI"), a corporation owned by Messrs. J. Lowder and T.
Lowder. The Company paid a total purchase price of $12.8 million, including the
issuance of 27,275 Units.
On July 31, 1997, the Company acquired through merger from Mr. Johnson six
office buildings located in the Mansell 400 Office Center for a purchase price
of $48.5 million. The Company paid the purchase price through the issuance of
540,235 Units, the assumption of indebtedness in the amount of $31.7 million and
the payment of $1.1 million in cash. In connection with the acquisition, the
Company also agreed to acquire certain adjacent or nearby properties for a total
purchase price of approximately $27.3 million. The Company acquired one of these
properties, the Village at Roswell Summit, on December 31, 1997 for
approximately $3.0 million, including the issuance to Mr. Johnson of 34,777
Units. The Company expects to acquire the remaining properties during 1998.
On August 8, 1997, the Company purchased from Messrs. J. Lowder, T. Lowder
and Robert E. Lowder certain undeveloped land located in Mobile, Alabama for a
purchase price of $475,000. The Company paid the purchase price through the
issuance of 5,411 Units to each of Messrs. J. Lowder and T. Lowder and the
payment of $158,333 in cash to Robert E. Lowder.
On November 1, 1997, the Company purchased from Mr. Gorrie his 27%
interest in the Riverchase Center, an office property located in Birmingham,
Alabama in which the Company owned the remaining 73% interest. The Company paid
the purchase price of $3.4 million through the issuance of 114,798 Units.
Brasfield & Gorrie General Contractors, Inc. ("B&G"), a corporation of
which Mr. Gorrie is a shareholder and chairman of the board, was engaged during
1995 to construct the expansion of the Company's Macon Mall. The Company paid
B&G a total of $5.2 million ($5.0 million of which was then paid to unaffiliated
subcontractors) during 1997 pursuant to this engagement.
CCI has guaranteed indebtedness of a partnership accounted for by the
Company under the equity method in the aggregate amount of $1.4 million. The
Company has indemnified CCI against any liability it may incur under this
guarantee.
The Management Corporation provided management and leasing services during
1997 to certain entities in which Mr. J. Lowder and his brothers T. Lowder and
Robert E. Lowder have an interest. The aggregate amount of fees paid to the
Management Corporation by such entities during 1997 was approximately $368,000.
Colonial Insurance Company, a corporation indirectly owned by the Lowder
family, provided insurance brokerage services for the Company during 1997. The
aggregate amount paid by the Company to Colonial Insurance Company for these
services for the year ended December 31, 1997, was approximately $182,000.
The Company leased space to certain entities in which the Lowder family
has an interest and received rent from these entities totaling approximately
$879,000 during 1997.
21
<PAGE>
The Company engaged Lowder Construction Company, Inc., of which Mr. J.
Lowder serves as chairman of the board and which is indirectly owned by Mr. J.
Lowder and T. Lowder, to serve as construction manager for ten multifamily
development and expansion projects during 1997. The Company paid a total of
$41.3 million ($39.8 million of which was then paid to unaffiliated
subcontractors) for the construction of these development and expansion projects
during 1997.
CERTAIN TRANSACTIONS
During fiscal year 1997, the Company engaged in certain transactions in
which certain of its trustees and executive officers had a financial interest.
These transactions, which are described above under the caption "Compensation
Committee Interlocks and Insider Participation," were approved by a majority of
the Company's independent trustees.
22
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth information regarding the beneficial
ownership of Common Shares as of March 9, 1998 for (1) each person known by the
Company to be the beneficial owner of more than five percent of the Company's
outstanding Common Shares, (2) each trustee of the Company and each Named
Executive Officer and (3) the trustees and executive officers of the Company as
a group. Each person named in the table has sole voting and investment power
with respect to all shares shown as beneficially owned by such person, except as
otherwise set forth in the notes to the table. References in the table to
"Units" are to units of limited partnership interest in the Operating
Partnership. Units owned by a person named in the table are included in the
"Number of Common Shares" column because such Units are redeemable, at the
option of the holder, for cash equal to the value of an equal number of Common
Shares or, at the election of the Company, for an equal number of Common Shares.
Because of limitations on ownership of Common Shares imposed by the Company's
Declaration of Trust, none of the Lowder brothers nor Mr. Ripps could in fact
redeem all of his Units for Common Shares without divesting a substantial number
of Common Shares in connection with the redemption. The extent to which a person
holds Units as opposed to Common Shares is set forth in the footnotes.
<TABLE>
Percent
of
Number of Percent of Common
Name and Business Address Common Common Shares
of Beneficial Owner Shares Shares(1) and Units(2)
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Thomas H. Lowder.......... 3,197,718 (3) 13.1% 10.1%
Colonial Plaza, Suite 750
2101 Sixth Avenue North
Birmingham, Alabama 35203
James K. Lowder........... 3,163,052 (4) 12.9% 10.0%
2000 Interstate Parkway
Suite 400
Montgomery, Alabama 36104
Robert E. Lowder.......... 1,848,161 (5) 7.9% 5.8%
One Commerce Street
Montgomery, Alabama 36104
Wellington Management
Company L.L.P. 1,848,700 (6) 8.6% 5.8%
75 State Street
Boston, Massachusetts 02109
Cohen & Steers Capital
Management, Inc. 1,684,500 (7) 7.8% 5.3%
757 Third Avenue
New York, New York 10017
Vanguard/Wellesley Income
Fund, Inc. 1,139,900 (8) 5.3% 3.6%
P.O. Box 2600
Valley Forge, Pennsylvania 19482
Carl F. Bailey............ 25,124 (9) * *
23
<PAGE>
M. Miller Gorrie.......... 262,671(10) 1.2% *
William M. Johnson........ 575,012 2.6% 1.8%
Herbert A. Meisler........ 536,934(11) 2.4% 1.7%
Claude B. Nielsen......... 16,000 (9) * *
Harold W. Ripps........... 1,919,678(12) 8.2% 6.1%
Donald T. Senterfitt...... 16,000 (9) * *
Howard B. Nelson, Jr...... 31,744(13)(14) * *
John N. Hughey............ 12,476(14) * *
Charles A. McGehee........ 21,759(14) * *
Paul F. Earle............. 4,757(14) * *
All executive officers and trustees as a group
(16 persons)............ 7,275,965(15) 25.7%(16) 22.9%(17)
- ----------------------
* Less than 1%
<FN>
(1) For purposes of this calculation, the number of Common Shares deemed
outstanding includes 21,613,174 Common Shares currently outstanding and the
number of Common Shares issuable to the named person(s) upon redemption of
Units or upon the exercise of options exercisable within 60 days.
(2) For purposes of this calculation, the number of Common Shares and Units
deemed outstanding includes 21,613,174 Common Shares currently outstanding,
10,029,391 Units currently outstanding (excluding Units held by the
Company), and the number of Common Shares issuable to the named person(s)
upon the exercise of options exercisable within 60 days.
(3) Includes 360,764 Common Shares and 2,836,954 Units. The total includes
67,731 shares owned by Thomas Lowder, 175,296 shares owned by Colonial
Commercial Investments, Inc. ("CCI"), a corporation owned equally by Thomas
and James Lowder, 61,574 shares owned by Equity Partners Joint Venture
("EPJV"), a general partnership of which Thomas, James and Robert Lowder are
the sole general partners, 8,328 shares owned pursuant to the Company's
401(k) plan and 47,835 shares subject to options exercisable within 60 days.
In addition, the total includes 538,211 Units owned by Thomas Lowder,
1,285,572 Units owned by CCI, 1,012,976 Units owned by EPJV and 195 Units
held in trust for the benefit of Thomas Lowder's children. Shares and Units
owned by CCI are reported twice in this table, once as beneficially owned by
Thomas Lowder and again as beneficially owned by James Lowder. Shares and
Units owned by EPJV are reported three times in this table, as beneficially
owned by each of the Lowder brothers.
(4) Includes 326,098 Common Shares and 2,836,954 Units. The total includes
64,020 shares owned by James Lowder, 175,296 shares owned by CCI, 61,574
shares owned by EPJV, 10,021 shares owned pursuant to the Company's 401(k)
plan and 15,000 shares subject to options exercisable within 60 days and 187
shares owned pursuant to the Company's Non-Employee Trustee Share Plan. In
addition, the total includes 538,211 Units owned by James Lowder, 1,285,572
Units owned by CCI, 1,012,976 Units owned by EPJV and 195 Units held in
trust for the benefit of James Lowder's children.
(5) Includes 97,789 Common Shares and 1,750,372 Units. The total includes 61,574
shares owned by EPJV, 31,215 shares owned by CBC Realty, Inc. ("CBC"), a
corporation wholly owned by Robert Lowder, and 5,000 shares subject to
options exercisable within 60 days. In addition, the total includes 523,546
Units owned by Robert Lowder, 1,012,976 Units owned by EPJV, 213,655 Units
owned by CBC and 195 Units held in trust for the benefit of Robert Lowder's
children.
24
<PAGE>
(6) Based on a Schedule 13G dated January 13, 1998 and filed with the SEC,
reflecting beneficial ownership as of December 31, 1997. According to the
Schedule 13G, these shares are held for the benefit of client accounts
pursuant to investment advisory arrangements. In addition, according to the
Schedule 13G, Wellington Management Company has shared voting power with
respect to 453,600 of these Common Shares and shared dispositive power with
respect to 1,848,700 of these Common Shares. The Company believes that the
ownership of these shares does not exceed the ownership limit established by
the Company's Declaration of Trust.
(7) Based on a Schedule 13G dated January 9, 1998 and filed with the SEC,
reflecting beneficial ownership as of December 31, 1997. According to the
Schedule 13G, these shares are held for the benefit of client accounts
pursuant to investment advisory arrangements. According to the Schedule 13G,
sole voting power exists for 1,487,000 of the 1,684,500 Common Shares. The
Company believes that the ownership of these shares does not exceed the
ownership limit established by the Company's Declaration of Trust.
(8) Based on an amendment to Schedule 13G dated February 9, 1998 and filed with
the SEC, reflecting beneficial ownership as of December 31, 1997. According
to the Schedule 13G, these shares are held for the benefit of client
accounts pursuant to investment advisory arrangements. The Company believes
that the ownership of these shares does not exceed the ownership limit
established by the Company's Declaration of Trust.
(9) Includes 15,000 shares subject to options exercisable within 60 days.
(10)Includes 5,000 shares subject to options exercisable within 60 days and
115,167 Units owned by B&G Properties.
(11)Includes 5,000 shares subject to options exercisable within 60
days and 526,934 Units owned by Meisler Enterprises
L.L.C., a limited liability company of which Mr. Meisler
and his wife are the sole members.
(12)Includes 3,333 shares subject to options exercisable within 60 days and
1,908,380 Units.
(13)Mr. Nelson also owns 400 shares of the Company's Series A Cumulative
Redeemable Preferred Shares, representing less than 1.0% of the series
outstanding.
(14)Includes, for Messrs. Nelson, Hughey, McGehee and Earle, respectively,
3,991, 406, 5,728 and 1,324 shares held pursuant to the Company's 401(k)
plan and 18,910, 9,535, 10,748 and 2,833 shares subject to options
exercisable within 60 days.
(15)Includes 597,721 Common Shares, 6,501,222 Units and 177,022 Common Shares
subject to options exercisable within 60 days. Shares and Units held by CCI
and EPJV have been counted only once for this purpose.
(16)For purposes of this calculation, the number of Common Shares deemed
outstanding includes 21,613,174 Common Shares
outstanding as of March 9, 1998, 6,501,222 Units
reported as beneficially owned by Thomas H. Lowder,
James K. Lowder, Mr. Ripps, Mr. Meisler, Mr. Johnson, Mr.
Gorrie and Mr. Nelson, and 177,022 Common Shares subject
to options exercisable within 60 days.
(17)For purposes of this calculation, the number of Common Shares and Units
deemed outstanding is described in note 2 to this table and includes 177,022
Common Shares subject to options exercisable within 60 days.
</FN>
</TABLE>
SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's trustees and executive officers to file reports with the SEC on Forms
3, 4 and 5 for the purpose of reporting their ownership of and transactions in
Common Shares and Units. During 1997, each of Messrs. Gorrie, Nelson and Ripps
was late in filing one Form 4 to report one transaction in Units, Mr. Meisler
was late in filing one Form 4 to report two option exercises, and each of Thomas
H. Lowder and James K. Lowder was late in filing three Forms 4 to report three
acquisitions of Units in exchange for properties.
25
<PAGE>
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of shareholders to be presented at the 1999 Annual Meeting must
be received by the Secretary of the Company prior to November 24, 1998 to be
considered for inclusion in the Company's proxy material for the 1999 Annual
Meeting of Shareholders. In addition, any shareholder who wishes to propose a
nominee to the Board of Trustees or submit any other matter to a vote at a
meeting of shareholders (other than a shareholder proposal included in the
Company's proxy materials pursuant to SEC Rule 14a-8) must comply with the
advance notice provisions and other requirements of Article II, Section 12 of
the Company's By-laws, which are on file with the Securities and Exchange
Commission and may be obtained from the Secretary of the Company upon request.
VOTING PROCEDURES AND COSTS OF PROXY SOLICITATION
Under the Company's By-laws and Alabama statutory law governing real
estate investment trusts organized under Alabama law, shares represented by
proxies that reflect abstentions will be counted as shares that are present and
entitled to vote for purposes of determining the presence of a quorum. Trustees
will be elected by a favorable vote of a plurality of the Common Shares present
and entitled to vote, in person or by proxy, at the Meeting. Accordingly,
abstentions from the election of trustees will not affect the election of the
candidates receiving the most votes. With respect to all other proposals to come
before the Meeting, abstentions, as well as shares represented by brokers who
are prohibited from exercising discretionary authority because the beneficial
owners of such shares have not provided voting instructions (commonly referred
to as "broker non-votes"), will have the same effect as votes against such
proposal.
The cost of preparing, assembling, and mailing the proxy material will be
borne by the Company. The Company will also request persons, firms and
corporations holding shares in their names or in the names of their nominees,
which shares are beneficially owned by others, to send the proxy material to,
and to obtain proxies from, such beneficial owners and will reimburse such
holders for their reasonable expenses in doing so.
Your vote is important. Please complete the enclosed proxy card and mail
it in the enclosed postage-paid envelope as soon as possible.
By Order of the Board of
Trustees
/s/ Douglas B. Nunnelley
Douglas B. Nunnelley
Senior Vice President and
Secretary
March 24, 1998
26
<PAGE>
Appendix A
COLONIAL PROPERTIES TRUST
SECOND AMENDED AND RESTATED
EMPLOYEE SHARE OPTION AND RESTRICTED SHARE PLAN
This Colonial Properties Trust Second Amended and Restated Employee Share
Option and Restricted Share Plan (the "Plan") amends and restates in its
entirety the Colonial Properties Trust Employee Share Option and Restricted
Share Plan, which was duly adopted by the Board of Trustees of Colonial
Properties Trust (the "Company") and approved by the shareholders of the
Company, on September 28, 1993. Set forth herein are all of the terms of the
three plans comprising the Plan, one for the benefit of the employees of the
Company (the "Company Plan"), one for the benefit of employees of Colonial
Realty Limited Partnership (the "Operating Partnership") its general partner and
any Affiliate of the Operating Partnership (the "Operating Partnership Plan")
and one for the benefit of employees of Colonial Properties Services, Inc. (the
"Management Company") and any Affiliate of the Management Company (the
"Management Company Plan").
PURPOSE
The Plan is intended to advance the interests of the Company, the
Operating Partnership and the Management Company by providing eligible
individuals (as designated pursuant to Section 5 below) with an opportunity to
acquire or increase a proprietary interest in the Company by granting them
options, bonuses and restricted shares in accordance with the terms stated
herein, which thereby will create a stronger incentive to expend maximum effort
for the growth and success of the Company, the Operating Partnership and the
Management Company, and encourage such eligible individuals to continue to serve
the Company, the Operating Partnership or the Management Company. Each share
option granted under the Plan is intended to be an "incentive stock option"
except (i) to the extent that any such Option would exceed the limitations set
forth in Section 9 below, (ii) for Options granted to an employee other than an
employee of the Company or any Subsidiary of the Company and (iii) for Options
specifically designated at the time of grant as not being "incentive stock
options".
DEFINITIONS
For purposes of interpreting the Plan and related documents (including
Share Option Agreements and Restricted Share Agreements), the following
definitions shall apply:
"Affiliate" means with respect to an entity, any company or other trade or
business that is controlled by or under common control with such entity
(determined in accordance with the principles of Section 414(b) and 414(c) of
the Code and the regulations thereunder) or is an affiliate of such entity
within the meaning of Rule 405 of Regulation C under the 1933 Act.
<PAGE>
"Agreement" means a written agreement that sets out the terms and
conditions of the grant of an Incentive Award.
"Applicable Committee" means, with respect to the Company Plan and the
Operating Partnership Plan, the Company Committee, and, with respect to the
Management Company Plan, the Management Company Committee.
"Board of Directors" means the Board of Directors of
Colonial Properties Services, Inc.
"Board of Trustees" means the Board of Trustees of the
Company.
"Bonus Shares" means Shares awarded to eligible individuals pursuant to
Section 15 of the Plan.
"Code" means the Internal Revenue Code of 1986, as now
in effect or as hereafter amended.
"Company" means Colonial Properties Trust.
"Company Committee" means the Executive Compensation Committee of the
Board of Trustees, which must consist of no fewer than two members of such board
and shall be appointed by such board, or such other committee as the Board of
Trustees or the Plan shall designate.
"Company Plan" means the Plan as administered pursuant to Section 3.1
hereof for the benefit of employees of the Company.
"Effective Date" means September 28, 1993.
"Employer" means the Company, the Operating Partnership or its general
partner, the Management Company, or any Affiliate of the Management Company, in
their capacity as Employers of persons eligible to be designated recipients of
Incentive Awards.
"Exchange Act" means the Securities Exchange Act of 1934, as now in effect
or as hereafter amended.
"Exercise Price" means the Option Price multiplied by the number of Shares
purchased pursuant to the exercise of an Option.
"Expiration Date" means the tenth (10th) anniversary of the Grant Date,
or, if earlier, the termination of the Option pursuant to Section 20.3 hereof.
"Fair Market Value" means the value of each Share subject to the Plan
determined as follows: if on the Grant Date or other determination date the
Shares are listed on an established national or regional stock exchange, are
admitted to quotation on the National Association of Securities Dealers
Automated Quotation System, or are publicly traded on an established securities
market, the Fair Market Value of the Shares shall be the closing price of the
Shares on such exchange or in such market (the highest such closing price if
there is more than one such exchange or market) on the trading day immediately
preceding the Grant Date or such other determination date (or if there is no
such reported closing price, the Fair Market Value shall be the mean between the
2
<PAGE>
highest bid and lowest asked prices or between the high and low sale prices on
such trading day) or, if no sale of the Shares is reported for such trading day,
on the next preceding day on which any sale shall have been reported. If the
Shares are not listed on such an exchange, quoted on such System or traded on
such a market, Fair Market Value shall be determined by the Board of Trustees in
good faith.
"General Partner" means Colonial Properties Holding
Company, the general partner of Colonial Realty Limited
Partnership.
"Grant Date" means, as determined by the Applicable Committee, (i) the
date as of which the Applicable Committee approves the grant, (ii) the date as
of which the Optionee or Holder and the Employer enter into the relationship
resulting in the Optionee or Holder being eligible for grants, or (iii) such
other date as the Applicable Committee shall determine.
"Grantee" means a person who is awarded Bonus Shares
under the Plan.
"Granting Employer" means the Company, the Operating Partnership or the
Management Company, each with respect to Incentive Awards made pursuant to the
Company Plan, the Operating Partnership Plan and the Management Company Plan,
respectively, unless the Applicable Committee as to any grant designates another
Employer as the Granting Employer.
"Holder" means a person who holds Restricted Shares
under the Plan.
"Immediate Family Members" means the spouse, ex-spouse, children,
step-children or grandchildren of the Optionee.
"Incentive Award" means an award of an Option, Bonus Shares or Restricted
Shares under the Plan.
"Incentive Share Option" means an "incentive stock option" within the
meaning of Section 422 of the Code.
"Limited Partnership Agreement" means the agreement of limited partnership
of Colonial Realty Limited Partnership, as now in effect or as hereafter
amended.
"Management Company" means Colonial Properties
Services, Inc.
"Management Company Committee" means the Board of Directors of the
Management Company or any committee thereof appointed by such board or
designated in the Plan to administer the Management Company Plan.
"Management Company Plan" means the Plan as administered pursuant to
Section 3.3 hereof for the benefit of the employees of the Management Company or
its Affiliates.
3
<PAGE>
"Operating Partnership" means Colonial Realty Limited
Partnership.
"Operating Partnership Plan" means the Plan as administered pursuant to
Section 3.2 hereof for the benefit of the employees of the Operating
Partnership, its general partner and its Affiliates.
"Option" means an option to purchase one or more Shares
pursuant to the Plan.
"Option Agreement" means the written agreement
evidencing the grant of an Option hereunder.
"Optionee" means a person who holds an Option under the
Plan.
"Option Period" means the period during which Options may be exercised as
defined in Section 12.
"Option Price" means the purchase price for each Share
subject to an Option.
"Partnership Agreement" means the Second Amended and
Restated Agreement of Limited Partnership of Colonial Realty
Limited Partnership, as amended.
"Plan" means this Second Amended and Restated Employee Share Option and
Restricted Share Plan (which encompasses the Company Plan, the Operating
Partnership Plan and the Management Company Plan), as the same may be hereafter
amended from time to time.
"Reporting Person" means a person who is required to file reports under
Section 16(a) of the Exchange Act with respect to the Company or the Operating
Partnership.
"Restricted Shares" means Shares which are subject to a risk of forfeiture
pursuant to the Plan.
"Restricted Share Agreement" means the written agreement evidencing the
grant of Restricted Shares hereunder.
"Restricted Share Award" means an award of restricted Shares granted
pursuant to Section 13 of this Plan.
"1933 Act" means the Securities Act of 1933, as now in
effect or as hereafter amended.
"Shares" mean the common shares of beneficial interest, par value $.01 per
Share, of the Company.
"Share Option Agreement" means the written agreement evidencing the grant
of an Option hereunder.
"Subsidiary" means any "subsidiary corporation" of the Company within the
meaning of Section 425(f) of the Code.
"Units" means units of partnership interest of the Operating Partnership
(but does not include preferred interests in the Operating Partnership).
"Unit Option" means an option to purchase one or more
Units pursuant to the Plan.
4
<PAGE>
ADMINISTRATION
3.1. Company Plan.
The Company Plan shall be administered by the Company Committee, which
shall be appointed by the Board of Trustees. Each member of the Company
Committee must qualify in all respects as a "non-employee director" as defined
in Rule 16b-3 under the Exchange Act and as an "outside director" as defined in
Treasury Regulations ss. 1.162-27(e)(3). The Company Committee shall have such
powers and authorities related to the administration of the Company Plan as are
consistent with the Company's declaration of trust and by-laws and with
applicable law. The Company Committee shall have the full power and authority
(subject to any restrictions imposed by the Board of Trustees, the Company's
declaration of trust or by-laws or applicable law) to take all actions and to
make all determinations required or provided for under the Company Plan, any
Incentive Award granted by the Company Committee under the Company Plan and any
Agreement entered into in connection therewith and shall have the full power and
authority to take all such other actions and determinations not inconsistent
with the specific terms and provisions of the Company Plan that the Company
Committee deems to be necessary or appropriate to the administration of the
Company Plan, any Incentive Award granted by the Company Committee under the
Company Plan and any Agreement entered into in connection therewith. The
interpretation and construction by the Company Committee of any provision of the
Company Plan, any Incentive Award granted by the Company Committee under the
Company Plan and any Agreement entered into in connection therewith shall be
final and conclusive. In addition, the Chief Executive Officer of the Company,
acting as a committee of the Board of Trustees, shall have the authority to make
awards of Bonus Shares pursuant to Section 15 hereof to any employee of the
Company other than a Reporting Person, and to make Incentive Awards to new
employees of the Company (other than awards of Reporting Persons) in connection
with their assuming employment with the Company.
3.2. Operating Partnership Plan.
The Operating Partnership Plan shall be administered by the Company
Committee, which shall be appointed by the Board of Trustees. Each member of the
Company Committee must qualify in all respects as a "non-employee director" as
defined in Rule 16b-3 under the Exchange Act. The Company Committee shall have
the full power and authority (subject to any restrictions imposed on such
Company Committee by Section 3.1 hereof) to take all actions and to make all
determinations required or provided for under the Operating Partnership Plan,
any Incentive Award granted by the Company Committee under the Operating
Partnership Plan and any Agreement entered into in connection therewith and
shall have the full power and authority to take all such other actions and
determinations not inconsistent with the specific terms and provisions of the
Operating Partnership Plan that the Company Committee deems to be necessary or
appropriate to the administration of the Operating Partnership Plan, any
Incentive Award granted by the Company Committee under the Operating Partnership
Plan and any Agreement entered into in connection therewith. The interpretation
and construction by the Company Committee of any provision of the Operating
Partnership Plan, any Incentive Award granted by the Company Committee under the
Operating Partnership Plan and any Agreement entered into in connection
therewith shall be final and conclusive. In addition, the Chief Executive
Officer of the Company, acting as a committee of the Board of Trustees, shall
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have the authority to make awards of Bonus Shares pursuant to Section 15 hereof
to any employee of the Operating Partnership other than a Reporting Person, and
to make Incentive Awards to new employees of the Operating Partnership or its
affiliates (other than Reporting Persons) in connection with their assuming
employment with the Operating Partnership or its affiliates.
3.3. Management Company Plan.
The Management Company Plan shall be administered by the Management
Company Committee. The Management Company Committee shall have such powers and
authorities related to the administration of the Management Company Plan as are
consistent with the Management Company's articles of incorporation and by-laws
and with applicable law. The Management Company Committee shall have the full
power and authority (subject to any restrictions imposed by the Board of
Directors of the Management Company, the Management Company's articles of
incorporation or by-laws or applicable law) to take all actions and to make all
determinations required or provided for under the Management Company Plan, any
Incentive Award granted by the Management Company Committee under the Management
Company Plan and any Agreement entered into in connection therewith and shall
have the full power and authority to take all such other actions and
determinations not inconsistent with the specific terms and provisions of the
Management Company Plan that the Management Company Committee deem to be
necessary or appropriate to the administration of the Management Company Plan,
any Incentive Award granted by the Management Company Committee under the
Management Company Plan and any Agreement entered into in connection therewith.
The interpretation and construction by the Management Company Committee of any
provision of the Management Company Plan, any Incentive Award granted by the
Management Company Committee under the Management Company Plan and any Agreement
entered into in connection therewith shall be final and conclusive. In addition,
the Chief Executive Officer of the Management Company, acting as a committee of
the Board of Directors, shall have the authority to make awards of Bonus Shares
pursuant to Section 15 hereof to any employee of the Company other than a
Reporting Person, and to make Incentive Awards to new employees of the
Management Company (other than Reporting Persons) in connection with their
assuming employment with the Management Company.
3.4. No Liability.
No member of the Company Committee or the Management Company Committee
shall be liable to any Optionee, Holder or Grantee or to the Company, the
Operating Partnership, or the Management Company or any their Subsidiaries,
Affiliates, employees, shareholders, or partners for any action or determination
made in good faith with respect to the Plan or any Incentive Award granted or
Agreement entered into hereunder.
3.5. Applicability of Rule 16b-3.
Those provisions of the Plan that make express reference to Rule 16b-3
shall apply only to Reporting Persons.
SHARES
The Shares that are the subject of an Incentive Award may be (i) issued
and outstanding Shares owned or acquired by the Granting Employer, (ii) treasury
Shares (to the extent permitted by applicable law) or (iii) authorized but
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unissued Shares. The aggregate total number of Shares that may be issued
pursuant to Incentive Awards under the Plan shall be 3,200,000, as increased
from time to time to equal ten percent (10%) of the number of issued and
outstanding Shares and Units (excluding Units held by the General Partner),
provided that no more than 3,200,000 Shares may be issued pursuant to Incentive
Share Options and no more than 750,000 Restricted Shares may be issued pursuant
to Restricted Share Awards. If any Incentive Award expires, terminates, or is
terminated or canceled for any reason prior to exercise or vesting in full, the
Shares that were subject to the unexercised, forfeited, or terminated portion of
such Incentive Award shall be available immediately for future grants of
Incentive Awards under the Plan.
ELIGIBILITY
5.1. Designated Recipients.
Incentive Awards may be granted under the Plan to (i) any full-time
employee of the Company, the Operating Partnership or its general partner, any
Affiliate of the Operating Partnership, the Management Company or any Affiliate
of the Management Company, as the Applicable Committee shall determine and
designate from time to time (including officers, trustees or directors of the
Company, the Operating Partnership or its general partner, any Affiliate of the
Operating Partnership or the Management Company or any Affiliate of the
Management Company, except that no officer, trustee or director of the Company,
the General Partner or the Management Company shall be eligible to receive
grants of Bonus Shares) or (ii) any other individual whose participation in the
Plan is determined by the Company Committee to be in the best interests of the
Company and is so designated by the Company Committee.
5.2. Successive Grants.
An individual may hold more than one Incentive Award, subject to such
restrictions as are provided herein.
EFFECTIVE DATE AND TERM OF THE PLAN
6.1. Effective Date.
The Plan is effective as of the Effective Date.
6.2. Term.
The Plan has no termination date; provided, however, that no Incentive
Share Option may be granted on or after the tenth anniversary of the Effective
Date.
PARACHUTE LIMITATIONS
Notwithstanding any other provision of this Plan or of any other
agreement, contract, or understanding heretofore or hereafter entered into by
the Optionee, Grantee or Holder with any Employer that is not an agreement,
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contract, or understanding entered into after the Effective Date that expressly
modifies or excludes application of this paragraph (an "Other Agreement"), and
notwithstanding any formal or informal plan or other arrangement for the direct
or indirect provision of compensation by the Employers to the Optionee, Grantee
or Holder (including groups or classes of participants or beneficiaries of which
the Optionee, Grantee or Holder is a member), whether or not such compensation
is deferred, is in cash, or is in the form of a benefit to or for the Optionee,
Grantee or Holder (a "Benefit Arrangement"), if the Optionee, Grantee or Holder
is a "disqualified individual," as defined in Section 280G(c) of the Code, any
Option held by that Optionee and any right to receive any payment or other
benefit under this Plan shall not become exercisable or vested (i) to the extent
that such right to exercise, vesting, payment, or benefit, taking into account
all other rights, payments, or benefits to or for the Optionee, Grantee or
Holder under this Plan, all Other Agreements, and all Benefit Arrangements,
would cause any payment or benefit to the Optionee, Grantee or Holder under this
Plan to be considered a "parachute payment" within the meaning of Section
280G(b)(2) of the Code as then in effect (a "Parachute Payment") and (ii) if, as
a result of receiving a Parachute Payment, the aggregate after-tax amounts
received by the Optionee, Grantee or Holder from all Employers under this Plan,
all Other Agreements, and all Benefit Arrangements would be less than the
maximum after-tax amount that could be received by the Optionee, Grantee or
Holder without causing any such payment or benefit to be considered a Parachute
Payment. In the event that the receipt of any such right to exercise, vesting,
payment, or benefit under this Plan, in conjunction with all other rights,
payments, or benefits to or for the Optionee, Grantee or Holder under any Other
Agreement or any Benefit Arrangement would cause the Optionee, Grantee or Holder
to be considered to have received a Parachute Payment under this Plan that would
have the effect of decreasing the after-tax amount received by the Optionee,
Grantee or Holder as described in clause (ii) of the preceding sentence, then
the Optionee, Grantee or Holder shall have the right, in the Optionee's,
Grantee's or Holder's sole discretion, to designate those rights, payments, or
benefits under this Plan, any Other Agreements, and any Benefit Arrangements
that should be reduced or eliminated so as to avoid having the payment or
benefit to the Optionee, Grantee or Holder under this Plan be deemed to be a
Parachute Payment.
GRANT OF OPTIONS
8.1. General.
Subject to the terms and conditions of the Plan, the Company Committee and
the Management Company Committee may from time to time grant to such eligible
individuals as the Applicable Committee may determine, Options to purchase such
number of Shares on such terms and conditions as the Applicable Committee may
determine, including any terms or conditions which may be necessary to qualify
such Options as Incentive Share Options. Such authority specifically includes
the authority, in order to effectuate the purposes of the Plan but without
amending the Plan, to modify grants to eligible individuals who are foreign
nationals or are individuals who are employed outside the United States to
recognize differences in local law, tax policy, or custom.
8.2. Limitation on Grants of Options to Executives.
The maximum number of Shares subject to Options that can be awarded under
the Plan to any executive officer of the Company, the Operating Partnership or
its general partner or the Management Company, or to any other person eligible
for a grant of an Incentive Award under Section 5.1 hereof in any calendar year,
is 500,000 Shares.
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LIMITATION OF INCENTIVE SHARE OPTIONS
An Option (other than an Option described in exceptions (ii) or (iii) of
Section 1) shall constitute an Incentive Share Option to the extent that the
aggregate fair market value (determined at the time the Option is granted) of
the Shares with respect to which Incentive Share Options are exercisable for the
first time by any Optionee during any calendar year (under the Plan and all
other plans of the Optionee's employer and its parent and Subsidiary) does not
exceed $100,000. This limitation shall be applied by taking Options into account
in the order in which they were granted.
SHARE OPTION AGREEMENTS
All Options granted pursuant to the Plan shall be evidenced by Share
Option Agreements, to be executed by the Granting Employer and by the Optionee,
in such form or forms as the Applicable Committee shall from time to time
determine. Share Option Agreements covering Options granted from time to time or
at the same time need not contain similar provisions; provided, however, that
all such Option Agreements shall comply with all terms of the Plan.
OPTION PRICE
The Option Price shall be fixed by the Applicable Committee and stated in
each Share Option Agreement. The Option Price shall not be less than the Fair
Market Value of the Shares on the Grant Date of the Option; provided, however,
that in the event the Optionee would otherwise be ineligible to receive an
Incentive Share Option by reason of the provisions of Sections 422(b)(6) and
424(d) of the Code (relating to stock ownership of more than ten percent), the
Option Price of an Option that is intended to be an Incentive Share Option shall
be not less than the greater of par value or 110 percent of the Fair Market
Value of a Share at the time such Option is granted.
TERM AND EXERCISE OF OPTIONS
12.1. Term.
Each Option granted under the Plan shall terminate and all rights to
purchase shares thereunder shall cease upon the expiration of ten years from the
date such Option is granted, or on such date prior thereto as may be fixed by
the Applicable Committee and stated in the Share Option Agreement relating to
such Option; provided, however, that in the event the Optionee would otherwise
be ineligible to receive an Incentive Share Option by reason of the provisions
of Sections 422(b)(6) and 424(d) of the Code (relating to stock ownership of
more than ten percent), an Option granted to such Optionee that is intended to
be an Incentive Share Option shall in no event be exercisable after the
expiration of five years from the date it is granted.
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12.2. Option Period and Limitations on Exercise.
Each Option granted under the Plan shall be exercisable, in whole or in
part, at any time and from time to time over a period commencing on or after the
Grant Date and ending upon the expiration or termination of the Option, as the
Applicable Committee shall determine and set forth in the Share Option Agreement
relating to such Option. Without limiting the foregoing, the Applicable
Committee, subject to the terms and conditions of the Plan, may in its sole
discretion provide that an Option may not be exercised in whole or in part for a
stated period or periods of time during which such Option is outstanding;
provided, however, that any such limitation on the exercise of an Option
contained in any Share Option Agreement may be rescinded, modified or waived by
the Applicable Committee, in its sole discretion, at any time and from time to
time after the Grant Date of such Option, so as to accelerate the time at which
the Option may be exercised.
12.3. Termination of Employment.
Upon the termination of the employment of an Optionee with the Granting
Employer, other than by reason of the death or "permanent and total disability"
(within the meaning of Section 22(e)(3) of the Code), any Option granted to an
Optionee pursuant to the Plan shall terminate, and such Optionee shall have no
further right to purchase Shares pursuant to such Option; provided further, that
the Applicable Committee may provide, by inclusion of appropriate language in
any Share Option Agreement, that an Optionee may (subject to the general
limitations on exercise set forth in Section 12.2 above), in the event of
termination of employment of the Optionee with the Granting Employer, exercise
an Option, in whole or in part, at any time subsequent to such termination of
employment and prior to termination of the Option pursuant to Section 12.2
above, either subject to or without regard to any installment limitation on
exercise imposed pursuant to Section 12.2 above, as the Applicable Committee, in
its sole and absolute discretion, shall determine and set forth in the Share
Option Agreement. Whether a leave of absence or leave on military or government
service shall constitute a termination of employment for purposes of the Plan,
shall be determined by the Applicable Committee, which determination shall be
final and conclusive. For purposes of the Plan, a termination of employment with
the Granting Employer shall not be deemed to occur if the Optionee is
immediately thereafter employed with any other Employer.
12.4. Rights in the Event of Death.
If an Optionee dies while employed by the Granting Employer, the executors
or administrators or legatees or distributees of such Optionee's estate shall
have the right (subject to the general limitations on exercise set forth in
Section 12.2 above), at any time within one year after the date of such
Optionee's death and prior to termination of the Option pursuant to Section 12.1
above, to exercise any Option held by such Optionee at the date of such
Optionee's death, whether or not such Option was exercisable immediately prior
to such Optionee's death; provided, however, that the Applicable Committee may
provide by inclusion of appropriate language in any Share Option Agreement that,
in the event of the death of an Optionee, the executors or administrators or
legatees or distributees of such Optionee's estate may exercise an Option
(subject to the general limitations on exercise set forth in Section 12.2
above), in whole or in part, at any time subsequent to such Optionee's death and
prior to termination of the Option pursuant to Section 12.1 above, either
subject to or without regard to any installment limitation on exercise imposed
pursuant to Section 12.2 above, as the Applicable Committee, in its sole and
absolute discretion, shall determine and set forth in the Share Option
Agreement.
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12.5. Rights in the Event of Disability.
If an Optionee terminates employment with the Granting Employer by reason
of the "permanent and total disability" (within the meaning of Section 22(e)(3)
of the Code) of such Optionee, then such Optionee shall have the right (subject
to the general limitations on exercise set forth in Section 12.2 above), at any
time within one year after such termination of employment and prior to
termination of the Option pursuant to Section 12.1 above, to exercise, in whole
or in part, any Option held by such Optionee at the date of such termination of
employment, whether or not such Option was exercisable immediately prior to such
termination of employment; provided, however, that the Applicable Committee may
provide, by inclusion of appropriate language in any Share Option Agreement,
that an Optionee may (subject to the general limitations on exercise set forth
in Section 12.2 above), in the event of the termination of employment of the
Optionee with the Granting Employer by reason of the "permanent and total
disability" (within the meaning of Section 22(e)(3) of the Code) of such
Optionee, exercise an Option, in whole or in part, at any time subsequent to
such termination of employment and prior to termination of the Option pursuant
to Section 12.1 above, either subject to or without regard to any installment
limitation on exercise imposed pursuant to Section 12.2 above, as the Applicable
Committee, in its sole and absolute discretion, shall determine and set forth in
the Share Option Agreement. Whether a termination of employment is to be
considered by reason of "permanent and total disability" for purposes of this
Plan shall be determined by the Applicable Committee, which determination shall
be final and conclusive.
12.6. Limitations on Exercise of Option.
Notwithstanding the foregoing Sections, in no event may the Option be
exercised, in whole or in part, after ten years following the date upon which
the Option is granted, as set forth in Section 1 above, or after the occurrence
of an event referred to in Section 20.3 below which results in termination of
the Option. In no event may the Option be exercised for a fractional Share.
12.7. Method of Exercise.
An Option that is exercisable hereunder may be exercised by the Optionee's
delivery to the Granting Employer of written notice of the exercise and the
number of Shares for which the Option is being exercised. Such delivery shall
occur on any business day, at the Granting Employer's principal office,
addressed to the attention of the Applicable Committee. Such notice shall
specify the number of Shares with respect to which the Option is being exercised
and shall be accompanied by payment in full of the Option Price of the Shares
for which the Option is being exercised. The minimum number of Shares with
respect to which an Option may be exercised, in whole or in part, at any time
shall be the lesser of (i) 100 shares or such lesser number set forth in the
Share Option Agreement and (ii) the maximum number of Shares available for
purchase under the Option at the time of exercise. Payment of the Option Price
for the Shares purchased pursuant to the exercise of an Option shall be made (i)
in cash or in cash equivalents; (ii) through the tender to the Granting Employer
of Shares, which Shares, if acquired from the Company or any of its Affiliates,
have been held for at least six months and which Shares shall be valued, for
purposes of determining the extent to which the Option Price has been paid
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thereby, at their Fair Market Value on the date of exercise; or (iii) by a
combination of the methods described in (i) and (ii). The Applicable Committee
may provide, by inclusion of appropriate language in a Share Option Agreement,
that payment in full of the Option Price need not accompany the written notice
of exercise provided the notice of exercise directs that the Share certificate
or certificates for the Shares for which the Option is exercised be delivered to
a licensed broker acceptable to the Granting Employer as the agent for the
individual exercising the Option and, at the time such Share certificate or
certificates are delivered, the broker tenders to the Granting Employer cash (or
cash equivalents acceptable to the Granting Employer) equal to the Option Price
for the Shares purchased pursuant to the exercise of the Option plus the amount
(if any) of federal and/or other taxes which the Granting Employer may in its
judgment, be required to withhold with respect to the exercise of the Option. An
attempt to exercise any Option granted hereunder other than as set forth above
shall be invalid and of no force and effect. Unless otherwise stated in the
applicable Share Option Agreement, an individual holding or exercising an Option
shall have none of the rights of a shareholder (for example, the right to
receive cash or dividend payments attributable to the subject Shares or to
direct the voting of the subject Shares) until the Shares covered thereby are
fully paid and issued to him or her. Except as provided in Section 20 below, no
adjustment shall be made for dividends or other rights for which the record date
is prior to the date of such issuance.
12.8. Transfer of Shares to Employee.
Promptly after the exercise of a Share Option by an employee of the
Company and the payment in full of the Option Price of the Shares covered
thereby, the individual exercising the Option shall be entitled to the issuance
of a Share certificate or Share certificates evidencing his or her ownership of
such Shares.
12.9. Transfer of Shares to Other Employees
(a) Promptly after the exercise of a Share Option by an employee of
an Employer that is not the Company and the payment in full of the Option Price
of the Shares covered thereby:
(i) The Company shall sell to the Employer employing the
Optionee the number of Shares as to which the Option was
exercised for a price equal to the Fair Market Value of
such Shares.
(ii) The Employer shall deliver to the individual exercising the
Option a Share certificate or Share certificates evidencing
his or her ownership of such Shares.
GRANT AND EXERCISE OF UNIT OPTIONS
13.1. Issuance of Unit Options
Upon the issuance of an Option, and in accordance with Section 4.2(B) of
the Partnership Agreement, the General Partner shall be deemed automatically to
have caused the Operating Partnership to issue to the General Partner a
corresponding Unit Option on terms identical to those of such Option.
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13.2. Exercise of Unit Options.
A Unit Option shall be deemed exercised automatically, upon the exercise
by an Optionee of the corresponding Option, as to the number of Units equal to
the number of Shares for which such Option is exercised. The General Partner
shall then cause the Operating Partnership to issue such Units to the General
Partner, and the Company shall remit payment for such Units to the General
Partner, which shall then remit payment to the Operating Partnership, all in
accordance with Section 4.2(B) of the Partnership Agreement.
13.3. Termination of Unit Options.
Upon the termination of an Option, the corresponding Unit Option also
shall terminate.
GRANT OF RESTRICTED SHARES
14.1. Restricted Share Awards.
(a) The Company Committee and the Management Company Committee may
from time to time, and subject to the provisions of the Plan and such other
terms and conditions as the Applicable Committee may determine, grant Restricted
Share Awards under the Plan. Each Restricted Share Award shall be evidenced by a
written instrument which shall state the number of Shares covered by the award
and the terms and conditions which the Applicable Committee shall have
determined with respect to such award. Upon the grant of each Restricted Share
Award, subject to Sections 14.1(d) and 14.3 hereof, the Company shall cause a
certificate representing the Shares covered by the award to be registered in the
name of the Holder and to be delivered to the Holder without payment on his part
(unless such Shares are newly issued Shares granted under the Company Plan, in
which case the Company may require a payment equal to the par value of each
Share for each Share issued). The Holder shall generally have the rights and
privileges of a shareholder of the Company with respect to such Shares,
including the right to vote and to receive dividends, subject to the
restrictions specified in paragraphs (b) and (c) hereof.
(b) The Applicable Committee shall determine a period of time
("Limitation Period") during which restrictions shall apply to the Shares
transferred to a Holder with respect to each Restricted Share Award, provided
that in no event shall the Limitation Period be less than two years. Except as
otherwise determined by the Applicable Committee, the Holder may not sell,
transfer, assign, pledge or otherwise encumber or dispose of the Shares covered
by such Restricted Share Award during the Limitation Period applicable with
respect to such Restricted Share Award. The Applicable Committee in its
discretion may prescribe conditions for the incremental lapse of the preceding
restrictions during the Limitation Period, and for the lapse or termination of
such restrictions upon the occurrence of certain events before the expiration of
the Limitation Period. The Applicable Committee in its discretion also may
shorten or terminate the Limitation Period or waive any conditions for the lapse
or termination of the restrictions with respect to all or any portion of the
Shares covered by the Restricted Share Award. The restrictions applicable to a
Restricted Share Award shall lapse upon the earliest of the following: (1) the
expiration of the Limitation Period applicable to the Restricted Share Award;
(2) the occurrence of an event prescribed by the Applicable Committee which
results in the lapse of the restrictions; or (3) such other time as the
Applicable Committee may determine.
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(c) The Shares covered by a Restricted Share Award shall be forfeited
by the Holder upon termination of the Holder's employment with the Granting
Employer for any reason before the occurrence of any of the events described in
the last sentence of paragraph (b) hereof. The Holder shall thereupon
immediately transfer the Shares to his or her Granting Employer without payment
by the Granting Employer. If the Granting Employer is not the Company or the
Operating Partnership, the Company and the Operating Partnership shall have the
right to purchase any such forfeited Shares from such Granting Employer at a
price equal to Fair Market Value at any time subsequent to such forfeiture.
(d) Promptly after the grant of a Restricted Share Award by the
Operating Partnership or its general partner, any Affiliate of the Operating
Partnership, the Management Company or an Affiliate of the Management Company,
such company shall notify the Company of the grant and of the recipient's name,
address and social security number, and shall either (i) pay or cause to be paid
to the Company an amount equal to the Fair Market Value of the Shares which are
subject to the Restricted Share Award or (ii) deliver free and clear of any
liens or encumbrances certificates representing outstanding Shares in an amount
equivalent to the number of Shares granted.
14.2. Restricted Share Agreement.
All Restricted Share Awards granted pursuant to the Plan shall be
evidenced by Restricted Share Agreements, to be executed by the Granting
Employer and by the Holder, in such form or forms as the Applicable Committee
shall from time to time determine. Restricted Share Agreements covering
Restricted Shares granted from time to time or at the same time need not contain
similar provisions; provided, however, that all such Restricted Share Agreements
shall comply with all terms of the Plan.
14.3. Certificates for Restricted Shares.
The Applicable Committee may require that the certificates evidencing the
grant of a Restricted Share Award hereunder be held in escrow until such
restrictions have expired. The Company shall also cause a legend to be placed on
such certificates that complies with the applicable securities laws and
regulations and makes appropriate reference to the restrictions to which the
Shares are subject. Upon attainment of the specified objectives and requirements
(or, to the extent specified in the grant, the portion of such Shares earned by
partial attainment of the objectives and requirements, as applicable), a
certificate for the number of Shares with respect to which restrictions have
lapsed shall be delivered to the Holder free of restrictions upon submission of
the certificate originally issued with respect to such Shares.
AWARDS OF UNRESTRICTED BONUS SHARES
The Chief Executive Officer of the Company, on behalf of the Board of
Trustees, and the Chief Executive Officer of the Management Company, on behalf
of the Board of Directors, may from time to time, as frequently as once a month,
subject to the provisions of the Plan, grant up to ten Bonus Shares to such
eligible individuals as he or she may designate. Upon the grant of Bonus Shares,
the Company, the General Partner or the Management Company, as appropriate,
shall cause a certificate representing the Bonus Shares to be registered in the
name of the Grantee and delivered to the Grantee. Upon delivery to the Grantee,
Bonus Shares shall be deemed validly issued, fully paid, and nonassessable, and
the Grantee shall have all the rights of a shareholder with respect to such
Bonus Shares.
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TRANSFERABILITY OF OPTIONS AND RESTRICTED SHARES
16.1. Transferability of Options.
During the lifetime of the Optionee, only such Optionee (or, in the event
of legal incapacity or incompetency, the guardian or legal representative of the
Optionee), may exercise the Option, except that the Applicable Committee may, in
its discretion, authorize all or a portion of the Option (other than an
Incentive Share Option) to be granted to an Optionee on terms which permit
transfer by such Optionee during his or her lifetime to Immediate Family
Members, (ii) a trust or trusts for the exclusive benefit of such Immediate
Family Members or (iii) a partnership in which such Immediate Family Members are
the only partners, provided that the Share Option Agreement pursuant to which
such Options are granted is approved by the Applicable Committee and expressly
provides for transferability in a manner consistent with this Section 15.1, in
which case such transferees may exercise the Option. Except as noted in the
preceding sentence, transfers of Options shall be prohibited except by will or
the laws of descent and distribution. Following transfer, any such Options shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, provided that for purposes of Section 12 hereof
(excluding Sections 12.3, 12.4 and 12.5), the term "Optionee" shall be deemed to
refer to the transferee. The events of termination of employment, death and
disability set forth in Sections 12.3, 12.4 and 12.5 hereof, respectively, shall
continue to be applied with respect to the original Optionee, following which
the Options shall be exercisable by the transferee only to the extent and for
the periods specified in Section 12. Except as may be provided in the Share
Option Agreement, no Option shall be pledged or hypothecated (by law or
otherwise) or subject to execution, attachment or similar processes.
16.2. Transferability of Restricted Shares.
No Restricted Shares shall be assignable or transferable, other than by
will or the laws of descent and distribution, before the satisfaction of
applicable performance and service requirements with respect to such Shares, as
set forth in the applicable Restricted Share Agreement.
USE OF PROCEEDS
The proceeds received by the Company from the sale of Shares pursuant to
Incentive Awards granted under the Plan shall constitute general funds of the
Company. As soon as practicable after receipt by the Company of the amount
described in Sections 12.9(a)(i) and 14.1(d) above, the Company shall contribute
an amount of cash equal to such payment to the wholly owned subsidiary that owns
its interests in the Operating Partnership, which in turn will contribute such
cash to the Operating Partnership, and the Operating Partnership shall issue
additional partnership interests to such subsidiary with a value equal to the
amount of such contribution.
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REQUIREMENTS OF LAW
18.1. General.
The Company shall not be required to sell or issue any Shares under any
Incentive Award if the sale or issuance of such Shares would constitute a
violation by the Optionee, the Holder, the Grantee or the Company of any
provisions of any law or regulation of any governmental authority, including
without limitation any federal or state securities laws or regulations. If at
any time the Company shall determine, in its discretion, that the listing,
registration or qualification of any Shares subject to an Option upon any
securities exchange or under any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the issuance or purchase of
Shares hereunder, the Option may not be exercised in whole or in part unless
such listing registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Company, as
applicable, and any delay caused thereby shall in no way affect the date of
termination of the Option. Specifically in connection with the 1933 Act, at the
time of grant of Restricted Shares or Bonus Shares, or when such Restricted
Shares become vested, or upon the exercise of any Option, unless a registration
statement under such Act is in effect with respect to the Shares covered by the
Option, the Company shall not be required to sell or issue such Shares unless
the Company Committee has received evidence satisfactory to it that the
Optionee, Holder or Grantee may acquire such Shares pursuant to an exemption
from registration under such Act. Any determination in this connection by the
Company Committee shall be final, binding, and conclusive. The Company may, but
shall in no event be obligated to, register any securities covered hereby
pursuant to the 1933 Act. The Company shall not be obligated to take any
affirmative action in order to cause the exercise of an Option or the issuance
of Shares pursuant thereto, the issuance of Bonus Shares or the issuance of
Shares pursuant to a Restricted Share Award to comply with any law or regulation
of any governmental authority. As to any jurisdiction that expressly imposes the
requirement that an Option shall not be exercisable or that Shares may not be
issued pursuant to a grant of Bonus Shares or Restricted Shares unless and until
the Shares covered by such Option or grant are registered or are exempt from
registration, the exercise of such Option or the issuance of Shares pursuant to
such grant (under circumstances in which the laws of such jurisdiction apply)
shall be deemed conditioned upon the effectiveness of such registration or the
availability of such an exemption.
18.2. Rule 16b-3.
The intent of this Plan is to qualify for the exemption provided by Rule
16b-3 under the Exchange Act. To the extent any provision of the Plan or action
by the Plan administrators does not comply with the requirements of Rule 16b-3,
it shall be deemed inoperative, to the extent permitted by law and deemed
advisable by the Plan administrators, and shall not affect the validity of the
Plan. In the event Rule 16b-3 is revised or replaced, the Board of Trustees may
exercise discretion to modify this Plan in any respect necessary to satisfy the
requirements of the revised exemption or its replacement.
18.3. REIT Qualification.
The Company shall not be required to sell or issue any Shares under any
Incentive Award if the sale or issuance of such Shares would cause the Company
to fail to qualify as a real estate investment trust for Federal income tax
purposes or would result in the Optionee's, Grantee's or Holder's ownership of
Shares in violation of the restrictions on ownership and transfer of Shares set
forth in the Company's declaration of trust.
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AMENDMENT AND TERMINATION OF THE PLAN
The Board of Trustees may, at any time and from time to time, amend,
suspend, or terminate the Plan as to any Shares as to which Incentive Awards
have not been granted; provided, however, no amendment that materially affects
the terms of Incentive Awards under the Operating Partnership Plan shall be
effective with respect to the Operating Partnership Plan without the approval of
the Board of Directors of the Operating Partnership, and no amendment that
materially affects the terms of Restricted Share Awards under the Management
Company Plan shall be effective with respect to the Management Company Plan
without the approval of the Board of Directors of the Management Company. The
Employer may retain the right in an Agreement to cause a forfeiture of the
Options or the Shares or gain realized by a Holder on account of the Optionee or
Holder taking actions prohibited by the applicable Agreement. Except as
permitted under this Section 19 or Section 20 hereof, no amendment, suspension,
or termination of the Plan shall, without the consent of the Optionee, Grantee
or Holder, alter or impair rights or obligations under any Incentive Award
theretofore granted under the Plan.
EFFECT OF CHANGES IN CAPITALIZATION
20.1. Changes in Shares.
If the number of outstanding Shares is increased or decreased or the
Shares are changed into or exchanged for a different number or kind of Shares or
other securities of the Company, in each case on account of any
recapitalization, reclassification, Share split, reverse split, combination of
Shares, exchange of Shares, Share dividend or other distribution payable in
capital stock, or other increase or decrease in such Shares effected without
receipt of consideration by the Company, occurring after the Effective Date of
the Plan, the number and kinds of Shares for the issuance of which Restricted
Share Awards or awards of Bonus Shares may be granted and Shares for the
acquisition of which Options may be granted under the Plan shall be adjusted
proportionately and accordingly by the Company. In addition, the number and kind
of Shares for which Restricted Share Awards or Options are outstanding shall be
adjusted proportionately and accordingly so that the proportionate interest of
the Holder of the Restricted Share Awards or Optionee immediately following such
event shall, to the extent practicable, be the same as immediately before such
event. Any such adjustment in outstanding Options shall not change the aggregate
Option Price payable with respect to Shares that are subject to the unexercised
portion of the Option outstanding but shall include a corresponding
proportionate adjustment in the Option Price per Share.
20.2. Reorganization in Which the Company Is the Surviving
Entity.
Subject to Section 20.3 hereof, if the Company shall be the surviving
entity in any reorganization, merger, or consolidation of the Company with one
or more other entities, any Option theretofore granted pursuant to the Plan
shall pertain to and apply to the securities to which a holder of the number of
Shares subject to such Option would have been entitled immediately following
such reorganization, merger, or consolidation, with a corresponding
proportionate adjustment of the Option Price per Share so that the aggregate
Option Price thereafter shall be the same as the aggregate Option Price of the
Shares remaining subject to the Option immediately prior to such reorganization,
merger, or consolidation. Subject to any contrary language in the applicable
Restricted Share Agreement, any restrictions that were applicable to any
previously granted Restricted Share Award shall apply as well to any replacement
shares received by the Holder as a result of such reorganization, merger, or
consolidation.
17
<PAGE>
20.3. Reorganization in Which the Company Is Not the
Surviving Entity or Sale of Assets or Shares.
Upon the dissolution or liquidation of the Company, or upon a merger,
consolidation, or reorganization of the Company with one or more other entities
in which the Company is not the surviving entity, or upon a sale of
substantially all of the assets of the Company to another entity, or upon any
transaction (including, without limitation, a merger or reorganization in which
the Company is the surviving entity) approved by the Board of Trustees that
results in any person or entity (or person or entities acting as a group or
otherwise in concert) owning 80 percent or more of the combined voting power of
all classes of securities of the Company (other than the Company or wholly owned
subsidiaries of the Company), the Plan and all Options outstanding hereunder
shall terminate, except to the extent provision is made in writing in connection
with such transaction for the continuation of the Plan or the assumption of such
Options theretofore granted, or for the substitution for such Options of new
options covering the stock of a successor Company, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kinds of shares and
exercise prices, in which event the Plan and Options theretofore granted shall
continue in the manner and under the terms so provided. In the event of any such
termination of the Plan, each individual holding an Option shall have the right
(subject to the prior expiration of such Option in accordance with its terms)
immediately before the occurrence of such termination and during such period
occurring before such termination as the Company Committee in its sole
discretion shall determine and designate, to exercise such Option in whole or in
part, whether or not such Option was otherwise exercisable at the time such
termination occurs. Any exercise of an Option during such period shall be
conditioned upon the consummation of the event and shall be effective only
immediately before the consummation of the event. The Company Committee shall
send written notice of an event that will result in such a termination to all
individuals who hold Options not later than the time at which the Company gives
notice thereof to its shareholders. Unvested Restricted Share Awards shall be
vested in the case of an event described in this Section 20.3.
20.4. Adjustments.
Adjustments under this Section 20 related to Shares or securities of the
Company shall be made by the Company Committee, whose determination in that
respect shall be final, binding, and conclusive. No fractional Shares or units
of other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case by
rounding downward to the nearest whole Share.
20.5. No Limitations on Company.
The grant of Incentive Awards pursuant to the Plan shall not affect or limit in
any way the right or power of the Company to make adjustments,
reclassifications, reorganizations, or changes of its capital or business
structure or to merge, consolidate, dissolve, or liquidate, or to sell or
transfer all or any part of its business or assets.
18
<PAGE>
DISCLAIMER OF RIGHTS
No provision in the Plan or in any Incentive Award granted or Agreement
entered into pursuant to the Plan shall be construed to confer upon any
individual the right to remain in the employ or service of any Employer, or to
interfere in any way with any contractual or other right or authority of any
Employer either to increase or decrease the compensation or other payments to
any individual at any time, or to terminate any employment or other relationship
between any individual and such Employer. In addition, notwithstanding anything
contained in the Plan to the contrary, unless otherwise stated in the applicable
Agreement, no Incentive Award granted under the Plan shall be affected by any
change of duties or position of the Optionee, Grantee or Holder (including a
transfer to or from any Employer), so long as such Optionee, Grantee or Holder
continues to be a trustee, director, officer, consultant, employee, or
independent contractor (as the case may be) of any Employer (the "Successor
Granting Employer"). The Plan shall in no way be interpreted to require any
Employer to transfer any Shares to a third party trustee or otherwise hold any
Shares in trust or escrow for any participant or beneficiary under the terms of
the Plan.
NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan nor the submission of the Plan to the
shareholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Company, the Operating
Partnership or its general partner or the Management Company or any Affiliate of
the Operating Partnership or the Management Company to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or particular individuals) as such entities in their discretion
determine desirable.
CAPTIONS
The use of captions in this Plan or any Agreement is for the convenience
of reference only and shall not affect the meaning of any provision of the Plan
or such Agreement.
WITHHOLDING TAXES
24.1. Withholding.
The Granting Employer shall have the right to deduct from payments of any
kind otherwise due to an Optionee, Grantee or Holder any Federal, state, or
local taxes of any kind required by law to be withheld with respect to any
Shares issued upon the exercise of an Option, to any Bonus Shares or to the
termination of the Limitation Period for Restricted Share Awards. At the time of
termination of the Limitation Period, the Holder shall pay to the Granting
Employer any amount that the Granting Employer may reasonably determine to be
necessary to satisfy such withholding obligation. Subject to the prior approval
of the Granting Employer, which may be withheld by the Granting Employer (and/or
the Successor Granting Employer) in its sole discretion, the Optionee, Grantee
or Holder may elect to satisfy such obligations, in whole or in part, (i) by
causing such Granting Employer to withhold Shares otherwise issuable pursuant to
the exercise of an Option or (ii) by delivering to such Granting Employer Shares
already owned by the Optionee, Grantee or Holder. The Shares so delivered or
withheld shall have a Fair Market Value equal to such withholding obligations,
determined as of the date that the amount of tax to be withheld is to be
determined. An Optionee, Grantee or Holder who has made an election pursuant to
this Section 24.1 may satisfy his or her withholding obligation only with Shares
that are not subject to any repurchase, forfeiture, unfulfilled vesting, or
other similar requirements.
19
<PAGE>
24.2. Limitations for Reporting Person.
Notwithstanding the foregoing, in the case of a Reporting Person, no
election to use Shares for the payment of withholding taxes shall be effective
unless made in compliance with any applicable requirements under Rule 16b-3(e)
or any successor rule under the Exchange Act.
OTHER PROVISIONS
Each Incentive Award granted under the Plan may contain such other terms
and conditions not inconsistent with the Plan as may be determined by the
Applicable Committee, in its sole discretion.
NUMBER AND GENDER
With respect to words used in this Plan, the singular form shall include
the plural form, the masculine gender shall include the feminine gender, etc.,
as the context requires.
SEVERABILITY
If any provision of the Plan or any Agreement shall be determined to be
illegal or unenforceable by any court of law in any jurisdiction, the remaining
provisions hereof and thereof shall be severable and enforceable in accordance
with their terms, and all provisions shall remain enforceable in any other
jurisdiction.
GOVERNING LAW
The validity and construction of this Plan and the instruments evidencing
the Incentive Awards granted hereunder shall be governed by the laws of the
State of Maryland.
* * *
20
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[COLONIAL LOGO]
COLONIAL PROPERTIES TRUST
PROXY CARD HIGHLIGHTS.
THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT.
Regardless of whether you plan to attend the Annual Meeting of Shareholders,
please execute your proxy promptly and return it in the enclosed envelope.
1997 COMPANY HIGHLIGHTS
- - Our funds from operations (FFO) increased to $2.70 per share from $2.45 per
share for 1996, an increase of 10.2%. As a result, we increased our
dividend from $2.08 per share in 1997 to $2.20 per share (annualized) in
1998.
- - The Company completed $438 million in property acquisitions and $73 million
of property sales in tax-deferred transactions.
- - The Company completed $85 million of property development, including a
major expansion of Macon Mall.
- - The Company expanded into the states of North Carolina, Tennessee and
Virginia.
- - The Company issued $175 million of unsecured debt, $125 million of
preferred stock, $103 million of common stock, and $45 million of operating
partnership units.
__ DETACH HERE DETACH HERE
|X| Please mark votes as in
example.
This proxy, when properly executed, will be voted in the manner directed herein
by the shareholder. If no direction is otherwise made, this proxy will be voted
FOR proposals 1, 2 and 3 and in the discretion of the named proxies as to any
other matters properly presented at the meeting. This proxy may be revoked at
any time before it is voted by delivery to the Secretary of the Company of
either a written revocation of the proxy or a duly executed proxy bearing a
later date, or by appearing at the annual meeting and voting in person.
1. To elect the following nominees to the Board of Trustees.
Nominees: M. Miller Gorrie, James K. Lowder, Herbert A. Meisler and
William M. Johnson.
FOR / /-------------------
/ / ALL / / WITHHELD For all nominees except
NOMINEES FROM ALL as noted above
NOMINEES
2. To adopt and approve the Second Amended and Restated Employee Share Option
and Restricted Share Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. To ratify the appointment of Coopers & Lybrand L.L.P. as independent
auditors of the Company for the fiscal year ending December 31, 1998.
/ / FOR / / AGAINST / / ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment
thereof.
[ADDRESS] MARK HERE FOR / /
ADDRESS CHANGE
AND NOTE AT
LEFT
Please sign exactly as your name
appears hereon. Joint owners should
each sign. When signing as attorney,
executor, administrator, trustee, or
guardian, please give full title as
such.
Signature: Date: Signature: Date:
<PAGE>
__ DETACH HERE DETACH HERE
PROXY
COLONIAL PROPERTIES TRUST
Proxy Solicited on Behalf of the Board of Trustees of the Company
for Annual Meeting to be held on April 23, 1998
The undersigned, being a shareholder of Colonial Properties Trust (the
"Company"), hereby appoints Thomas H. Lowder and Douglas B. Nunnelley, or either
of them, with full power of substitution in each, as proxies and hereby
authorizes such proxies, or either of them, to represent the undersigned at the
Annual Meeting of Shareholders of the Company to be held in the auditorium on
the lobby level (second floor) of Colonial Plaza, 2101 Sixth Avenue North,
Birmingham, Alabama 35203, on April 23, 1998 at 10:30 a.m., central daylight
savings time, and at any adjournment of said meeting, and thereat to act with
respect to all votes that the undersigned would be entitled to cast, if then
personally present, in accordance with the following instructions. The
undersigned shareholder hereby revokes any proxy or proxies heretofore given.
You are encouraged to specify your choice by marking the appropriate box,
SEE REVERSE SIDE, but you need not mark any box if you wish to vote in
accordance with the Board of Trustees' recommendations. The proxies cannot vote
your preferences unless you sign and return this card.
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
