<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File Number 001-12684
COLUMBUS REALTY TRUST
(Exact Name of Registrant as Specified in its Charter)
TEXAS
(State or other jurisdiction of
incorporation or organization) 75-2509086
15851 DALLAS PARKWAY, SUITE 855 (I.R.S. Employer Identification Number)
DALLAS, TEXAS 75248
(Address of Principal Executive Offices)
(Registrant's Telephone Number, Including Area Code): (972) 387-1492
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Name of each exchange on which registered.
-------------------- ------------------------------------------
COMMON SHARES OF BENEFICIAL INTEREST, NEW YORK STOCK EXCHANGE
$0.01 PAR VALUE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No____
--------
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
---
The aggregate market value of the voting stock held by nonaffiliates of the
registrant (based on the closing price of such stock as reported on March 6,
1997 through the New York Stock Exchange) was approximately $255,837,000. There
were 13,059,882 common shares of beneficial interest, $0.01 par value per share,
outstanding as of March 6, 1997.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Registrant's Proxy Statement in connection with its Annual
Meeting of Shareholders to be held May 23, 1997, are incorporated by reference
into Part III Items 10, 11, 12 and 13.
Exhibit Index begins on Page 28.
<PAGE>
COLUMBUS REALTY TRUST
PART I
ITEM 1. BUSINESS
BACKGROUND. Columbus Realty Trust (the "Company") is a self-administered
----------
and self-managed real estate investment trust ("REIT") formed on October 12,
1993, pursuant to the Texas Real Estate Investment Trust Act. On December 29,
1993, the Company completed an initial public offering of 6,898,566 common
shares of beneficial interest (the "Initial Public Offering"), and
simultaneously, a business combination involving entities with varying common
ownership (the "Formation Transactions"). As a result of the Formation
Transactions, the Company acquired twelve multifamily residential properties,
two industrial properties and one retail property (collectively, the "Original
Properties"). The Company also acquired various rights with respect to the
acquisition and development of additional multifamily residential properties and
certain other rights, including the rights of its predecessors under certain
third party management contracts.
The Original Properties contained an aggregate of 2,356 apartments units,
and approximately 475,000 rentable square feet of industrial and retail
property, located primarily in the Dallas/Fort Worth metropolitan area. During
the period from the Company's Initial Public Offering through December 31, 1996,
the Company has acquired an additional 1,590 apartment units in six properties,
and has completed construction of an additional 1,464 in eight properties,
increasing the total residential portfolio to 5,410 units as of the end of 1996.
DEVELOPMENT ACTIVITIES. During 1996, the Company completed construction of
----------------------
five multifamily residential development properties containing a total of 874
units, continued construction on one additional property consisting of 503
units, commenced construction on four new properties to contain an
additional 1,082 units and acquired one development site. The Company entered
into a redevelopment agreement for a mixed-use multifamily residential and
retail project in Houston, Texas, in February 1997. As of March 6, 1997, the
development activities completed, under construction, and proposed for
construction (collectively, the "Development Properties") are summarized in the
following chart:
DEVELOPMENT PROPERTIES
----------------------
<TABLE>
<CAPTION>
Estimated Total Actual or Estimated
Property Location No. of Units Cost (millions) (1) Completion
-------- -------- ------------ ------------------- ----------
Completed during 1996
- ---------------------
<S> <C> <C> <C> <C>
The Abbey Dallas, TX 34 $ 4.8 Apr, 1996
Hackberry II Dallas, TX 192 11.1 Apr, 1996
The Vineyard Dallas, TX 116 8.3 May, 1996
Winsted Village Dallas, TX 314 18.6 Aug, 1996
Columbus Square Dallas, TX 218 20.4 Sept, 1996
----- ------
874 63.2
Under construction
- ------------------
Columbus Shore Dallas, TX 503 40.5 1997
Addison Circle One Dallas, TX 460 32.1 1997
Columbus Pointe Jackson, MS 240 11.9 1997
Cole's Corner Dallas, TX 186 14.2 1997
The Rice Hotel Houston, TX 317 33.3 1997
The Heights of State-Thomas Dallas, TX 196 16.6 1998
----- ------
1,902 148.6
Acquired Sites
- --------------
Block 580 - Uptown Dallas, TX 346 23.5 (2)
----- ------
Grand Totals 3,122 $235.3
===== ======
</TABLE>
- ------------------
(1) Includes land cost which is classified separately in the
Company's financial statements.
(2) Commencement and completion dates of construction have not
yet been determined.
2
<PAGE>
PROPERTY MANAGEMENT. The Company manages all of its properties through its
-------------------
wholly-owned subsidiary, Columbus Management Services, Inc. ("CMSI"), a Texas
corporation. CMSI provides or arranges third parties to provide leasing,
marketing, resident and tenant services, property management and maintenance,
courtesy patrols and human resource recruiting, training and development, and
reporting functions. CMSI performs similar functions for third party owners of
three residential properties, and for four condominium associations, all of
which are located in the Dallas/Fort Worth metropolitan area.
BUSINESS OBJECTIVES. The Company's primary business objectives are to: (i)
-------------------
maximize the cash flow available for distribution per common share; (ii)
maximize the capital appreciation of its property portfolio through active and
intensive property management; (iii) continue the development of high quality
multifamily residential communities in order to increase the Company's presence
as a developer, owner and operator of properties in the "renter by choice"
multifamily residential rental market in each of the Company's targeted
submarkets; (iv) continue to pursue strategic acquisition of existing
multifamily residential properties located within its submarkets, when the
qualities of such properties are consistent with its ownership criteria, and (v)
hold its income-producing properties for long-term investment.
INDUSTRY SEGMENTS. The Company is engaged in a single industry segment --
-----------------
the acquisition, ownership, development and management of income producing
properties. For the Company's fiscal year ended December 31, 1996, 91% of the
Company's consolidated net operating income was attributable to its ownership,
operation and management of residential properties, 4% of its consolidated net
operating income was attributable to its ownership, operation and management of
its industrial properties and 5% of its consolidated net operating income was
attributable to its ownership, operation and management of its retail property.
During 1996, no single residential, industrial, or retail tenant accounted for
more than 10% of the Company's consolidated gross revenue. Additionally during
1996, no single residential, industrial, or retail property accounted for more
than 10% of the Company's consolidated gross revenue.
EMPLOYEES. The Company has approximately 200 employees and officers
---------
involved in the administration and operation of its business and properties.
None of the Company's employees is subject to a collective bargaining agreement
and the Company has experienced no labor-related work stoppages. The Company
considers its relations with its personnel to be good.
COMPETITION. All of the Company's multifamily residential properties are
-----------
located in developed areas that include other competitive apartment community
properties, and eight of the residential properties as well as two of the
Development Properties under construction are located within a one-mile radius
in the Uptown District of Dallas. Other developers have constructed and may
construct additional multifamily residential properties in the Company's markets
which compete with the Company's properties and which may result in increased
competition in certain of the Company's markets. In addition, the Company
competes with other REITS as well as other real estate owners and developers
with respect to the acquisition of land for development and the acquisition of
existing multifamily properties. The Company may compete with others that have
greater resources than the Company and whose officers and directors have more
experience than the Company's officers and Trust Managers. Similar competitive
conditions exist with respect to the industrial and retail properties. In
addition, single family housing and other forms of multifamily residential
properties provide housing alternatives to potential tenants of upscale
apartment communities.
AMERICANS WITH DISABILITIES ACT. The Properties and any newly acquired or
-------------------------------
developed properties must comply with Title III of the Americans with
Disabilities Act (the "ADA") to the extent that such properties are "public
accommondations" and/or "commercial facilities" as defined by the ADA.
Compliance with the ADA requirements could require removal of structural
barriers to handicapped access in certain public areas of the Properties where
such removal is readily achievable. The ADA does not, however, consider
residential apartment properties to be public accommondations or commercial
facilities, except to the extent portions of such facilities, such as the
leasing office, are open to the public. The Company believes that its properties
comply with all present requirements under the ADA and applicable state laws.
Noncompliance could result in imposition of fines or an award of damages to
private litigants. If required to make material additional changes, the
Company's results of operations could be adversely affected.
3
<PAGE>
ENVIRONMENTAL MATTERS. The Company is subject to Federal, state and local
---------------------
environmental regulations that apply to the development of real property,
including construction activities, the ownership of real property, and the
operation of multifamily apartment properties.
In developing properties and constructing apartments, the Company utilizes
environmental consultants to determine whether there are any flood plains,
wetlands or environmentally sensitive areas that are part of the property to be
developed. If flood plains are identified, development and construction is
planned so that flood plain areas are preserved or alternative flood plain
capacity is created in conformance with Federal and local flood plain management
requirements.
The Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. sec. 9601 et seq. ("CERCLA"), and applicable state superfund laws
subject the owner of real property to claims or liability for the costs of
removal or remediation of hazardous substances that are disposed of on real
property in amounts that require removal or remediation. Liability under CERCLA
and applicable state superfund laws can be imposed on the owner of real property
or the operator of a facility without regard to fault or even knowledge of the
disposal of hazardous substances on the property or at the facility. The
presence of hazardous substances in amounts requiring response action or the
failure to undertake remediation where it is necessary may adversely affect the
owner's ability to sell real estate or borrow money using such real estate as
collateral. In addition to claims for cleanup costs, the presence of hazardous
substances on a property could result in a claim by a private party for personal
injury or a claim by an adjacent property owner for property damage.
The Company obtains an environmental investigation of each property that
it considers for purchase or that it owns and plans to develop. If there is
any indication of contamination, sampling of the property is performed by the
environmental consultant. The environmental investigation report is reviewed
by the Company and counsel prior to purchase of any property. If necessary,
remediation of contamination is undertaken prior to development.
The Company has not been notified by any governmental authority of any
noncompliance, claim, or liability in connection with any of its Properties.
The Company has not been notified of a claim for personal injury or property
damage by a private party in connection with any of the Properties in connection
with environmental conditions. The Company is not aware of any other
environmental condition with respect to any of its Properties that could be
considered to be material. With respect to the redevelopment of The Rice Hotel,
substantially all of the remediation required to remove asbestos-containing
materials had been completed prior to the Company's agreement to a land lease
arrangement with the Houston Housing Finance Corporation ("HHFC") on February
27, 1997. HHFC has financial responsibility to complete the abatement. The
Company believes that its properties are in compliance in all material respects
with all federal, state and local laws, ordinances and regulations regarding
hazardous or toxic substances or petroleum products. The Company has not been
notified by any governmental authority, and is not otherwise aware, of any
material noncompliance liability or claim relating to hazardous or toxic
substances in connection with any of its present or former properties.
TAX STATUS. The Company has made an election to be taxed as a real estate
----------
investment trust ("REIT") under Section 856 through 860 of the Internal Revenue
Code of 1986, as amended (the "Code"), commencing with its taxable year ending
December 31, 1993. If the Company qualifies for taxation as a REIT, the Company
generally will not be subject to federal income tax to the extent it distributes
at least 95% of its REIT taxable income to its shareholders. If the Company
fails to qualify as a REIT in any taxable year, the Company will be subject to
federal income tax (including any applicable alternative minimum tax) on its
taxable income at regular corporate rates. Even if the Company qualifies for
taxation as a REIT, the Company may be subject to certain state and local taxes
on its income and property and to federal income and excise taxes on its
undistributed income.
4
<PAGE>
ITEM 2. PROPERTIES
As of March 3, 1997, the Company owned 37 total properties: 27 completed
multifamily residential properties (the "Residential Properties"), two
industrial properties, one retail property, six multifamily development sites in
various stages of construction (collectively, the "Properties"), and one
acquired site for future development. The Properties are owned by the Company in
fee simple, and are encumbered as follows: twenty-six properties (seventeen
multifamily residential, two industrial, one retail, five projects under
construction, and the development site) are subject to a first lien deed of
trust securing the Credit Facility, nine multifamily properties are subject to a
first lien deed of trust securing a mortgage held by Nationwide Life Insurance
Company ("Nationwide"), one multifamily residential property is subject to a
first lien deed of trust securing a loan from another third party, and one
project currently under construction is encumbered by a development and
construction loan payable to Wells Fargo Realty Advisors. The Company believes
all of the Properties are adequately insured in accordance with industry
standards and lender requirements.
RESIDENTIAL PROPERTIES
The Residential Properties as of March 6, 1997, consist of multifamily
communities in the following submarkets, as defined by the Company:
<TABLE>
<CAPTION>
Submarket Properties # of Units % of Total
--------- ---------- ---------- ----------
<S> <C> <C> <C>
Uptown District 9 1,646 29.6%
White Rock 2 522 9.4
North Dallas 5 1,201 21.6
DFW/Las Colinas 8 1,453 26.1
Jackson, Mississippi 3 742 13.3
- ----- -----
27 5,564 100.0%
== ===== =====
</TABLE>
The Company manages all of the Residential Properties through CMSI. Eight
of the properties have at least 250 units, with the largest property having a
total of 474 units. The oldest of the properties was completed in 1983, and the
weighted average age of the portfolio at December 31, 1996, was 6.0 years. The
economic occupancy (defined in footnote 5 of the table which follows) for the
stabilized properties during 1996 was 95.6%, with an average collected rent per
unit of $735 per month, or $0.868 per square foot.
5
<PAGE>
RESIDENTIAL PROPERTY INFORMATION
The following table presents general information concerning the Residential
Properties:
<TABLE>
<CAPTION>
AVG CURRENT 1996
YEAR UNIT MARKET RENT 1996
COMPLETED NO. SIZE RENT/ COLLECTED ECO
LOCATION OR TO BE OF SQ. FT. (SQ. UNIT PER OCC
PROPERTY (1) COMPLETED UNITS (2) FT.) (3) UNIT (4) (5)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Completed Properties:
The Meridian Dallas 1991 132 105,314 798 $ 1,015 $ 948 96.0%
The Worthington Dallas 1993 332 271,484 818 1,064 977 96.9
The Vintage Dallas 1993 160 124,909 781 817 741 96.8
The Rock Dallas 1988 208 137,120 659 649 625 95.2
Windhaven Village (6) Dallas 1991 474 391,190 825 528 462 100.0
Parkway Village Villas Dallas 1986 136 177,831 1,308 1,101 1,046 96.2
Springstead Condos Dallas 1983 66 76,236 1,155 891 861 91.4
Reflections on McCallum Dallas 1986 198 157,786 797 641 623 93.1
Town Lake (9) Dallas 1987 238 207,553 872 697 670 94.4
The Parks (9) Dallas 1986 160 138,430 865 697 670 94.4
Villas at Valley Ranch (7) Dallas 1985 54 70,014 1,297 1,175 1,133 95.8
Ascension Point (7) Dallas 1985 79 73,699 933 801 767 94.3
Ascension Point II Dallas 1995 86 79,676 926 801 814 89.7
The Trace (10) Jackson, MS 1989 282 207,266 735 562 548 96.5
The Trace II (10) Jackson, MS 1995 204 149,212 731 562 548 96.5
The Residences Dallas 1986 196 146,828 749 952 910 96.4
Lakeshore Dallas 1988 404 382,588 947 877 881 94.8
Lakeside Village Dallas 1986 327 258,727 791 768 739 96.1
Hackberry Creek Dallas 1988 240 204,384 852 777 714 93.9
Hackberry Creek II (8) Dallas 1996 192 169,380 882 777 768 95.5
The Mark Jackson, MS 1984 256 253,032 988 595 583 94.6
Uptown Village Dallas 1995 300 229,971 767 799 740 97.1
The Abbey (8) Dallas 1996 34 43,384 1,276 1,775 1,604 95.7
The Vineyard (8) Dallas 1996 116 84,485 728 819 794 93.2
Winsted Village (8) Dallas 1996 314 228,473 728 677 655 94.6
Columbus Square (8) Dallas 1996 218 187,722 861 1,038 1,005 94.6
The Commons (11) Dallas 1985 158 101,977 645 685 N/A N/A
--- ------- ----- ----- --- ---
Subtotals/Averages-Completed (27 properties) 5,564 4,658,671 837 $783 $735 95.6%
Development Properties-under construction:
Addison Circle One Dallas 1997 460 412,340 896 N/A N/A N/A
Columbus Shore Dallas 1997 503 398,998 793 N/A N/A N/A
Columbus Pointe Jackson, MS 1997 240 191,015 796 N/A N/A N/A
Cole's Corner Dallas 1997 186 148,133 796 N/A N/A N/A
The Rice Hotel Houston 1997 317 318,877 1,006 N/A N/A N/A
Heights of State-Thomas Dallas 1998 196 159,897 816 N/A N/A N/A
--- ------- --- --- --- ---
Subtotals/Averages-Development (6 properties ) 1,902 1,629,260 857 N/A N/A N/A
----- ---------- --- --- --- ---
Totals/Averages (33 properties ) 7,466 6,287,931 842 N/A N/A N/A
===== ========= === === === ===
</TABLE>
6
<PAGE>
________________
Notes:
(1) Refers to greater metropolitan area of cities indicated.
(2) Includes only apartment units; excludes common areas and commercial
space.
(3) Weighted average of monthly rates used for new leases and renewals as
of March 1, 1997.
(4) Average monthly rent collected per occupied unit for the year ended
December 31, 1996.
(5) Total rent collected divided by gross potential rent for the period,
expressed as a percentage. Gross potential rent is defined as the
maximum rent collectible, based on signed leases for occupied units
and market rates for vacant units.
(6) Windhaven Village is subject to a master lease with Electronic Data
Systems.
(7) The Company does not own all the units in these properties.
Information is provided only with respect to the units owned by the
Company.
(8) Development Properties completed during 1996 reflect rental income and
occupancy performance from completion of construction through December
31, 1996.
(9) Town Lake and The Parks are operated as one property; rent and
occupancy numbers reflect combined averages.
(10) The Trace I & II are operated as one property; rent and occupancy
numbers reflect combined averages.
(11) The Company acquired the 158-unit multifamily residential property
known as The Commons at Turtle Creek in February 1997 from an
unaffiliated third party. Data relating to rent collected per unit and
economic occupancy for 1996 cannot be verified by the Company.
7
<PAGE>
INDUSTRIAL PROPERTIES
The Post and Paddock Service Center ("Post and Paddock") contains 241,400
square feet and is located in the Great Southwest Industrial District in Grand
Prairie, Texas, one of the largest distribution and industrial parks in the
United States. As of December 31, 1996, Post and Paddock was 98% occupied by 24
tenants paying an average annual base rent equal to approximately $4.35 per
square foot.
The Campus Office Technology Center ("Campus Circle"), located in the Las
Colinas Business Park in Irving, Texas, contains 65,410 rentable square feet. As
of December 31, 1996, the building was 100% occupied by three tenants, CAE-Link
Corporation, Vanstar Corporation (formerly CLTX, Inc.), and PAS Financial Group,
paying average annual rents equal to approximately $9.39 per square foot.
RETAIL PROPERTY
The Towne Crossing Shopping Center ("Towne Crossing") is adjacent to Town
East Mall in the community of Mesquite, Texas, approximately 12 miles east of
the Dallas central business district. Anchor tenants occupying 10% or more of
the total 168,689 square feet of rentable space include a Kroger Food Market,
AMC Theaters, and Accent Craft Mall.
As of December 31, 1996, Towne Crossing was approximately 99% occupied. The
three anchor tenants occupy approximately 57% of the leasable area at an average
annual rent of approximately $9.92 per square foot. Twenty-eight local tenants,
including restaurants, a health club, medical professionals, personal services
and specialty shops, occupy approximately 42% of the total leasable area at an
average annual rent of approximately $10.05 per square foot.
INDUSTRIAL AND RETAIL LEASE TERMS
The Company's industrial and retail leases provide for monthly payments of
base rent in advance and the reimbursement of operating expenses. With respect
to the industrial properties, operating expenses are passed through to tenants,
subject to expense stops which are usually equal to the actual operating
expenses for the first year of the term of the lease. With respect to the retail
leases, tenants generally reimburse their pro rata share of all operating
expenses, without regard to an expense stop. The commercial and retail leases do
not provide for any free rent, nor permit tenants to abate or offset rents. The
Company's liability under the leases is limited to the Company's interest in the
property in which the leased premises are located. In the event of a casualty,
the Company generally has the right to terminate any lease or to make repairs
within 180 days before the tenant has a right to terminate.
8
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
Neither the Company nor the Properties are presently subject to any
material litigation nor, to the Company's knowledge, is any material litigation
threatened against the Company or the Properties, other than routine litigation
and administrative proceedings arising in the ordinary course of business, some
of which are expected to be covered by liability insurance and none of which are
expected to have a material adverse effect on the business, financial condition
or results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
9
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS
MATTERS
The Company's common shares were listed and began trading on the New
York Stock Exchange on December 22, 1993 under the symbol "CLB". The following
table sets forth the quarterly high and low sales prices per share as reported
on the New York Stock Exchange and the dividends the Company declared and paid
for each quarter during 1995 and 1996:
<TABLE>
<CAPTION>
Quarter Ended High Low Dividend per share
-------------- ---- --- ------------------
<S> <C> <C> <C>
March 31, 1995 18-7/8 16 $0.375
June 30, 1995 20 17-5/8 0.375
September 30, 1995 20-1/8 18-1/8 0.375
December 31, 1995 19-7/8 17-3/4 0.375
March 31, 1996 20-3/4 18-7/8 0.375
June 30, 1996 20-1/8 18-1/4 0.395
September 30, 1996 20-3/4 18-3/4 0.395
December 31, 1996 23-1/4 20-3/8 0.395
</TABLE>
On March 6, 1997, the last reported sales price of the Company's
common shares on the New York Stock Exchange was 20-7/8 per share. On March 6,
1997, the Company had 635 shareholders of record.
In order for the Company to maintain its qualification as a REIT, it
must make annual distributions to the shareholders of at least 95% of its
taxable income. Under certain circumstances, the Company could be required to
make distributions in order to meet such requirement in excess of its cash
available for distribution, but the Company does not expect this to occur in the
foreseeable future.
The Company presently expects to continue to pay comparable quarterly
dividends in the foreseeable future. The amount of such dividends will be
determined, based in part, on the Company's net income and funds from
operations, which will be impacted by several variables, including interest
rates and the overall performance of the Properties and the Development
Properties. In establishing and declaring future dividend payments, the Company
and its Board of Trust Managers will also evaluate, in addition to the Company's
net income and funds from operations, the distribution requirements under the
REIT provisions of the Internal Revenue Code, and any other factors deemed
relevant to such declaration, including general economic conditions.
Additionally, the Credit Facility contains certain covenants which may, in some
circumstances, restrict the Company's ability to distribute cash to its
shareholders. These covenants include a specific requirement that no more than
90% of funds from operations may be distributed as dividends related to each
calendar year after December 31, 1994. For the year ended December 31, 1996, the
Company distributed approximately 86% of its funds from operations to its
shareholders.
10
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The succeeding three tables set forth the following information: (1)
selected financial and operating information for the Company on a consolidated
historical basis as of and for the years ended December 31, 1996, 1995 and 1994,
on a consolidated pro forma basis for the year ended December 31, 1993, on a
consolidated historical basis as of December 31, 1993, and for the period from
October 12, 1993 (inception) through December 31, 1993, and on a combined
historical basis for the Columbus Group and Texana Group (collectively, the
"Predecessors") and the Company combined as of December 28, 1993, and December
31, 1992, and for each of the years in the two-year period ended December 31,
1993. The combined historical results of the Columbus Group have been included
with the combined historical results of the Texana Group (and with the Company
for 1993) in the column entitled "Combined Historical" for the periods presented
in order to permit a meaningful comparison with the Company's historical and pro
forma financial information since the Company, on an ongoing basis, includes the
properties of the Predecessors; (2) selected financial and operating information
on a combined historical basis for the Columbus Group as of December 28, 1993,
and for the period from January 1, 1993, through December 28, 1993, and as of
and for the year ended December 31, 1992, and (3) selected financial and
operating information on a combined historical basis for the Texana Group as of
December 28, 1993, and for the period from January 1, 1993, through December 28,
1993, and as of and for the year ended December 31, 1992.
The following selected financial data should be read in conjunction with
the discussion set forth in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and all of the financial statements and
notes thereto included elsewhere in this report.
11
<PAGE>
SELECTED FINANCIAL AND OPERATING INFORMATION
COLUMBUS REALTY TRUST AND PREDECESSORS COMBINED
(in thousands, except share and per share information)
<TABLE>
<CAPTION>
Columbus
Columbus Realty Columbus Realty
Realty Trust Trust Trust and
Consolidated October 12, Predecessors
Pro Forma (1) 1993 Combined Historical
Columbus Realty Trust, Historical Year Ended through Year Ended
Year Ended December 31, December 31, December 31, December 31,
--------------------------------------------------------------------------------------
1996 1995 1994 1993 1993 1993 (2) 1992(2)
---- ---- ---- ---- ---- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues:
Rental $ 45,910 $39,023 $28,963 $19,365 $182 $19,365 $16,220
Property management 298 479 640 453 5 453 482
Interest and other 2,322 1,749 1,278 905 1 846 882
--------------------------------------------------------------------------------------
Total revenues 48,530 41,251 30,881 20,723 188 20,664 17,584
Operating expenses:
Property operating and
maintenance (3) 12,459 10,118 7,526 5,757 20 5,757 4,613
General and administrative (4) 5,979 5,362 4,612 3,410 21 3,183 2,694
Interest 7,884 5,596 2,848 825 9 7,795 6,520
Interest related to
amortization of
deferred financing costs 393 515 474 428 4 357 102
Depreciation and
amortization 10,603 9,232 6,660 4,706 48 4,335 3,333
--------------------------------------------------------------------------------------
Total expenses 37,318 30,823 22,120 15,126 102 21,427 17,262
Gain on sale of real estate 246 - - - - - -
--------------------------------------------------------------------------------------
Net income (loss) before
extraordinary item $11,458 $10,428 $8,761 $5,597 $ 86 $(763) $322
Net income per common share
(primary and fully diluted) $.94 $.90 $.89 $.66 $.01 - -
Dividends per common share $1.56 $1.50 $1,502 - - - -
Weighted average number of
common shares outstanding:
Primary 12,099,291 11,536,110 9,832,417 8,500,084 8,500,084 - -
Fully diluted 12,142,069 11,556,269 9,845,759 8,500,084 8,500,084 - -
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Predecessors Combined
Columbus Realty Trust Historical
December 31, December 28, December 31,
--------------------------------------------- -----------------------------
1996 1995 1994 1993 1993 (2) 1992 (2)
---- ---- ---- ---- -------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Real estate, before accumulated
depreciation $399,813 $335,046 $267,786 $158,946 $133,491 $124,249
Total assets 374,576 320,976 253,370 149,681 122,619 116,898
Total debt 179,855 145,492 79,324 28,063 101,836 104,842
Shareholders'/owners' equity 180,078 156,827 161,859 115,460 15,417 6,018
</TABLE>
12
<PAGE>
SELECTED HISTORICAL FINANCIAL AND OPERATING INFORMATION
THE COLUMBUS GROUP
(in thousands)
<TABLE>
<CAPTION>
Period Ended Year Ended
December 28, December 31,
1993 1992
----------------------------------
<S> <C> <C>
OPERATING DATA:
Revenues:
Rental $11,331 $ 8,103
Property management 253 254
Interest and other 265 222
----------------------------------
Total revenues 11,849 8,579
Operating expenses:
Property operating and maintenance (3) 3,078 2,000
General and administrative (4) 1,896 1,383
Interest 4,960 3,765
Interest related to amortization of
deferred financing costs 201 102
Depreciation and amortization 2,776 1,864
----------------------------------
Total expenses 12,911 9,114
Net loss $(1,062) $ (535)
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 28, December 31,
1993 1992
----------------------------------
<S> <C> <C>
BALANCE SHEET DATA:
Real estate, before
accumulated depreciation $81,996 $73,490
Total assets 75,429 69,741
Total debt 67,432 58,177
Owners' equity 4,281 7,258
</TABLE>
13
<PAGE>
SELECTED HISTORICAL FINANCIAL AND OPERATING INFORMATION
THE TEXANA GROUP
(in thousands)
<TABLE>
<CAPTION>
Period Ended Year Ended
December 28, December 31,
1993 1992
--------------------------------------------------------
<S> <C> <C>
OPERATING DATA:
Revenues:
Rental $ 7,852 $8,117
Property management 194 228
Interest and other 580 660
--------------------------------------------------------
Total revenues 8,626 9,005
Operating expenses:
Property operating and maintenance (3) 2,659 2,613
General and administrative (4) 1,266 1,311
Interest 2,826 2,755
Interest related to amortization of
deferred financing costs 152 -
Depreciation and amortization 1,511 1,469
--------------------------------------------------------
Total expenses 8,414 8,148
Net income before extraordinary item $212 $857
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 28, December 31,
1993 1992
--------------------------------------------------------
<S> <C> <C>
BALANCE SHEET DATA:
Real estate, before accumulated depreciation $51,495 $50,759
Total assets 47,190 47,157
Total debt 34,404 46,665
Owners' equity (deficit) 11,136 (1,240)
</TABLE>
14
<PAGE>
NOTES TO SELECTED FINANCIAL DATA:
(1) Consolidated pro forma statements of operations reflect adjustments
principally for (i) reduction of mortgage notes payable and related
interest expense due to debt repayment, (ii) additional expenses
associated with operating as a public company, (iii) the increase in
basis of certain real estate assets for the excess of purchase price over
historical cost, as well as the related increased depreciation, (iv)
proceeds from draws under the Credit Facility and the related interest
expense and (v) the sale of common shares and the application of the net
proceeds therefrom (after deducting underwriting discounts and
commissions and estimated offering expenses).
(2) Represents the audited combined historical financial statements of the
Columbus Group and the Texana Group. In 1993, the audited consolidated
financial statements of Columbus Realty Trust are also included.
(3) Property operating and maintenance includes repairs and maintenance,
utilities, real estate taxes and other property operating expenses.
(4) General and administrative includes advertising expenses, corporate
general and administrative expenses, and property general and
administrative expenses.
15
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The following discussion should be read in conjunction with the "Selected
Financial Data" and all of the financial statements appearing elsewhere in this
Form 10-K.
As of December 31, 1996, the Company owned 5,410 completed residential
units in its real estate portfolio, an increase of 868 units or 19% over the
4,542 units held as of December 31, 1995, and an increase of 1,620 units or 43%
over the 3,790 units held as of December 31, 1994. During the twelve months
ended December 31, 1996, five newly-constructed multifamily residential projects
comprising 874 units were completed and added to the operating portfolio, and
six individual condominium units in one property were sold. The net growth in
the number of residential apartment units owned and operated by the Company has
had a significant impact upon the Company's operating results, as hereinafter
described.
Industry analysts generally consider funds from operations to be an
appropriate measure of the performance of an equity REIT. Accordingly, the
Company believes that the presentation of funds from operations provides an
appropriate measure of the Company's performance relative to other real estate
investment trusts. The Board of Governors of the National Association of Real
Estate Investment Trusts ("NAREIT") initially adopted a resolution defining
funds from operations as net income (loss), computed in accordance with
generally accepted accounting principles, excluding gains and losses from debt
restructuring and sales of property, plus depreciation and amortization, and
after adjustments for unconsolidated partnerships and joint ventures. In March
1995, NAREIT approved for adoption a "White Paper on Funds from Operations,"
which modified the definition of funds from operations to limit adjustments for
depreciation and amortization to those related specifically to real estate
investments, and made further recommendations for disclosures intended to
enhance the comparability and usefulness of the operating data. In accordance
with NAREIT's recommendation, the Company implemented the modified NAREIT
definition beginning in 1996.
Funds from operations does not represent cash flow and is not necessarily
indicative of cash flow or liquidity available to the Company, nor should it be
considered as an alternative to net income as an indicator of operating
performance. The Company believes that, in order to facilitate a clear
understanding of the operating results of the Company, funds from operations
should be disclosed in conjunction with net income (or loss) as presented in the
financial statements and data included elsewhere in this Form 10-K. Computed in
accordance with the modified definition as described above, funds from
operations for the years ended December 31, 1996, 1995 and 1994, was
approximately $21.9 million, $19.5 million and $15.6 million, respectively, as
detailed in the table below (in thousands):
<TABLE>
<CAPTION>
Years ended December 31,
1996 1995 1994
--------------------------------------------------------
<S> <C> <C> <C>
Net income $11,458 $10,428 $ 8,761
Depreciation of real estate assets 10,257 8,828 6,443
Amortization of tenant allowances and capitalized
leasing costs 206 194 111
Non-cash compensation expense - - 245
------- ------- -------
Funds from operations, as adjusted $21,921 $19,450 $15,560
======= ======= =======
</TABLE>
Funds from operations for the year ended December 31, 1996, totaled
approximately $21.9 million or $1.81 per common share, compared with funds from
operations of approximately $19.5 million or $1.68 per common share in the
comparable prior period. The increase in funds from operations of approximately
$2.4 million or 12% in 1996 over 1995 is primarily attributable to the net
operating income provided by the increased number of apartment units in the
16
<PAGE>
Company's portfolio, partially offset by an increase in the amount
of expensed debt service. Interest expense increased due to borrowings during
1995 and 1996 to fund property acquisitions, and completion of construction of
three multifamily projects in 1995 and five multifamily projects in 1996.
Interest on debt incurred for construction projects is capitalized prior to
completion of construction. After completion of construction, interest on such
debt is expensed.
Funds from operations for the year ended December 31, 1994, was adjusted
for a one time, non-cash compensation expense of $245,000. The adjustment gives
effect to the grant in the first quarter of 1994 of 13,200 shares at par value
($0.01) to non-executive employees under the Company's Share Bonus Plan
established in connection with the Initial Public Offering. For tax purposes
and under generally accepted accounting principles, the incremental market value
of these shares was expensed as compensation, but had no impact on the cash flow
of the Company. Management believes this adjustment to funds from operations is
necessary to accurately reflect the Company's performance for comparative
purposes and to provide the basis for payment of dividends.
RESULTS OF OPERATIONS
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED DECEMBER 31, 1995
- ------------------------------------------------------------------------------
The Company's net income increased approximately $1.0 million to
approximately $11.5 million or $0.94 per common share for the year ended
December 31, 1996, compared with net income of approximately $10.4 million or
$0.90 per common share for the year ended December 31, 1995, primarily as a
result of operations from the seven multifamily construction projects
which were completed and leased during 1995 and 1996. Included in
net income for the year ended December 31, 1996, is a net gain of $246,000 from
the sale of condominium units at one of the Company's properties.
Revenues from all sources totaled approximately $48.5 million in the year
ended December 31, 1996, compared with total revenues of approximately $41.3
million in the year ended December 31, 1995. Rental revenues totaled
approximately $45.9 million during the year ended December 31, 1996, an increase
of approximately $6.9 million or 17.76% over rental revenues of approximately
$39.0 million in the previous year. During 1996 the Company received
approximately $5.9 million of additional rental income from the seven
multifamily development projects completed and leased in 1995 and 1996. Rental
revenues increased approximately $1.2 million due to rental rate increases at
the Company's stabilized properties operating for both twelve month periods
ended December 31. Rental revenues includes $12,000 and $15,000 of deferred
rental income in the years ended December 31, 1996 and 1995, respectively.
Property management income decreased $181,000 or 37.8% from 1995 due to a
decrease in apartment units and retail space managed for third-party owners.
Interest and other revenues increased $573,000 or 32.8% in 1996 over 1995
primarily due to increased other income from the properties, including the
incremental increase in other income from the recently completed development
projects, increased yields earned on invested funds, and a $50,000 nonrecurring
marketing commission earned pursuant to the sale of a commercial property
formerly managed for an affiliate of the Company.
Total expenses during the year ended December 31, 1996, were approximately
$37.3 million, an increase of approximately $6.5 million or 21.1% over total
expenses of approximately $30.8 million in the prior year. The increase in total
expenses is primarily due to the growth in the size of the Company's residential
operating portfolio as a result of its development and construction program, an
increase in expensed interest, and higher property tax valuations on certain of
the properties. The increase in the number of stabilized apartment units was the
primary reason for the $456,000 or 14.6% increase in repairs and maintenance
expenses and the $528,000 or 26.7% increase in other property operating
expenses. Advertising expenses increased $172,000 or 31.2% in 1996 over 1995
primarily as a result of increased advertising and marketing incurred to support
the leasing programs at the newly completed development projects and to maintain
high occupancies at the remaining properties. Property administrative expenses
increased $429,000 or 15.6% in the year ended December 31, 1996, over 1995 due
to salary and benefits increases and additional personnel managing the newly
completed development properties. Real estate tax expense increased
approximately $1.4 million or 27.0% in 1996 compared with 1995. Approximately
$687,000 of this increase relates to tax increases due to higher tax assessments
on certain of the properties in the operating portfolio in both years. The
remainder of the increase of $706,000 is attributable to the development
17
<PAGE>
properties added to the portfolio in 1995 and 1996. General and administrative
expenses incurred for the Company's corporate activities increased $16,000 or
almost 1% in 1996. Higher personnel, administrative, and investor communications
costs were offset by lower travel, franchise tax, and insurance costs.
Interest expense increased approximately $2.3 million or 40.9% in the
twelve months ended December 31, 1996, compared with 1995 as a result of an
increase in non-development debt outstanding in the two periods. The Company's
average non-development debt outstanding under the Credit Facility, plus other
fixed-rate debt, was approximately $108.1 million for the year ended December
31, 1996, compared with an average non-development debt balance of $72.4 million
in the previous year. The Company's average interest rate for non-development
debt under the Credit Facility was 7.17% in 1996 compared with an average
interest rate of 7.78% on non-development debt under the Credit Facility in
1995. Interest related to amortization of deferred financing costs decreased
$122,000 or 23.7% in 1996 from 1995 because certain deferred commitment fees
became fully amortized in the fourth quarter of 1995, and as a result of
increased proportionate borrowings under the Credit Facility for development
activities, which decreased the pro-rata share of amortization attributable to
operating activities.
Depreciation and amortization expense increased approximately $1.4 million
or 14.9% in the year ended December 31, 1996, compared with the twelve months
ended December 31, 1995. The addition of multifamily residential properties to
the operating portfolio in 1995 and 1996 resulted in approximately $1.3 million
of additional depreciation and amortization expense. Depreciation and
amortization of the real property and fixed assets on the remaining operating
portfolio and on furnishings and equipment at the corporate offices increased
$176,000 overall. The increased depreciation and amortization due to capital
improvements undertaken at certain properties in 1995 and 1996 more than offset
decreases in depreciation and amortization of short-lived equipment and
furnishings which have become fully depreciated at certain properties and at the
Company's corporate offices. In addition, the Company stopped depreciating its
real estate investments in two condominium communities in June 1996 when
marketing efforts to sell the condominium units began and the net book value of
the two properties was reclassified as real estate held for sale. The
reclassification resulted in a $121,000 decrease in depreciation expense in 1996
from 1995.
The Company invested approximately $68.2 million in its real estate
portfolio during the year ended December 31, 1996. Approximately $58.6 million
was invested in the development and construction of ten multifamily residential
apartment projects, five of which were completed as of December 31, 1996. The
Company acquired three new multifamily residential development sites for
approximately $7.1 million, in aggregate, in 1996. Additionally, the Company
invested approximately $2.5 million for capital improvements, purchases of
furniture, fixtures, and equipment, and retail leasing commissions in the year
ended December 31, 1996. The components of these capital investments were (a)
approximately $1.8 million invested in improvements to the multifamily
residential properties held in the Company's real estate portfolio for one year
or longer, (b) $358,000 invested in capital improvements to a property acquired
in the first quarter of 1995, (c) $333,000 invested in tenant improvements,
capital expenditures, and leasing commissions for the Company's retail and
industrial properties, and (d) $81,000 invested in furniture, fixtures, and
equipment for the corporate offices. More detailed information regarding these
capital investments is set forth in the following table.
18
<PAGE>
Summary of capital improvements for the year ended December 31, 1996:
<TABLE>
<CAPTION>
Stabilized Properties (1) Acquisition Property (2) Totals
-----------------------------------------------------------------------------------
Amount Per Unit Amount Per Unit Amount Per Unit
------ -------- ------ --------
(in thousands) (in thousands) (in thousands)
<S> <C> <C> <C> <C> <C> <C>
Multifamily residential properties
- ----------------------------------
Recurring expenditures
Floor coverings $175 $35.97 $19 $116.85 $194 $38.55
Appliances 16 3.28 25 159.01 41 8.24
Exterior repairs 701 144.41 25 155.23 726 144.76
Furniture, fixtures, & 203 41.73 118 737.43 321 63.92
equipment
Other 63 12.88 3 16.54 66 12.99
-----------------------------------------------------------------------------------
Subtotal - recurring 1,158 238.27 190 1,185.06 1,348 268.46
Revenue generating 93 19.25 - - 93 18.64
Major renovations 503 103.48 168 1,055.15 671 133.83
-----------------------------------------------------------------------------------
Total multifamily residential $1,754 $361.00 $358 $2,240.21 2,112 $420.93
=========================================================== ===========
Industrial and retail properties (3) Per Sq. Ft
- ------------------------------------ ----------
Tenant improvements 208 $0.40
Commissions 34 .07
Other 91 .17
------------------------
Total industrial and retail 333 $0.64
===========
Corporate purchases of furniture, fixtures, and equipment 81
------------
Total $2,526
============
</TABLE>
(1) Multifamily residential properties owned for one year or more as of
January 1, 1996, and multifamily development projects completed and
stabilized subsequent to the Company's initial public offering (December
29, 1993). Per unit computations are based on the average monthly
stabilized and completed apartment units during the period. The average
number of completed units during the year ended December 31, 1996, was
4,857.
(2) Multifamily residential property acquired and owned by the Company for
less than one year as of January 1, 1996. Per unit computations are based
on 160 units.
(3) Total leasable retail and industrial square footage totals approximately
525,300 sq. ft. Includes one retail shopping center, two industrial
properties, and retail space integrated into four primarily multifamily
residential properties.
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1995 TO YEAR ENDED DECEMBER 31, 1994
- ------------------------------------------------------------------------------
The Company's net income increased approximately $1.7 million to
approximately $10.4 million or $0.90 per common share for the year ended
December 31, 1995, compared with net income of approximately $8.8 million or
$0.89 per common share in 1994. The additional rents collected from properties
added to the Company's portfolio during 1994 and 1995 is the primary reason for
this increase. During the twelve months ended December 31, 1995, rental revenues
totaled approximately $39.0 million, an increase of approximately $10.1 million
or 34.8% over rental revenues of approximately $29.0 million in 1994. Rental
revenues generated by properties purchased since January 1, 1994, accounted for
approximately $6.0 million of this increase, while the completion of the Trace
II, Uptown Village, and Ascension Point II projects during 1995 resulted in
additional rental income of approximately $3.2 million. Rental revenues from the
remaining properties in the operating portfolio increased
19
<PAGE>
approximately $831,000 in 1995 over the comparable prior year due to higher
average occupancy rates and rental rate increases. The Company recognizes
rental revenue from commercial tenants on a straight-line basis over the terms
of the related leases. Rental revenues includes $15,000 and $13,000 of deferred
rental income in the years ended December 31, 1995 and 1994, respectively.
Property management income decreased $161,000 or 25.2% in 1995 from 1994 because
of a decrease in apartment units and retail space managed for third-party
owners. Interest and other revenues increased $471,000 or 36.9% in 1995 over
1994 primarily due to income from the properties added to the Company's
portfolio, and because of increased yields earned on invested funds.
Total expenses during the year ended December 31, 1995, were
approximately $30.8 million, an increase of approximately $8.7 million or 39.4%
over total expenses of approximately $22.1 million in 1994. The increase in
total expenses is primarily due to the growth in the size of the Company's
residential operating portfolio as a result of its acquisition and development
activities. The increase in the number of apartment units operated by the
Company resulted in a $771,000 or 32.9% increase in repairs and maintenance
expenses, a $483,000 or 32.4% increase in other property operating expenses, and
a $185,000 or 50.6% increase in advertising expenses in 1995 compared with 1994.
Property administrative expenses increased $349,000 or 14.6% in 1995 over 1994
primarily due to salaries and benefits for personnel managing the new
properties. General and administrative expenses incurred for the Company's
corporate activities increased $216,000 or 11.8% in 1995 over 1994 as a result
of higher costs to acquire, develop, and manage the Company's larger real estate
portfolio. Real estate tax expense increased approximately $1.3 million or
36.3% in 1995 over 1994 due to the additional properties owned in 1995, and due
to increased tax assessments on certain of the properties.
The Company's increased borrowing pursuant to the Credit Facility and
other mortgage debt incurred to fund its construction and acquisition activities
in 1994 and 1995 resulted in an increase of approximately $2.7 million or 96.5%
in interest expense in the year ended December 31, 1995, over 1994.
Additionally, the Company's average cost of borrowing under the Credit Facility
for completed properties increased from 6.33% in 1994 to 7.78% in 1995.
Interest related to amortization of deferred financing costs increased $41,000
or 8.7% in 1995 over 1994 as the Company incurred additional loan fees in 1995
to obtain an amendment to the Credit Facility.
Approximately $2.2 million of the $2.6 million or 38.7% increase in
depreciation and amortization expenses in 1995 over 1994 relates to depreciation
recognized on the additional properties held in the Company's operating
portfolio in 1995 compared with 1994. The remaining increase is related to an
increase in depreciable assets after capital improvement programs at certain of
the other properties, and investments in furniture, fixtures, office machines,
and computer equipment for the corporate offices.
The Company invested approximately $64.9 million, in total, in the real
estate portfolio during the year ended December 31, 1995. Approximately $54.3
million was invested in the development and construction of ten multifamily
residential apartment projects, three of which were completed during the year.
The Company acquired an existing multifamily residential property and two
additional units in the Ascension Point condominium community for approximately
$6.6 million, in the aggregate. Approximately $1.6 million was invested in
capital improvements to properties acquired in 1994 and 1995, and approximately
$1.2 million was invested in improvements to the multifamily residential
properties held in the Company's original real estate portfolio. Tenant
improvements and capital expenditures for the Company's retail and industrial
properties totaled $521,000, and investments in furniture, fixtures, and
equipment totaled $605,000 in 1995. The expenditures for furniture, fixtures,
and equipment were comprised of $432,000 primarily for maintenance equipment,
vehicles, and computers at the properties, and $173,000 for computers and
furnishings at the Company's corporate offices.
CASH FLOW ANALYSIS
The Company's activities resulted in a net decrease in cash and cash
equivalents of approximately $8.0 million in the year ended December 31, 1996,
compared with a net increase in cash and cash equivalents of approximately $6.3
million in the previous year ended December 31, 1995. Cash inflows from the
Company's operating activities totaled approximately $19.4 million in 1996,
compared with approximately $22.4 million provided by operations in the year
ended December 31, 1995. The Company's investing activities in the year ended
December 31, 1996, totaled approximately $67.7 million compared with
approximately $64.9 million in the prior
20
<PAGE>
year. The Company's investment of approximately $68.2 for development of and
improvements to its real estate portfolio was previously described in the
discussion of the results of operations for the year ended December 31, 1996.
The sale of six condominium units at one of the Company's properties provided
$520,000 in the year ended December 31, 1996. During the year ended December 31,
1995, the Company invested approximately $64.9 million in its real estate
portfolio. The components of these investments were approximately $54.3 million
invested in properties under development and construction during the year,
approximately $6.6 million for acquisitions of existing multifamily properties,
and approximately $3.9 million for improvements to the operating portfolio and
purchases of furniture and equipment.
Financing activities undertaken in the year ended December 31, 1996,
provided approximately $40.2 million, compared with approximately $48.8 million
in the year ended December 31, 1995. The primary cash inflows from financing
activities in 1996 were approximately $59.2 million provided from construction
draws, approximately $23.9 million provided from the sale of 1,166,600 of the
Company's common shares, and approximately $5.8 million provided from sales of
common shares of the Company pursuant to shareholder and employee plans. The
Company's cash outflows from financing activities during 1996 were approximately
$24.8 million for payments on notes payable, approximately $23.0 million for
dividend payments to shareholders, and $793,000 in the aggregate for financing
and common share offering costs. During the year ended December 31, 1995, the
Company's primary cash inflows from financing activities were approximately
$118.3 million from construction draws and proceeds from a note payable, and
approximately $1.2 million from sales of common shares pursuant to shareholder
and employee plans. Cash outflows for financing activities in the year ended
December 31, 1995, were approximately $52.2 million for payments on notes
payable, approximately $17.2 million for dividend payments to shareholders, and
approximately $1.4 million in the aggregate for financing and offering costs.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically used cash flow from operations to meet its
dividend payments and short term liquidity requirements, and a combination of
equity, mortgage debt, and credit line debt to finance its development and
acquisition of new properties. The Company has established a $170 million
credit line (the "Credit Facility") with several lenders as the primary source
of acquisition and development capital, with a view towards replacing that debt
following acquisition (or completion, in the case of a development property) as
market conditions warrant, with either long term fixed rate debt or permanent
equity. As of March 6, 1997, the Company had a total of $199.1 million in
outstanding debt, consisting of $137.7 million under the Credit Facility (of
which $70.8 million was drawn for development in progress), $59.8 million in
fixed rate debt with an average maturity of 5.1 years, and $1.6 million in
short-term, unsecured debt drawn for acquisition of a new development in
progress. Prior to its maturity date of May 1, 1997, the Company intends to
retire the $1.6 million in unsecured debt with an incremental draw on the Credit
Facility.
LONG-TERM FINANCING ARRANGEMENTS
The Company's long-term financing includes a $50 million loan from
Nationwide Life Insurance Company (the "Nationwide Loan") which bears interest
at a fixed rate of 7.45% and matures in December 2002, with a 25-year principal
amortization schedule. The loan is collateralized by nine properties formerly
pledged as part of the collateral pool securing the Credit Facility. In November
1995 the Company used the $50 million proceeds to retire an equivalent amount of
variable rate debt outstanding under the Credit Facility, simultaneously
releasing the nine properties as collateral for the Nationwide loan. The
Company completed the refinancing with the goal of fixing its cost on a
significant portion of the Company's debt and reducing exposure to future
interest rate increases. As of March 6, 1997, approximately $49.1 million was
outstanding under the Nationwide loan.
The Company currently has under construction a total of 1,902 units in
six multifamily residential communities, and has acquired one additional site
upon which it expects to construct approximately 346 multifamily residential
units. These seven developments are currently projected to cost approximately
$172 million, of which $115 million is anticipated to be funded from the Credit
Facility and internally generated cash flow, and the remaining $57 million from
third party debt and other sources. Full use of the Company's $170 million
availability in the Credit Facility is subject to the Company's ability to
provide sufficient collateral to the lenders during the term of the loan. Such
collateral is currently available to fully utilize the committed loan amount,
plus an additional $12 million of borrowing capacity under the existing loan-to-
value requirements under the terms of the Credit Facility. Additional
collateral value will become available during 1997 as existing developments in
progress are completed and become
21
<PAGE>
operational. This should allow the Company to meet the funding requirements
currently contemplated under the Credit Facility to complete its planned
development in progress by either (a) increasing the facility's current
commitment, subject to agreement with the existing lenders, or (b) releasing
certain collateralized assets from the facility for use in securing additional
third party debt.
While the Company currently intends to continue to use the Credit
Facility as its primary source of development financing, it may in the future
use additional third party secured debt, unsecured public debt, cash flow from
operations, and other sources of debt or equity to fund acquisitions and
development costs, or to refinance the Credit Facility before maturity when
deemed appropriate. With respect to any development properties, the Company
intends to fund interest payments through additional draws on the various loan
sources until such properties are completed and begin to provide sufficient
income to satisfy debt service requirements and operating expenses. When the
Credit Facility matures on December 31, 1997, the Company will be required to
secure substitute financing for any balance then outstanding.
On August 8, 1996, the Company filed a "shelf" Registration Statement
with the Securities and Exchange Commission on Form S-3 to register an aggregate
of $200 million of debt securities, common shares, preferred shares and warrants
(collectively, the "Registered Securities"). The Registered Securities may be
issued separately or together, in separate series, and in amounts and at prices
and terms to be determined by market conditions at the time of offering. On
October 10, 1996, the Company sold 1,166,600 common shares of beneficial
interest pursuant to the Registration Statement, at a price of $20.50 per share,
or an aggregate purchase price of approximately $23.9 million, to certain
institutional investors. The net proceeds after transaction expenses were
combined with working capital to retire $24.0 million of debt outstanding under
the Credit Facility. The proceeds from any future sales of the Registered
Securities under the Registration Statement may be used for general Company
purposes, including the development and acquisition of multifamily residential
properties and further repayment of secured or unsecured indebtedness.
RISKS ASSOCIATED WITH FORWARD LOOKING STATEMENTS
This Form 10-K, together with other statements and information publicly
disseminated by the Company, contains certain forward looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Such statements
are based on current expectations which involve a number or risks and
uncertainties, including, but not limited to, risks due to the market
concentration of the Company's properties in Dallas, Texas and particularly the
Uptown District; risks associated with the acquisition, construction, and
development of multifamily residential properties - including the risk of
oversupply of units or a reduction in demand for apartment units, risks
associated with delays in construction and lease-up, cost increases, and risks
that the Company's acquisition and development properties will fail to perform
as expected; real estate financing risks such as availability of debt or equity
financing in the future and the risk of increasing rates for such financing; as
well as other risks listed from time to time in the Company's reports filed with
the SEC.
RECENT DEVELOPMENTS
On January 16, 1997, the Company paid a deposit of $300,000 pursuant to
an earnest money contract to purchase and redevelop a ten-acre tract known as
the St. Luke's Hospital Campus located in Denver, Colorado. The Company expects
to complete a purchase of the site when demolition of existing buildings,
remediation of the property, and certain other conditions are met.
On February 24, 1997, the Company purchased a 158-unit multifamily
residential property known as The Commons at Turtle Creek, located in Dallas,
Texas, for a purchase price of approximately $6.9 million. The purchase was
funded from the Company's Credit Facility.
On February 25, 1997, the Company filed a Registration Statement on
Form S-8, registering the issuance of 1,000,000 common shares to be issued
pursuant to the Company's Employee Incentive Plan.
22
<PAGE>
On February 27, 1997, the Company executed a forty-year land lease
agreement for a redevelopment project, The Rice Hotel, located in Houston,
Texas. The Rice Hotel is an 18-story structure originally built in 1913. Under
terms of the agreement, the Company will fund redevelopment of the hotel into a
mixed-use residential and retail facility comprised of 317 loft-style apartments
and 21,000 square feet of retail space. The Company, in partnership with a
Houston development company, will manage all aspects of the renovation,
currently budgeted at approximately $33.3 million, and operations of the project
upon completion. The Houston Housing Finance Corporation (HHFC), owner of the
land, will fund approximately $6.6 million of abatement and infrastructure
costs, and the Company will provide the balance of the funding. Concurrently
with closing the lease agreement, the Company guaranteed a $20.0 million
construction loan for the project. The remainder of the Company's renovation
costs will be funded from draws on the Credit Facility, cash flow from
operations, or other short term financing.
On March 7, 1997, the Company declared a dividend of $0.395 per common
share, payable on March 25, 1997, to shareholders of record on March
21, 1997.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data are listed in the Index
to Financial Statements and Financial Schedules appearing on Page F-1 of this
Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
23
<PAGE>
PART III
ITEM 10. TRUST MANAGERS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Trust Managers and the executive officers of the Company, their
positions and offices with the Company or its subsidiaries, and the expiration
of their current terms as Trust Managers are as follows:
<TABLE>
<CAPTION>
Name Positions and Offices Held Term
- ---- -------------------------- ----
<S> <C> <C>
Richard L. Bloch Chairman of the Board of Trust Managers 1999
Robert L. Shaw Trust Manager, Chief Executive Officer 1997
Will Cureton Trust Manager, Chief Operating Officer 1998
Roger T. Staubach Trust Manager 1997
James C. Leslie Trust Manager 1999
Amy DiGeso Trust Manager 1999
Hugh G. Robinson Trust Manager 1997
Gregg L. Engles Trust Manager 1998
Richard R. Reupke Chief Financial Officer
J. Michael Lewis Senior Vice President-Treasurer
Thomas L. Wilkes Senior Vice President-Management; President, CMSI
Arthur E. Lomenick Senior Vice President-Development
James F. Duffy Senior Vice President-Construction
</TABLE>
Pursuant to the terms of the Amended and Restated Declaration of Trust
and Bylaws of the Company, the Board of Trust Managers will consist of no less
than two and no more than eleven persons. The Board of Trust Managers is divided
into three classes having three-year staggered terms. Trust Managers will hold
office until their successors are duly elected and qualified.
The following is a biographical summary of the experience of the
executive officers and Trust Managers of the Company:
Richard L. Bloch, age 67, has been Chairman of the Board of Trust
----------------
Managers and a Trust Manager since October 1993 and is a member of the Executive
Committee. Mr. Bloch has served as a Director of City National Bank of Beverly
Hills and its holding company, City National Bank Corporation, since 1976 and of
Cantel Corporation since 1988. Mr. Bloch served as a Director of Data
Broadcasting Corporation from 1993 through 1995. He served as Chairman of the
Board and Chief Executive Officer of Filmways, Inc. and Chairman of the Board of
two of its principal subsidiaries, Union Fidelity Insurance and Grossett &
Dunlap, Inc., from 1976 through 1982, and as a member of the board of directors
of Glenayre Technology (formerly known as NuWest Corporation) from 1987 through
1992. He is a co-founder and former principal owner of the Phoenix Suns NBA
basketball team and one of the former owners of the NBC-affiliated KVOA
television station in Tucson, Arizona. Mr. Bloch's real estate experience
includes co-developing and/or owning the Gulf & Western Building in New York
City, a Hyatt Hotel in Los Angeles, the Transamerica Building in Tucson and
several IBM and Allstate Insurance facilities.
Robert L. Shaw, age 40, has been Chief Executive Officer of the Company
--------------
and a Trust Manager since its inception, and is a member of the Executive
Committee. Mr. Shaw was a co-founder of Columbus Realty Holdings, Inc. ("CRH"),
a predecessor of the Company, and of its affiliate, Memphis Real Estate, Inc.
("Memphis Real Estate"), and served as President of CRH and Memphis Real Estate
from August 1989 to December 1993. Mr. Shaw was Executive Vice President of SBC
Development Company from September 1987 to March 1990, and Vice President from
July 1987 to September 1987. Mr. Shaw has been involved in the construction and
development of multifamily residential properties since 1981. He serves on the
Board of Directors of the Greater Dallas Chamber of Commerce and the National
Association of Real Estate Investments Trusts. He is also a member of the
Young Presidents Organization ("YPO"), the Urban Land Institute, and the
National Multifamily Housing Counsel. In addition, he serves on the University
of Texas at Dallas Advisory Board.
24
<PAGE>
Will Cureton, age 46, has been Chief Operating Officer of the Company
------------
and a Trust Manager since its inception, and is a member of the Executive
Committee. Prior to the formation of the Company, from 1987 until December 1993,
Mr. Cureton served as President and Chief Executive Officer of Texana and
certain of its affiliates (the "Texana Group"), which were merged into the
Company pursuant to the Initial Public Offering. Prior to his affiliation with
the Texana Group, Mr. Cureton was Vice President and Chief Operating Officer of
The DicoGroup, Inc., a Dallas-based oil and gas and real estate company, from
1981 through 1988. Prior to his association with The DicoGroup, Mr. Cureton
joined Coopers & Lybrand in 1974 as a Certified Public Accountant where he
served as real estate coordinator and audit manager for the Dallas office until
1981. He is a member of the Real Estate Council and the National Association of
Real Estate Investment Trusts. Mr. Cureton has been on the Board of Directors of
the East Texas State University Athletic Association since 1989. He also serves
on the ETSU Foundation Board and its Capital Campaign Steering Committee.
Roger T. Staubach, age 55, has been a Trust Manager of the Company
-----------------
since December 1993 and is a member of the Audit Committee. Mr. Staubach is
Chairman and Chief Executive Officer of The Staubach Company, an integrated real
estate company providing services related to office, industrial and retail real
estate with a commitment to represent only the real estate user, which he formed
in 1977. He is also a director of a number of affiliates and subsidiaries of The
Staubach Company, and serves as president of several of these entities. Mr.
Staubach is a director of Halliburton Company, Brinker International, and First
USA, Inc. and a trustee of American AAdvantage Funds. Mr. Staubach was
quarterback for the Dallas Cowboys professional football team from 1969 through
1979.
James C. Leslie, age 41, has been a Trust Manager of the Company since
---------------
December 1993, and is Chairman of the Audit Committee and a member of the
Executive Compensation Committee. Mr. Leslie is President-Financial Services, a
member of the Office of the President, and a director of The Staubach Company,
positions he has held since February 1996, January 1993 and October 1988,
respectively. Mr. Leslie was Chief Financial Officer of The Staubach Company
from 1982 to January 1992 and President of Staubach Financial Services from
January 1992 to February 1996. Mr. Leslie is also President and a board member
of Wolverine Holding Company, and serves on the boards of Forum Retirement
Partners, L.P., and the North Texas Chapter of the Arthritis Foundation. Mr.
Leslie is a certified public accountant.
Amy DiGeso, age 44, has been a Trust Manager of the Company since
----------
September 1996. Ms. DiGeso is currently President and Chief Executive Officer of
Mary Kay Inc., directing all operating responsibilities for Mary Kay Inc. global
business. She is also a board member of Mary Kay Inc. and of the Cosmetic,
Toiletry, and Fragrance Association. Prior to her affiliation with Mary Kay, Ms.
DiGeso was with Bankers Trust Company from 1986 to 1992, last holding the
position as Chief of Staff for the Asset and Project Financing Group, served as
Executive Director of Human Resources of Estee Lauder from 1984 to 1986, and
with American Express Company from 1978 to 1984, held several positions
culminating in the Chief Administrative Officer role for their direct marketing
business. She holds an MBA in International Management from Fordham University,
and a BS in Behavioral Science from Penn State.
Hugh G. Robinson, age 64, has been a Trust Manager of the Company since
----------------
December 1993 and is a member of the Executive Compensation Committee. General
Robinson, who retired from the U.S. Army Corps of Engineers as a Major General
in 1983, has served since 1989 as Chairman of the Board and Chief Executive
Officer of The Tetra Group, Inc., which provides construction management and
business development services. From 1988 to 1995, he was Senior Vice President
and managed the Southwest office of Grigsby Brandford & Co., Inc., a minority
owned investment banking firm specializing in municipal securities. He was a
member of the board of directors of the Federal Reserve Bank of Dallas from 1985
through 1991, serving as chairman of the board in 1991. Prior to joining The
Tetra Group, General Robinson held the position of President of Cityplace
Development Corporation, a real estate development company, since its formation
in 1984. General Robinson is also a member of the boards of directors of A.H.
Belo Corporation (the owner of the Dallas Morning News), TUElectric, Smith
Environmental Technologies, Guaranty Federal Savings Bank, and Circuit City
Stores, Inc.
25
<PAGE>
Gregg L. Engles, age 39, has been a Trust Manager of the Company since
---------------
December 1993 and is the Chairman of the Executive Compensation Committee and a
member of the Audit Committee. Mr. Engles is the Chairman and Chief Executive
Officer of Suiza Foods Corporation, a New York Stock Exchange company which owns
and operates dairy processing operations in Florida, California, Nevada and
Puerto Rico and packaged ice operations throughout the United States. Until
December 1993, Mr. Engles was Chairman of the Board of The Milnot Company, a
branded and private label food products company. He is also a co-founder of SFE
Citrus Processors, Inc., which owns a Florida bulk citrus processor.
Richard R. Reupke, age 41, is Chief Financial Officer and Secretary of
-----------------
the Company, positions he has held since October 1993. From October 1993 to
August 1994, Mr. Reupke also served as Treasurer of the Company. Since June
1994, he has served as Secretary of CMSI, a wholly owned subsidiary of the
Company. From August 1988 to December 1993, Mr. Reupke served as Vice
President--Finance of Texana RAT II Associates, Inc. where he had primary
responsibility for all accounting functions. Prior to his affiliation with the
Texana Group, Mr. Reupke was Controller for NOVA Properties Co., Controller for
Dale C. Bullough & Associates and Regional Controller for Genex Homes, Inc. He
is a member of the Apartment Association of Greater Dallas, the Apartment
Association of Tarrant County, and BOMA (Building Owners and Managers
Association).
J. Michael Lewis, age 47, is Senior Vice President and Treasurer of the
----------------
Company, positions he has held since August 1994. Prior to joining the Company,
Mr. Lewis accumulated 17 years experience of service which included the
positions of Executive Vice President and Treasurer for Southland Financial
Corporation, a publicly traded financial services holding company, and its
successors, which were the owners, developers and managers of the Las Colinas
development in Irving, Texas, a suburb of Dallas. Prior to that, he was a
portfolio manager of securities for Southland Trust Company and Southland Life
Insurance Company. He is a member of the Financial Executives Institute, the
Australian American Chamber of Commerce and serves as Chairman of Providence
Christian School of Texas, and as a director of the Las Colinas Association.
Thomas L. Wilkes, age 37, is a Senior Vice President of the Company and
----------------
President of CMSI, a wholly owned subsidiary of the Company, positions he has
held since October 1993. Mr. Wilkes served as President of CRH Management
Company, a multifamily property management firm and a member of the Columbus
Group, since its formation in October 1990 to December 1993. Prior thereto, he
was a Senior Divisional Manager in the residential services division of the
Trammell Crow Residential Companies from June 1988 to October 1990 and a
Divisional Manager from December 1986 to May 1988. Before joining Trammell Crow,
Mr. Wilkes served for four years as an officer in the United States Air Force.
Mr. Wilkes is a Certified Property Manager, Registered Apartment Manager, member
of Leadership Dallas Class of 1997, member of National Association of Home &
Apartment Builders, and a member of the Institute of Real Estate Management, and
is on the board of the Apartment Association of Greater Dallas, Bryan's House
and is past President of the Uptown Dallas Association.
Arthur E. Lomenick, age 41, has been a Senior Vice President of the
------------------
Company since October 1994 and was Vice President from October 1993 to October
1994. Previously, Mr. Lomenick served as Vice President, Investments, for
Memphis Real Estate since January 1993. Prior thereto, Mr. Lomenick was
Executive Vice President of Wolverine Investment Services, a division of The
Staubach Company, from August 1992 to January 1993. Mr. Lomenick served as Vice
President of The Staubach Company from February 1990 through August 1992, and as
Vice President of divisions of The Staubach Company from 1986 through February
1990. Mr. Lomenick serves on the boards of directors of the Dallas Visual Arts
Center, the Dallas Arts District Association, and the Oaklawn Forum. He is also
a member of the International Downtown Association (IDA), and the Urban Land
Institute (ULI), serving on its Gold Flight Housing Committee, and the Congress
of the New Urbanism.
26
<PAGE>
James F. Duffy, age 53, has been a Senior Vice President of the Company
--------------
since May 1996. Prior to his affiliation with the Company, Mr. Duffy was
President of the JFD Group, a business consulting firm specializing in the
commercial construction industry. Prior thereto, he was President of the W. B.
Moore Company from 1991 to 1993, Vice President-Operations of Spring Valley
Construction Company from 1981 to 1990, and Vice President-Commercial for Luther
Hill and Associates, Inc. from 1972 to 1981. He is a past president of the
Dallas Chapter of Associated General Contractors of America. He was past
Secretary/Treasurer of the Texas Building Branch-AGC. He has also served as a
member of the construction degree advisory committees at East Texas State
University, The University of North Texas, and Northlake College. Mr. Duffy was
a member of the City Council of the Town of Addison from 1986 to 1991, serving
as Mayor Pro Tem and as Chairman of both the Addison Planning and Zoning
Commission and Board of Zoning Adjustment.
No family relationships exist among any of the Trust Managers or
executive officers of the Company. No arrangement or understanding exists
between any Trust Manager or executive officer or any other person pursuant to
which any Trust Manager or executive officer was selected as a Trust Manager or
executive officer of the Company.
The information contained in the paragraph related to compliance with
Section 16(a) of the Securities and Exchange Act of 1934, under the heading
"Proposal One: Election of Trust Managers, Trust Managers Whose Terms Will
Continue After the Meeting" of the Proxy Statement for the Annual Meeting of
Shareholders to be held May 23, 1997 (the "Proxy Statement") is incorporated
herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The section entitled "Executive Compensation" of the Proxy Statement is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The section entitled "Security Ownership of Certain Beneficial Owners
and Management" of the Proxy Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The section entitled "Certain Relationships and Transactions" of the
Proxy Statement is incorporated herein by reference.
27
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Report:
(1) Financial Statements - The index to the Financial Statements is
included in page F-1 of this report.
(2) Exhibits:
EXHIBIT
NO. DESCRIPTION
- ------- -----------
3.1 --Amended and Restated Declaration of Trust of the Company (9)
3.2 --Bylaws of the Company (9)
4.1 --Form of Certificate representing common shares of beneficial
interest, par value $.01 per share, of the Company (3)
10.1 --Form of Registration Rights Agreement among the Company and the
persons named therein (1)
10.4/+*/ --Employment Agreement between the Company and Richard L. Bloch
10.5/+*/ --Employment Agreement between the Company and Robert L. Shaw
10.6/+*/ --Employment Agreement between the Company and Will Cureton
10.7/+*/ --Employment Agreement between the Company and Richard R. Reupke
10.8/+*/ --Employment Agreement between the Company and Thomas L. Wilkes
10.9/+*/ --Employment Agreement between the Company and J. Michael Lewis
10.10/+*/ --Employment Agreement between the Company and Arthur E. Lomenick
10.11/+*/ --Employment Agreement between the Company and James F. Duffy
10.12 --Form of Indemnification Agreement by and between the Company
and its executive officers and Trust Managers (1)
10.13 --Fourth Amendment Master Lease Agreement between the Company and
Electronic Data Systems Corporation pertaining to Windhaven
Village (6)
10.14 --Lease Agreement between the Company and Madison Office
Building, Inc. pertaining to the Madison Office Building (2)
10.15/+/ --Columbus Realty Trust 1993 Share Bonus Plan (4)
10.16/+/ --Columbus Realty Trust 1993 Share Option Plan (4)
10.17 --Second Amended and Restated Loan Agreement between
the Company, Bank One, Texas, NA, Bank United of Texas
FSB, Comerica Bank-Texas and Bank One, Texas NA, as agent for
the Banks (8)
10.18 --First Modification to the Second Amended and Restated Loan
Agreement between the Company, Bank One, Texas, NA, Bank
United of Texas FSB, Wells Fargo Realty Advisors Funding,
Incorporated, Texas Commerce Bank NA, Comerica Bank - Texas,
and Bank One, Texas NA, as agent for the Banks (14)
10.19 --Second Modification to the Second Amended and Restated Loan
Agreement between the Company, Bank One, Texas NA, Bank
United of Texas FSB, Wells Fargo Realty Advisors Funding,
Incorporated, Texas Commerce Bank NA, Comerica Bank - Texas,
and Bank One, Texas NA, as agent for the Banks (14)
10.20 --$50,000,000 Mortgage Note between the Company and Nationwide
Life Insurance Company (14)
10.21 --Form of Assignment of Limited Partnership Interests (1)
10.22 --Form of Waiver and Contribution Agreement (3)
10.23/+/ --Columbus Realty Trust 401(k) Plan and Trust (5)
10.24 --Columbus Realty Trust Amended and Restated Dividend
Reinvestment and Share Purchase Plan (7)
10.25/+/ --Columbus Realty Trust Share Bonus Plan (No. 2) (8)
10.26/+/ --Columbus Realty Trust Employee Stock Purchase Plan (10)
10.27/+/ --Columbus Realty Trust Long Term Management Incentive Plan (11)
28
<PAGE>
10.28/+/ --Columbus Realty Trust Long Term Employee Incentive Plan (12)
10.29/+*/ --Form of Long Term Management Incentive Plan Performance - Based
Stock and Dividend Equivalent Award Agreement by and between
the Company and Richard Bloch, Robert L. Shaw and Will
Cureton.
10.30/*/ --Third Modification to the Second Amended and Restated Loan
Agreement between the Company, Bank One, Texas N.A., Bank
United of Texas FSB, Wells Fargo Realty Advisors Funding
Incorporated, Texas Commerce Bank N.A., Comerica Bank-Texas,
and Bank One, Texas N.A., as agent for the Banks.
11 --Statement regarding computation of net income per common share
(13)
21.1 --Schedule of Subsidiaries of the Company (5)
23.1* --Consent of Ernst & Young LLP
27.1* --Financial Data Schedule
______________________
+ Management Contract or Compensatory Plan or Arrangement
* Filed herewith
(1) Previously filed with Amendment No. 1 to the Company's
Registration Statement on Form S-11 (Registration No. 33-70218)
filed with the Securities and Exchange Commission on November
26, 1993 and incorporated herein by reference.
(2) Previously filed with Amendment No. 2 to the Company's
Registration Statement on Form S-11 (Registration No.33-70218)
filed with the Securities and Exchange Commission on December
13, 1993 and incorporated herein by reference.
(3) Previously filed with Post-Effective Amendment No. 1 to the
Company's Registration Statement on Form S-11 (Registration No.
33-70218) filed with the Securities and Exchange Commission on
December 23, 1993 and incorporated herein by reference.
(4) Previously filed with the Company's Registration Statement on
Form S-11 (Registration No. 33-80544) filed with the Securities
and Exchange Commission on June 21, 1994 and incorporated herein
by reference.
(5) Previously filed with Amendment No. 1 to the Company's
Registration Statement on Form S-11 (Registration No. 33-
80544) filed with the Securities and Exchange Commission on June
30, 1994 and incorporated herein by reference.
(6) Previously filed with Amendment No. 1 to the Company's
Registration Statement on Form S-3 (Registration No. 33-
88672) filed with the Securities and Exchange Commission on
January 30, 1995 and incorporated herein by reference.
(7) Previously filed with Post Effective Amendment to the Company's
Registration Statement on Form S-3 (Registration No.33-
90146) filed with the Securities and Exchange Commission on
September 28, 1995 and incorporated herein by reference.
(8) Previously filed with the Company's Registration Statement on
Form S-8 (Registration No. 33-90492) filed with the Securities
and Exchange Commission on March 21, 1995 and incorporated
herein by reference.
(9) Previously filed with the Company's Registration Statement on
Form S-3 (Registration No. 333-09775) filed with the Securities
and Exchange Commission on August 8, 1996 and incorporated
herein by reference.
(10) Previously filed with the Company's Registration Statement on
Post Effective Amendment No. 1 to Form S-8 (Registration No. 33-
94798) filed with the Securities and Exchange Commission on
August 28, 1995 and incorporated herein by reference.
(11) Previously filed with the Company's Registration Statement on
Form S-8 (Registration No. 333-02276) filed with the Securities
and Exchange Commission on March 12, 1996 and incorporated
herein by reference.
(12) Previously filed with the Company's Registration Statement on
Form S-8 (Registration No. 333-22307) filed with the Securities
and Exchange Commission on February 25, 1997 and incorporated
herein by reference.
29
<PAGE>
(13) Incorporated by reference to Note 6 of Item 8- Financial
Statements of this Form 10-K
(14) Previously filed with the Company's Annual Report on Form 10-K
for the year ended December 31, 1995.
(b) Reports on Form 8-K:
None.
30
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on behalf
of the undersigned, thereunto duly authorized.
COLUMBUS REALTY TRUST
(Registrant)
March 11, 1997 /s/ ROBERT L. SHAW
--------------------
Chief Executive Officer
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this Form 10-K has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Name Position Date
- ---- -------- ----
/s/ RICHARD L. BLOCH Trust Manager and March 11, 1997
- ------------------------
Richard L. Bloch Chairman of the Board
/s/ ROBERT L. SHAW Trust Manager and March 11, 1997
- ------------------------
Robert L. Shaw Chief Executive Officer
/s/ WILL CURETON Trust Manager and March 11, 1997
- ------------------------
Will Cureton Chief Operating Officer
/s/ ROGER T. STAUBACH Trust Manager March 11, 1997
- ------------------------
Roger T. Staubach
/s/ RICHARD R. REUPKE Chief Financial Officer and March 11, 1997
- ------------------------
Richard R. Reupke Secretary
/s/ JAMES C. LESLIE Trust Manager March 11, 1997
- ------------------------
James C. Leslie
/s/ AMY DIGESO Trust Manager March 11, 1997
- ------------------------
Amy DiGeso
/s/ HUGH G. ROBINSON Trust Manager March 11, 1997
- ------------------------
Hugh G. Robinson
/s/ GREGG L. ENGLES Trust Manager March 11, 1997
- ------------------------
Gregg L. Engles
31
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Columbus Realty Trust
Report of Independent Auditors F-2
Consolidated Financial Statements:
Consolidated Balance Sheets as of December 31, 1996, and December 31, 1995 F-3
Consolidated Statements of Operations for the years ended December 31, 1996, 1995 and 1994 F-4
Consolidated Statements of Shareholders' Equity for the years ended December 31, 1996, 1995 and
1994 F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994 F-6
Notes to Consolidated Financial Statements F-7
Supplementary Data:
Schedule III - Real Estate Investments and Accumulated Depreciation F-24
Notes to Schedule III - Real Estate Investments and Accumulated Depreciation F-27
</TABLE>
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions, or are inapplicable, and therefore have been omitted.
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Trust Managers
Columbus Realty Trust
We have audited the accompanying consolidated balance sheets of Columbus Realty
Trust as of December 31, 1996, and 1995 and the related consolidated statements
of operations, shareholders' equity, and cash flows for each of the three years
in the period ended December 31, 1996. Our audits also included the financial
statement schedule of Columbus Realty Trust listed in the Index referenced at
Item 14(a). These financial statements and schedule are the responsibility of
management of Columbus Realty Trust. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Columbus Realty Trust as of December 31, 1996, and 1995 and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1996, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
ERNST & YOUNG LLP
Dallas, Texas
January 28, 1997, except for
Note 15, as to which the date
is March 7, 1997
F-2
<PAGE>
COLUMBUS REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
ASSETS
DECEMBER 31,
-------------------------
1996 1995
-------------------------
<S> <C> <C>
Real estate:
Land $ 54,399 $ 48,104
Buildings and improvements 285,104 232,428
Furniture, fixtures, and equipment 4,696 4,433
Construction-in-progress 55,614 50,081
-------------------------
399,813 335,046
Less accumulated depreciation 40,492 31,667
-------------------------
Real estate held for investment 359,321 303,379
Real estate held for sale 3,980 -
-------------------------
363,301 303,379
Cash and cash equivalents 3,195 11,224
Accounts receivable 663 861
Receivables from affiliates 152 418
Deferred assets, net of accumulated amortization
of $1,112 and $932 at December 31, 1996
and 1995, respectively 420 454
Deferred financing costs, net of accumulated
amortization of $2,197 and $1,438
at December 31, 1996 and 1995, respectively 1,316 1,795
Other assets 5,529 2,845
-------------------------
Total assets $374,576 $320,976
=========================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Notes payable $179,855 $145,492
Accrued dividends - 4,322
Accounts payable and accrued expenses 3,536 4,912
Accrued interest 288 292
Accrued property taxes 6,727 5,203
Tenant security deposits 1,671 1,273
Prepaid rent 358 592
Minority interest 2,063 2,063
-------------------------
Total liabilities 194,498 164,149
Shareholders' equity:
Preferred shares, $ .01 par value;
10,000,000 shares authorized;
none issued or outstanding - -
Common shares, $ .01 par value;
100,000,000 shares authorized;
13,059,137 and 11,524,618 shares issued at
December 31, 1996 and 1995, respectively 131 115
Additional paid-in capital 206,564 176,061
Retained earnings (deficit) (26,611) (19,343)
-------------------------
180,084 156,833
Less 900 common shares in treasury, at cost 6 6
-------------------------
Total shareholders' equity 180,078 156,827
-------------------------
Total liabilities and shareholders' equity $374,576 $320,976
=========================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
COLUMBUS REALTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
1996 1995 1994
--------------------------------------
<S> <C> <C> <C>
Revenues:
Rental $45,910 $39,023 $28,963
Property management 298 479 640
Interest and other 2,322 1,749 1,278
--------------------------------------
Total revenues 48,530 41,251 30,881
Expenses:
Repairs and maintenance 3,573 3,117 2,346
Other property operating 2,504 1,976 1,493
Advertising 723 551 366
General and administrative - properties 3,183 2,754 2,405
General and administrative - corporate 2,073 2,057 1,841
Real estate taxes 6,382 5,025 3,687
Interest 7,884 5,596 2,848
Interest related to amortization of
deferred financing costs 393 515 474
Depreciation and amortization 10,603 9,232 6,660
--------------------------------------
Total expenses 37,318 30,823 22,120
--------------------------------------
Income from operations 11,212 10,428 8,761
Gain on sale of real estate 246 - -
--------------------------------------
Net income $11,458 $10,428 $ 8,761
======================================
Net income per common share, primary
and fully diluted:
Income from operations $ 0.92 $ 0.90 $ 0.89
Gain on sale of real estate 0.02 - -
--------------------------------------
Net income $ 0.94 $ 0.90 $ 0.89
======================================
Weighted average number of common shares
outstanding (including common share
equivalents):
Primary 12,099,291 11,536,110 9,832,417
Fully diluted 12,142,069 11,556,269 9,845,759
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
COLUMBUS REALTY TRUST
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(In thousands, except share data)
<TABLE>
<CAPTION>
Common Shares Treasury Shares
-------------------------- ------------------------
Retained Total
Number Paid-in Earnings Number Shareholders'
of Shares Amount Capital (Deficit) of Shares Amount Equity
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993 8,500,084 $ 85 $121,722 $ (6,347) - $ $115,460
Dividends declared - - - (14,962) - - (14,962)
Net adjustments to
purchase price - - (103) - - - (103)
Issuance of common shares,
net of offering costs 2,900,000 29 52,435 - - - 52,464
Issuance of common shares
under employee plan 13,200 - 245 - - - 245
Repurchase of common shares - - - 900 (6) (6)
Net income - - - 8,761 - - 8,761
-------------------------------------------------------------------------------------------------
Balance at December 31, 1994 11,413,284 114 174,299 (12,548) 900 (6) 161,859
-
Dividends declared - - - (17,223) - - (17,223)
Issuance of common shares
under employee and
shareholder plans 112,234 1 1,762 - - - 1,763
Net income - - - 10,428 - - 10,428
-------------------------------------------------------------------------------------------------
Balance at December 31, 1995 11,525,518 115 176,061 (19,343) 900 (6) 156,827
Dividends declared - - - (18,726) - - (18,726)
Issuance of common shares, net
of offering costs 1,166,600 12 23,477 - - - 23,489
Issuance of common shares
under employee and
shareholder plans 352,019 4 6,762 - - - 6,766
Option exercise 15,000 - 264 - - - 264
Net income - - - 11,458 - - 11,458
-------------------------------------------------------------------------------------------------
Balance at December 31, 1996 13,059,137 $131 $206,564 $(26,611) 900 $(6) $180,078
=================================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
COLUMBUS REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(In thousands)
<TABLE>
<CAPTION>
1996 1995 1994
---------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 11,458 $ 10,428 $ 8,761
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 10,603 9,232 6,660
Amortization of deferred financing costs 393 515 474
Gain on sale of real estate (246) - -
Noncash compensation expense related
to issuance of shares to employees - - 245
Net effect of changes in operating assets and
liabilities (2,791) 2,248 3,380
---------------------------------
Net cash provided by operating activities 19,417 22,423 19,520
INVESTING ACTIVITIES
Acquisition of properties (7,095) (6,648) (84,862)
Acquisition of ownership interests in predecessors - - (103)
Payment of construction costs (58,592) (54,322) (20,465)
Proceeds from sale of real estate 520 - -
Improvements to real estate investments (2,214) (3,331) (2,638)
Purchase of furniture, fixtures, and equipment (312) (605) (933)
---------------------------------
Net cash used in investing activities (67,693) (64,906) (109,001)
FINANCING ACTIVITIES
Net proceeds from offerings of common shares 23,915 - 53,114
Proceeds from employee and shareholder plans 5,810 1,188 -
Payment of offering costs (513) (231) (2,132)
Proceeds from notes payable 59,206 118,342 103,813
Payment of financing costs (280) (1,180) (1,170)
Payment of notes payable (24,843) (52,174) (52,552)
Payment of dividends (23,048) (17,181) (10,682)
Purchase of treasury stock - - (6)
---------------------------------
Net cash provided by financing activities 40,247 48,764 90,385
---------------------------------
Net (decrease) increase in cash and cash equivalents (8,029) 6,281 904
Cash and cash equivalents at beginning of period 11,224 4,943 4,039
---------------------------------
Cash and cash equivalents at end of period $ 3,195 $ 11,224 $ 4,943
=================================
Supplemental cash flow information:
Interest payments, including $5,148, $3,072 and $941
$3,072 and $941 capitalized in 1996, 1995 and 1994,
respectively $ 13,036 $ 8,619 $ 3,555
Noncash investing and financing activities:
Issuance of shares under employee plans $ 1,305 $ 807 $ -
Contribution of land $ - $ 2,063 $ -
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND FORMATION
Columbus Realty Trust (the Company) was organized as a Texas real estate
investment trust on October 12, 1993, to continue the multifamily operations of
Columbus Realty Holdings, Inc. (CRH) and certain of its affiliates and
predecessors (collectively, the Columbus Group). The Company commenced
operations December 29, 1993, upon completion of an initial public offering of
6,898,566 common shares at a price of $17.25 per share.
Net proceeds from the public offering were approximately $111.6 million before
offering costs. In connection with the offering, the Company drew $15 million
on a credit facility agreement (the Credit Facility, more fully described in
Note 5), for total proceeds of approximately $126.6 million. The proceeds were
primarily used to pay off mortgage notes payable and the related debt prepayment
penalties of the Columbus Group and of Texana-RAT II Associates, Inc. and
certain of its affiliates (collectively, the Texana Group), and for the
acquisition of the ownership interests in certain properties of the Columbus
Group and the Texana Group (collectively, the predecessors to Columbus Realty
Trust).
Upon consummation of the public offering, the ownership interests of the
predecessors to Columbus Realty Trust in twelve multifamily residential
properties, two industrial properties and one retail property were transferred
to the Company. The properties are located primarily in the greater Dallas,
Texas, metropolitan area. In addition, the property management contracts of
affiliates of the predecessors to Columbus Realty Trust were transferred to
Columbus Management Services, Inc. (CMSI), a wholly owned subsidiary of the
Company. CMSI manages the properties of the Company, as well as properties
owned by other parties.
The ownership interests, with a net book value of approximately $17.0 million,
and the property management contracts were acquired for a purchase price of
approximately $16.2 million, plus 1,601,518 common shares and options for
100,000 shares at an option price of $19.8375 per share.
For financial reporting purposes, the ownership interests acquired were recorded
by the Company at their historical values, with the exception of the payments
made to the third-party owners, which have been accounted for under the purchase
method of accounting. The payments made to third-party owners have been
allocated to the related real estate based on their estimated fair values.
CONSOLIDATION AND PRESENTATION
The consolidated financial statements include the accounts of the Company and
its subsidiaries, CMSI, and Addison Circle One, Ltd. The formation of Addison
Circle One, Ltd. is more fully discussed in Note 3. All significant
intercompany transactions and accounts have been eliminated.
USES OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statement and accompanying notes.
Actual results could differ from those estimates.
F-7
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
INCOME TAXES
The Company has made an election to be taxed as a real estate investment trust
(REIT) under Sections 856 through 860 of the Internal Revenue Code of 1986, as
amended (the Code). As a REIT, the Company generally is not subject to federal
income tax to the extent it distributes at least 95% of its REIT taxable income
to its shareholders. Shareholders are taxed on dividends declared and must
report such dividends as either ordinary income, short term gains, long term
gains, or as return of capital. No provision for federal income taxes has been
included in the Company's financial statements as of December 31, 1996, 1995, or
1994 (see Note 6).
If the Company fails to qualify as a REIT in any taxable year, the Company will
be subject to federal income tax (including any applicable alternative minimum
tax) on its taxable income at regular corporate rates. Even if the Company
qualifies for taxation as a REIT, the Company may be subject to certain state
and local taxes on its income and property and to federal income and excise
taxes on its undistributed income.
Earnings and profits, which determine the taxability of dividends to
shareholders, differ from net income reported for financial reporting purposes
due to differences for federal tax purposes in the estimated useful lives used
to compute depreciation and the carrying value (basis) of the investment in
properties.
REVENUE RECOGNITION
Rental income attributable to residential leases is recorded when due from
residents. Rental income from the industrial and retail properties is recognized
on a straight-line basis over the term of the related lease.
REAL ESTATE ASSETS AND RELATED DEPRECIATION
Real estate assets held for investment are stated at the lower of depreciated
cost or net realizable value. The Company will record impairment losses on long-
lived assets used in operations, when events and circumstances indicate that the
assets might be impaired and the estimated undiscounted cash flows to be
generated by those assets are less than the carrying amounts of those assets.
No such impairment losses have been recognized to date.
Real estate assets held for sale are stated at the lower of net book value
(historical cost less accumulated depreciation) or net realizable value at the
date the Company began marketing efforts to sell the properties. The Company
will record impairment losses on real estate investments held for sale if the
Company determines the estimated net realizable value upon disposition of the
asset will be less than net book value. No such impairment losses have been
recognized to date. In 1996, the Company began marketing efforts with respect
to certain of its condominium units (see Note 4). No depreciation of the real
estate assets held for sale has been recognized since the inception of marketing
efforts for the properties.
Costs related directly to the acquisition, development and improvement of real
estate, including tenant improvements on the industrial and retail properties,
are capitalized. Interest costs incurred during construction periods are
capitalized.
F-8
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
REAL ESTATE ASSETS AND RELATED DEPRECIATION (CONTINUED)
Ordinary repairs and maintenance are expensed as incurred; major replacements
and betterments are capitalized and depreciated over their estimated useful
lives. Depreciation is computed on a straight-line basis over the expected
useful lives of depreciable property, which is generally 15 to 40 years for
buildings and improvements, and 5 to 7 years for furniture, fixtures and
equipment.
Costs incurred in connection with resident turnover such as unit cleaning,
painting, carpet cleaning or replacement, appliance replacement, and other
associated costs are expensed as incurred.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include all cash and cash equivalent investments with
original maturities of three months or less. Cash balances of $555,000 and
$470,000 were restricted in escrow accounts as of December 31, 1996 and 1995,
respectively.
DEFERRED ASSETS
Deferred assets include costs incurred in obtaining tenant leases at the
Company's industrial and retail properties. Such costs are amortized over the
term of the related lease using the straight-line method.
DEFERRED FINANCING COSTS
Loan origination costs and commitment fees are deferred and amortized on a
straight-line basis, which approximates the effective interest method, over the
initial term of the related note payable.
STOCK COMPENSATION
The Company accounts for its stock compensation arrangements under the
provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees (APB 25) and intends to continue to do so. See Note 7 for a
discussion of the Company's stock compensation arrangements and pro forma
disclosure of the effect on income from operations and earnings per share of
such arrangements pursuant to the requirements of Financial Accounting Standards
Board Statement 123, Accounting for Stock-Based Compensation (SFAS 123).
CONCENTRATIONS
The Company invests primarily in multifamily residential properties. At
December 31, 1996, the Company owned 26 multifamily residential properties,
two industrial properties, one retail property, one development site, and had
five multifamily residential properties under development. All but three of
these properties are located in the Dallas, Texas, metropolitan area. The
multifamily residential industry is highly competitive and the Company competes
with other REITs as well as other real estate owners and developers with respect
to the acquisition of
F-9
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
CONCENTRATIONS (CONTINUED)
land for development and the acquisition of existing multifamily residential
properties. In addition the Company's properties compete with other multifamily
residential properties for residents. The Company believes that the location
and quality of its multifamily residential properties, the management services
and amenities provided to residents, and its long-term commitment to the
ownership of its properties and to its surrounding communities are the principal
competitive factors affecting its real estate investments.
2. REAL ESTATE
YEAR ENDED DECEMBER 31, 1996
ACQUISITIONS OF DEVELOPMENT SITES
The Company purchased four multifamily residential development sites in the year
ended December 31, 1996. All of the acquisitions were funded through the
Company's Credit Facility more fully described in Note 5.
Two development sites were purchased in the Uptown district of Dallas, Texas,
for an aggregate purchase price of approximately $5.2 million in January 1996.
Construction of a 196-unit multifamily residential project, The Heights of
State-Thomas, began on one of the sites in the fourth quarter of 1996.
Development of the second site is expected to begin in 1997. A third
multifamily development site in the Uptown district was acquired in July 1996
for approximately $1.3 million. Construction of a 186-unit multifamily
residential project, Cole's Corner, began on this site in August 1996.
The Company acquired a multifamily residential development site in Jackson,
Mississippi, for approximately $620,000 in February 1996. Construction of a
240-unit multifamily residential project, Columbus Pointe, began on this site in
the second quarter of 1996.
COMPLETED CONSTRUCTION
The Company completed construction of five multifamily residential projects
during the year ended December 31, 1996. The aggregate development and
construction costs of the projects as set forth in the table below have been
reclassified from construction in progress to buildings and improvements in the
Company's consolidated financial statements as of December 31, 1996.
<TABLE>
<CAPTION>
Number Development/Construction
Project Name Location of Units Completion Date Cost
------------ -------- -------- --------------- ----
(in thousands)
<S> <C> <C> <C> <C>
Hackberry Creek II Dallas, TX 192 April 1996 $ 9,617
The Abbey Dallas, TX 34 April 1996 4,364
The Vineyard Dallas, TX 116 May 1996 7,418
Winsted Village Dallas, TX 314 August 1996 15,881
Columbus Square Dallas, TX 218 September 1996 18,120
--- -------
874 $55,400
=== =======
</TABLE>
F-10
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
2. REAL ESTATE (CONTINUED)
YEAR ENDED DECEMBER 31, 1995
ACQUISITIONS
In March 1995 the Company acquired a 160-unit multifamily residential property
known as The Parks, located in Coppell, Texas. The purchase price of
approximately $6.6 million was funded through the Company's Credit Facility.
The Company acquired two condominium units in the Ascension Point Phase I
condominium community located in Arlington, Texas, during the year ended
December 31, 1995, for purchases prices totaling $98,000. The purchases were
funded from the Company's cash reserves.
COMPLETED CONSTRUCTION
The Company completed construction of three apartment projects during the year
ended December 31, 1995, as set forth in the table below.
<TABLE>
<CAPTION>
Number Development/Construction
Project Name Location of Units Completion Date Cost
------------ -------- -------- --------------- ----
(in thousands)
<S> <C> <C> <C> <C>
Trace II Jackson, MS 204 January 1995 $ 7,488
Uptown Village Dallas, TX 300 May 1995 13,144
Ascension Point II Dallas, TX 86 September 1995 4,598
--- -------
590 $25,230
=== =======
</TABLE>
3. REAL ESTATE JOINT VENTURE
In December 1995 the Company executed a partnership agreement with Gaylord
Properties, Inc. for the development and construction of a 460-unit multifamily
and retail development to be known as Addison Circle One. The partnership,
Addison Circle One, Ltd., was formed pursuant to a master development agreement
between the Company and Gaylord Properties, Inc. The Company paid an affiliate
$150,000 in January 1996 upon formation of Addison Circle One, Ltd. See Note
10.
The Company, as general partner in Addison Circle One, Ltd. made an initial
capital contribution of approximately $8.6 million to the partnership, funded
through the Company's Credit Facility. Gaylord Properties, Inc., as limited
partner, contributed the development site valued at $2.1 million to the
partnership. The limited partner contribution has been reflected in the
Company's consolidated financial statements as a minority interest. The assets
and liabilities of Addison Circle One, Ltd. have been consolidated in the
Company's consolidated balance sheets as of December 31, 1996, and 1995. The
formation and operations of Addison Circle One, Ltd. had no effect on the
Company's statements of operations for the years ended December 31, 1996, and
1995.
F-11
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
3. REAL ESTATE JOINT VENTURE (CONTINUED)
The Company is solely responsible for the operation of the partnership,
construction and development of Addison Circle One, and management of the
property upon completion. Construction on Addison Circle One began in January
1996. Addison Circle One, Ltd., obtained a $21.3 million construction loan for
the unfunded projected development costs in June 1996, as more fully described
in Note 5.
4. REAL ESTATE HELD FOR SALE
In June 1996 the Company began marketing efforts to sell 130 condominium units
owned by it in the Springstead and Villas of Valley Ranch condominium
communities located in Dallas, Texas. The aggregate net book value of the
condominium properties totaling approximately $4.0 million has been classified
as real estate held for sale in the Company's consolidated financial statements
as of December 31, 1996.
Six units in the Villas of Valley Ranch condominium community were sold during
the year ended December 31, 1996, for net proceeds of $433,000 resulting in a
net gain of approximately $246,000.
5. NOTES PAYABLE
CREDIT FACILITY
The Company's $170 million Credit Facility is secured by a first mortgage and
assignment of rents on all of the Company's real estate portfolio, except for
the Lakeside Village Apartments and nine properties securing a loan from
Nationwide Life Insurance Company, more fully described below. The Credit
Facility, as amended in February 1995 and March 1996, bears interest at LIBOR
(5.50% at December 31, 1996) plus 165 basis points on completed property debt
and LIBOR plus 205 basis points on development property debt. When the Credit
Facility matures on December 31, 1997, the Company will be required to secure
substitute financing for the balance then outstanding.
Approximately $118.0 million and $84.7 million was outstanding under the Credit
Facility at December 31, 1996, and 1995, respectively. The unused commitment
under the Credit Facility at December 31, 1996, was approximately $52.0 million.
The Company's weighted average borrowing rates during 1996 were 7.10% on
completed property debt and 7.53% on development debt. The Company's weighted
average borrowing rates during 1995 were 7.78% on completed property debt and
8.22% on development debt. The Company's ability to draw amounts under the
Credit Facility from time to time is subject to the satisfaction of certain
conditions. The payment of dividends and capital share repurchases are
restricted to 90% of funds from operations, as defined by NAREIT, plus net
taxable gain from the sale of properties. The Credit Facility requires the
Company to maintain a minimum level of tangible net worth and also to meet
specified ratios of liabilities to market capitalization, liquid assets and debt
to market capitalization.
F-12
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
5. NOTES PAYABLE (CONTINUED)
CONSRUCTION LOAN
In June 1996 Addison Circle One, Ltd., an affiliated partnership, the
majority interest of which is held by the Company, obtained a $21.3 million
construction loan from Wells Fargo Realty Advisors Funding, Inc. (Wells Fargo).
The loan will be funded in increments corresponding to the development and
construction costs incurred to complete the Addison Circle One multifamily
residential and retail project more fully described in Note 3.
The Wells Fargo loan is secured by a first lien deed of trust on the land and
improvements comprising the project and a security interest in its rents and
leases. Interest is due and payable monthly at LIBOR plus 165 basis points
applied to the daily principal balance outstanding (7.27% at December 31, 1996).
The loan matures in June 1999 when the principal balance then outstanding is
due. Approximately $1.9 million had been drawn on the construction loan as of
December 31, 1996.
MORTGAGE LOANS
In November 1995, $50 million of variable rate debt outstanding under the Credit
Facility was retired when the Company closed on a $50 million loan from
Nationwide Life Insurance Company (Nationwide). The 7.45% fixed-rate loan
(principal balance of approximately $49.3 million at December 31, 1996) is
collateralized by nine completed multifamily residential properties. Regular
principal payments required to amortize the note are $768,000 in 1997, $828,000
in 1998, $892,000 in 1999, $960,000 in 2000, approximately $1.0 million in 2001,
and approximately $1.0 million in 2002 until the note's maturity in November
2002 when the scheduled unpaid principal balance of approximately $43.8 million
is due.
The Company obtained approximately $11 million in financing from an unaffiliated
third party in connection with the purchase of the Lakeside Village Apartments
in May 1994. The note payable (principal balance of approximately $10.7 million
at December 31, 1996) bears interest at 7% per annum, requires monthly payments
of principal and interest, and matures in May 1999 when the scheduled unpaid
principal balance of approximately $10.4 million is due. Regular principal
payments required to amortize the note are $133,000 in 1997, $143,000 in 1998,
and $62,000 in 1999.
6. SHAREHOLDERS' EQUITY
Common shareholders are entitled to one vote for each share held on all matters
presented for a vote of shareholders. There is no right of cumulative voting in
connection with the election of Trust Managers. Shareholders are entitled to
receive pro rata, such dividends, if any, as may be declared by the Board of
Trust Managers in their discretion from funds legally available. Upon
liquidation or dissolution, shareholders are entitled to share ratably in all
assets available for distribution to shareholders, subject to the rights of the
holders of the Company's creditors and to the rights of any preferred class of
the Company's securities (if any are outstanding). The common shareholders have
no redemption, preference, conversion, exchange or preemptive rights to
subscribe to any securities of the Company. The common shares issued are fully
paid and non-assessable.
F-13
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
6. SHAREHOLDERS' EQUITY (CONTINUED)
For the Company to qualify as a REIT under the Code, not more than 50% in
value of its outstanding common shares may be owned, directly or indirectly,
by five or fewer individuals (as defined in the Code to include pension funds
and certain other tax-exempt entities) during the last half of a taxable year,
and such shares must be beneficially owned by 100 or more persons during at
least 335 days of a taxable year of 12 months, or during a proportionate part of
a shorter taxable year. The Company's Declaration of Trust provides that no
holder may own, or be deemed to own by virtue of the attribution provisions of
the Code, more than 9.8% of the total outstanding shares, subject to certain
exceptions.
EQUITY OFFERINGS
The Company sold 2,700,000 common shares in a second public offering in July
1994, receiving net proceeds of approximately $48.8 million after underwriting
commissions and offering costs. In August 1994, the Company received
approximately $3.8 million for an additional 200,000 shares sold pursuant to the
underwriters exercise of a portion of an overallotment option. The aggregate net
proceeds of approximately $52.6 million were used to repay a portion of the
indebtedness then outstanding on the Company's Credit Facility.
In January 1995 the Company registered for resale 1,940,618 restricted common
shares issued in connection with the formation of the Company with the
Securities and Exchange Commission. Approximately $78,000 was incurred for
legal and accounting fees related to the registration, and has been reflected in
the Company's financial statements as additional paid in capital.
The Company registered an aggregate of $200 million of debt securities, common
shares, preferred shares and warrants (collectively, the Registered Securities)
pursuant to a "shelf" Registration Statement with the Securities and Exchange
Commission in August 1996. The Registered Securities may be issued separately
or together, in separate series, and in amounts and at prices and terms to be
determined by the Company. In October 1996 the Company completed the sale of
1,166,600 of the Registered Securities to certain institutional investors. The
Company received net proceeds of approximately $23.5 million after expenses from
the sale of such common shares for $20.50 per share. The proceeds were used to
repay a portion of the Company's indebtedness under the Credit Facility.
INCOME PER SHARE
Income per share has been computed by dividing net income by the weighted
average number of common shares and dilutive common share equivalents
outstanding during the periods presented. In years in which there are no
earnings, common share equivalents are not included in the computation as they
are anti-dilutive.
DIVIDENDS
During the year ended December 31, 1996, the Company modified its policy
regarding the timing of its declaration and payment of quarterly dividends such
that dividends will be declared and paid in the same calendar quarter. The
following table presents the sources of the four quarterly dividends declared
during the year ended December 31, 1996 on a per common share basis. The
characterization of the dividends for federal income tax purposes has been
allocated based upon the earnings and profits of the Company for the year ended
December 31, 1996.
F-14
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
6. SHAREHOLDERS EQUITY (CONTINUED)
DIVIDENDS (CONTINUED)
<TABLE>
<CAPTION>
Long-term
Ordinary Return Capital Total
Record Payment Income of Capital Gain Dividend
Date Date (63.3%) (35.1%) (1.6%) (100%)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
March 25, 1996 April 15, 1996 $0.237 $0.132 $0.006 $0.375
June 28, 1996 July 15, 1996 0.250 0.139 0.006 0.395
September 30, 1996 October 15, 1996 0.250 0.139 0.006 0.395
December 23, 1996 December 26, 1996 0.250 0.139 0.006 0.395
-----------------------------------------------------
$0.987 $0.549 $0.024 $1.560
-----------------------------------------------------
</TABLE>
DIVIDEND REINVESTMENT PLAN
Effective with the first quarterly dividend in 1995, the Company adopted a
dividend reinvestment and share purchase plan (the Dividend Reinvestment Plan).
Under terms of the Dividend Reinvestment Plan, common shareholders are eligible
to purchase the Company's common shares directly from the Company with all or
any portion of the quarterly dividend for a purchase price of 95% of the then
current market price for the shares. Shareholders may also make additional cash
purchases of additional shares on the same terms, not to exceed $10,000 per
quarter, subject to certain other limitations. Under the Dividend Reinvestment
Plan, the Company issued 276,762 common shares for net proceeds of approximately
$5.4 million in the year ended December 31, 1996, and 63,669 common shares for
net proceeds of approximately $1.0 million in the year ended December 31, 1995.
7. SHARE OPTION AND COMPENSATION PLANS
In connection with the initial public offering, the Company established the
Columbus Realty Trust 1993 Share Option Plan (the Share Option Plan). A maximum
of 1,400,000 common shares were reserved for issuance under the Share Option
Plan which provides for the grant of incentive and nonqualified options. The
plan provides for the right of an option holder to elect to receive, in lieu of
common shares issuable upon exercise of the option, cash or common shares equal
to the excess of the market price of the common shares over the exercise price
for such common shares. The share options are exercisable beginning six months
from the date they are granted and are exercisable over a period determined by
the Plan Administrators, but no longer than ten years after the date they are
granted. All common share options authorized under the plan were granted as of
December 31, 1996.
In January 1996 the Company established the Long-Term Management Incentive
Plan (Management Incentive Plan) pursuant to which the Plan Administrators are
authorized to award 500,000 common shares in the form of share options, share
purchase awards and restricted and unrestricted share awards under such terms as
allowed in the plan. Pursuant to the Management Incentive Plan, the Company
awarded 228,876 nonqualified options to employee and non-employee Trust
Managers, executives and employees in the year ended December 31, 1996.
F-15
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
7. SHARE OPTION AND COMPENSATION PLANS (CONTINUED)
Additionally, 260,000 common shares were reserved for issuance pursuant to
performance based share performance awards to certain executive officers and
11,124 common shares were awarded as share bonuses as described in Note 8.
The Company has elected to follow APB 25 and related interpretations in
accounting for its employee stock options because, as discussed below, the
alternative fair value accounting provided for under SFAS 123 requires use of
option valuation models that were not developed for use in valuing employee
stock options. Under APB 25, because the exercise price of the Company's
employee stock options equals the market price of the underlying stock on the
date of grant, no compensation expense is recognized.
Pro forma information regarding net income and earnings per share is required by
SFAS 123, which also requires that the information be determined as if the
Company has accounted for its employee stock options granted subsequent to
December 31, 1994, under the fair value method of that statement. The fair value
for these options was estimated at the date of grant using a Black-Scholes
option pricing model and the following assumptions: a dividend yield of 7.826%
and a volatility factor of 0.165 based on the average monthly closing price of
the Company's common shares since inception (December 29, 1993), risk free
interest rates ranging from 5.80% to 6.89% corresponding to the expected lives
of the grants, and expected lives generally corresponding to the terms of the
grants (weighted average of approximately nine years).
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
For purposes of the pro forma disclosures required by SFAS 123, the estimated
fair value of options granted after December 31, 1994, is amortized to expense
over the options' vesting periods. SFAS 123 does not require pro forma
presentation for the year ended December 31, 1994, or earlier. The Company's pro
forma information follows (in thousands except for share and per share data):
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995
-------------------------------
<S> <C> <C>
Pro forma net income $ $11,162 $ 10,369
Pro forma earnings per share $ 0.91 $ 0.90
Pro forma fully diluted weighted
average number of common shares
outstanding 12,221,123 11,557,721
</TABLE>
F-16
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
7. SHARE OPTION AND COMPENSATION PLANS (CONTINUED)
SUMMARY OF SHARE OPTION ACTIVITY
<TABLE>
<CAPTION>
Number of Options, Number of Options, Number of Options, Other Total
Share Option Plan Incentive Plans Options
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Outstanding, December 31, 1993 860,000 (a) - 340,000 (b) 1,200,000
Options granted 50,000 (c) - - 50,000
Options exercised - - - -
Options expired - - - -
---------------------------------------------------------------------------------------------------
Outstanding, December 31, 1994 910,000 - 340,000 1,250,000
Options granted 335,000 - - 335,000 (d)
Options exercised - - - -
Options expired - - - -
---------------------------------------------------------------------------------------------------
Outstanding, December 31, 1995 1,245,000 - 340,000 1,585,000
Options granted 155,000 228,876 - 383,876 (e)
Options exercised (15,000) (f) - - (15,000)
Options expired - - - -
---------------------------------------------------------------------------------------------------
Outstanding, December 31, 1996 1,385,000 228,876 340,000 1,953,876
===================================================================================================
</TABLE>
___________________
(a) Option prices range from $17.25 to $17.375 per share.
(b) Granted to affiliates and non-affiliates in connection with
development site acquisitions. Option prices are $19.8375 per share.
(c) Option prices range from $17.25 to $18.375 per share.
(d) Weighted average option price is $18.60 per share. Weighted average
fair value according to the Black Scholes option valuation model is
$1.15 per share.
(e) Weighted average option price is $20.39 per share. Weighted average
fair value according to the Black Scholes option valuation model is
$1.20 per share.
(f) Exercise prices ranged from $17.25 to $18.25 per share.
The number of common share options exercisable as of December 31, 1996, 1995,
and 1994 were 1,670,137; 1,363,781; and 965,442, respectively.
8. SHARE BONUS PLANS
During the year ended December 31, 1994, the Company issued all of the 13,200
common shares authorized for issuance under the Columbus Realty Trust 1993 Share
Bonus Plan to certain nonexecutive employees and other key personnel for a
purchase price equal to par value ($.01 per share). The difference between the
market price for the shares at the date issued and the purchase price was
recognized as compensation expense the Company's consolidated financial
statements for the year ended December 31, 1994.
F-17
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
8. SHARE BONUS PLANS (CONTINUED)
During the year ended December 31, 1995, the Company established the Columbus
Realty Trust Share Bonus Plan No. 2 whereby 100,000 shares were authorized for
issuance by the Plan Administrators. As of December 31, 1996, all of the
authorized share bonuses had been granted under terms stipulating three year
vesting periods. During the year ended December 31, 1995, 43,290 common shares
were awarded to certain executive employees for purchase prices equal to par
value ($.01 per share). The difference between the purchase price and the market
prices for the shares on the dates issued was $807,000. During the year ended
December 31, 1996, the Plan Administrators awarded 56,710 shares to certain
executive employees for purchase prices equal to par value. The difference
between the purchase prices and the market prices on the issuance dates was
approximately $1.1 million and will be recognized as compensation expense
ratably over the three year vesting periods beginning on the issuance dates of
the respective awards.
Pursuant to amendments to their respective employment agreements effective
January 1, 1996, certain executives agreed to receive no base salary for the
period from January 1, 1996 through December 31, 1996, and, in lieu thereof, to
receive restricted common shares having a fair market value equal to 150% of the
amount of such base salary. During 1996, the Company issued 11,124 restricted
common shares to these executive employees for a purchase price equal
to par value under the Management Incentive Plan in March 1996. The difference
between the purchase price and the market price on the grant date is
approximately $213,000 and will be recognized as compensation expense ratably
over a three-year vesting period beginning on the issuance date.
In November 1996 the Company entered into performance based stock and dividend
equivalent award agreements with its Chairman of the Board, Chief Executive
Officer, and Chief Operating Officer. Under terms of the agreements, an
aggregate of 260,000 common shares could be awarded to the three executive
officers in 2000 or 2002 if the vesting criteria relating to the total return on
the Company's common shares are met. Additionally, such executive officers could
receive dividend equivalent awards, plus interest and reinvestment earnings, on
the 260,000 common shares annually for the period beginning in January 1997.
Such dividend equivalent awards will be paid if the increase in the total return
on the Company's common shares for the previous year exceeds the total weighted
average total return per common share of all publicly traded equity residential
apartment REITs, as determined by NAREIT.
9. EMPLOYEE BENEFIT PLANS
EMPLOYEE STOCK PURCHASE PLAN
On July 23, 1995, the Company established the Columbus Realty Trust Employee
Stock Purchase Plan whereby employees of the Company are eligible to purchase
common shares directly from the Company for a purchase price equal to 85% of the
current market price on the date of purchase. Employees are limited to
purchases aggregating a market value of no more than $25,000 per plan year based
on the market price on the first day of the plan year. Under the Employee Stock
Purchase Plan, the Company issued 7,423 common shares for net proceeds of
$121,000 in the year ended December 31, 1996, and 5,275 common shares for net
proceeds of $51,000 in the year ended December 31, 1995.
F-18
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
9. EMPLOYEE BENEFIT PLANS (CONTINUED)
401(K) SAVINGS PLAN
Pursuant to Columbus Realty Trust 401(k) Savings Plan (the 401(k) Plan),
eligible employees (as defined in the 401(k) Plan) may join the 401(k) Plan on
semi-annual enrollment dates. Participants may elect to defer up to 15% of
their annual compensation to a maximum of $9,500 as pre-tax contributions to the
plan (subject to certain limitations for highly-compensated employees). The
Company has the option, but is not required, to make contributions to the 401(k)
Plan. In January 1997 the Company contributed $27,000 to the 401(k) Plan for the
benefit of participants contributing the 401(k) Plan during the six month period
December 31, 1996.
10. TRANSACTIONS WITH AFFILIATES
<TABLE>
<CAPTION>
Receivables from affiliates include the following (in thousands): December 31,
---------------------------
1996 1995
---------------------------
<S> <C> <C>
Amounts advanced to condominium homeowners' associations $ 54 $ 47
Amounts advanced to non-management employees 34 12
Receivable from Employee Stock Purchase Plan 3 1
Amounts advanced to affiliates in ordinary course of business
for third party property management 6 353
Amounts receivable from owners of predecessors in connection
with the acquisition of their interests 55 5
---------------------------
$ 152 $ 418
===========================
</TABLE>
The Company provides property management services in connection with the
management of certain properties owned by affiliates. Property management fee
income relating to these contracts during the years ended December 31, 1996,
1995 and 1994, was approximately $238,000, $331,000, and $379,000, respectively.
Included in management fee income from affiliates in the year ended December 31,
1996, is $197,000 attributable to the Madison Office Building (The Madison),
which the affiliates sold in January 1996. The Company received a marketing fee
of $50,000 pursuant to the sale.
The Company paid approximately $160,000 and $106,000 in rent for office space at
The Madison in the years ended December 31, 1995 and 1994, respectively. The
Company continues to occupy the office space at The Madison pursuant to its
lease obligation more fully described in Note 11.
In January 1996 the Company paid $150,000 to Wolverine Asset Management, Inc.,
an affiliate of a Trust Manager, for real estate advisory services in connection
with the joint development agreement with Gaylord Properties, Inc. more fully
described in Note 14.
The Company entered into certain note purchase agreements pursuant to borrowing
arrangements between a bank and two of the Company's executive officers in the
year ended December 31, 1996, as more fully described in Note 14.
F-19
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
11. OPERATING LEASES
The Company receives rental income from the properties under operating leases
with terms ranging from less than one year to twenty years for the industrial
and retail properties, and less than one year for most of the residential
properties.
The minimum future rentals under operating leases for the industrial and retail
properties as of December 31, 1996, are as follows (in thousands):
<TABLE>
<CAPTION>
Year Ending December 31,
------------------------
<S> <C>
1997 $ 5,424
1998 5,052
1999 4,067
2000 1,594
2001 1,229
Thereafter 3,295
-------
$20,661
=======
</TABLE>
Included in the rentals under operating leases is one multifamily residential
property that is subject to a master lease expiring in October 1999,
with Electronic Data Systems (EDS). EDS has an option to purchase the property
at the end of each lease year with the purchase price compounding 5% each year
the option is not exercised.
The original term of Companys lease for its corporate offices at The Madison
expired December 31, 1996, subject to three one-month renewal options. The
Company expects to exercise all three renewal options for monthly base rent
payments of approximately $15,000.
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash equivalents, accounts receivable, accounts payable and accrued expenses and
other liabilities are carried at amounts that reasonably approximate their fair
values. Notes payable result from (a) draws made on the Company's Credit
Facility and the Wells Fargo loan during the years ended December 31, 1996, and
1995, which accrue interest at floating interest rates based on market rates and
(b) two first mortgage loans that accrue interest at 7.0% and 7.45%. The
carrying values of the notes payable at December 31, 1996, and 1995 reasonably
approximate their fair values.
F-20
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
13. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the unaudited results of operations for 1996,
1995, and 1994 (in thousands, except per share data):
<TABLE>
<CAPTION>
Quarter Ended
-------------
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
<S> <C> <C> <C> <C>
Year ended December 31, 1996
- ------------------------------
Total revenues $10,934 $11,762 $12,554 $13,280
Net income 2,696 2,809 2,848 3,105
Per common share:
Net income $ 0.23 $ 0.24 $ 0.24 $ 0.24
Year ended December 31, 1995
- ------------------------------
Total revenues $ 9,414 $10,271 $10,668 $10,898
Net income 2,546 2,491 2,650 2,741
Per common share:
Net income $ 0.22 $ 0.22 $ 0.23 $ 0.24
Year ended December 31, 1994
- ------------------------------
Total revenues $ 6,237 $ 7,385 $ 8,379 $ 8,880
Net income 1,829 1,979 2,458 2,495
Per common share:
Net income $ 0.21 $ 0.23 $ 0.23 $ 0.22
</TABLE>
14. COMMITMENTS AND CONTINGENCIES
GENERAL
The Company is subject to legal proceedings, claims and liabilities which arise
in the ordinary course of its business. In the opinion of the Company, none of
such proceedings is material in relation to the Company's consolidated financial
statements.
JOINT DEVELOPMENT AGREEMENT
The Company has entered into a joint development agreement with Gaylord
Properties, Inc., to develop between 2,500 and 3,500 multifamily residential
units in Addison, Texas. The first development under the agreement, Addison
Circle One, is described in Note 3. The Company has the option, but is not
obligated, to pursue additional development activities under the joint
development agreement, subject to the agreement of Gaylord.
F-21
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
14. COMMITMENTS AND CONTINGENCIES (CONTINUED)
NOTE PURCHASE AGREEMENTS
In June 1996 the Company entered into Note Purchase Agreements (Purchase
Agreements) pursuant to loans made between Bank One, Texas, N.A. (Bank One), and
two of the Company's executive officers. The loans, in the form of credit
facilities which may be drawn upon at the discretion of the borrowers up to
maximum principal amounts of $350,000 and $300,000, are secured by pledges of
36,532 and 32,066 of the Company's common shares, respectively, owned by such
executive officers. Should an event of default occur, Bank One may require the
Company to purchase the notes for a purchase price equal to the balance then
outstanding under the terms of the note agreements. If the Company is required
to purchase the notes, the Company will obtain all rights of Bank One, as a
secured party, with respect to the common shares securing the loans. Based on
the closing market price for the Company's common shares on December 31, 1996,
of $22.75, the market value of the pledged shares was approximately $831,000,
and $730,000, respectively.
Such loans require quarterly interest-only payments beginning August 1, 1996,
and mature on June 12, 1999. Interest accrues at floating rates determined by
Bank One. The applicable interest rate in effect as of December 31, 1996, was
8.25% on principal balances outstanding under the credit facilities of $150,000
and $100,000. The borrowers were current on all obligations under the loans as
of December 31, 1996.
LETTER OF CREDIT
Addison Circle One Ltd. obtained an irrevocable standby letter of credit of
approximately $3.4 million in the year ended December 31, 1996. The letter of
credit was obtained for the benefit of the Town of Addison, Texas, as a guaranty
for payment of certain public infrastructure costs required in the construction
of the Addison Circle One multifamily residential project. As of December 31,
1996, no amounts had been drawn on the letter, which expires on June 30, 1997.
15. SUBSEQUENT EVENTS
REAL ESTATE TRANSACTIONS
On January 16, 1997, the Company paid a deposit of $300,000 pursuant to an
earnest money contract to purchase and redevelop a ten-acre tract known as the
St. Luke's Hospital Campus located in Denver, Colorado. The Company expects to
complete a purchase of the site when demolition of existing buildings,
remediation of the properties, and certain other conditions are met.
On February 24, 1997, the Company purchased a 158-unit multifamily residential
property known as The Commons at Turtle Creek, located in Dallas, Texas, for a
purchase price of approximately $6.9 million. The purchase was funded from the
Company's Credit Facility.
On February 27, 1997, the Company executed a forty-year land lease agreement for
a redevelopment project, The Rice Hotel, located in Houston, Texas. The Rice
Hotel is an 18-story structure originally built in 1913. Under
F-22
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
15. SUBSEQUENT EVENTS (CONTINUED)
REAL ESTATE TRANSACTIONS (CONTINUED)
terms of the agreement, the Company will fund redevelopment of the hotel into a
mixed-use residential and retail facility comprised of 317 loft-style apartments
and 21,000 square feet of retail space. The Company, in partnership with a
Houston-based development company, will manage all aspects of the renovation,
currently budgeted at approximately $33.3 million, and operations of the project
upon completion. The Houston Housing Finance Corporation (HHFC), owner of the
land, will fund approximately $6.6 million of abatement and infrastructure
costs, and the Company will provide the balance of the funding. Concurrently
with closing the lease agreement, the Company guaranteed a $20.0 million
construction loan for the project. The remainder of the Company's renovation
costs will be funded from draws on the Credit Facility or other short term
financing.
OTHER
On February 25, 1997 the Company filed a Registration Statement on Form S-8 with
the Securities and Exchange Commission registering 1,000,000 common shares for
issuance pursuant to the Columbus Realty Trust Employee Incentive Plan.
On March 7, 1997, the Company declared a dividend of $0.395 per common share,
payable on March 25, 1997, to shareholders of record on March 21, 1997.
F-23
<PAGE>
COLUMBUS REALTY TRUST
SCHEDULE III -- REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
GROSS AMOUNT AT WHICH
INITIAL COSTS COSTS REAL CARRIED AT CLOSE OF PERIOD(A)
-------------------- CAPITALIZED ESTATE -------------------------------
RELATED BLDGS & SUBSEQUENT DISPOSED BLDGS & CONSTRUCTION
DESCRIPTION ENCUMBRANCES LAND IMPRVMNTS TO ACQUISITION OF LAND IMPRVMNTS IN PROGRESS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Residential Properties:
- -----------------------
High-rise Apartments:
The Residences, Dallas, TX (b) $ 638 $12,421 $ 1,233 $ - $ 638 $ 13,654 $ -
Mid-rise Apartments:
The Abbey, Dallas, TX (b) 385 - 4,364 - 385 4,364 -
Columbus Square, Dallas, TX (b) 1,960 - 18,122 - 1,960 18,122 -
Lakeshore, Irving, TX (b) 3,030 25,970 1,688 - 3,030 27,658 -
The Meridian, Dallas, TX (b) 2,227 - 8,537 - 2,227 8,537 -
Uptown Village, Dallas, TX (b) 2,083 - 13,244 - 2,083 13,244 -
The Vineyard, Dallas, TX (b) 864 - 7,418 - 864 7,418 -
Winsted Village, Dallas, TX (b) 2,642 - 15,881 - 2,642 15,881 -
The Worthington, Dallas, TX (b) 3,648 - 26,200 - 3,648 26,200 -
Garden Apartments:
Ascension Point, Arlington, TX (b) 410 2,633 131 - 410 2,764 -
Ascension Point II, Arlington, TX (b) 470 - 4,681 - 470 4,681 -
Hackberry Creek, Irving, TX (b) 1,800 10,200 382 - 1,800 10,582 -
Hackberry Creek II, Irving, TX (b) 1,448 - 9,617 - 1,448 9,617 -
Lakeside, Dallas, TX (c) 3,066 15,084 731 - 3,066 15,815 -
The Mark, Jackson, MS (d) 762 10,013 950 - 762 10,963 -
Parkway Village, Dallas, TX (d) 1,020 5,936 353 - 1,020 6,289 -
Reflections on McCallum,
Dallas, TX (d) 903 5,231 494 - 903 5,725 -
The Rock, Dallas, TX (d) 696 3,304 4,909 - 696 8,213 -
Town Lake/The Parks,
Coppell, TX (d), (h) 3,547 5,124 9,653 - 3,547 14,777 -
The Trace, Jackson, MS (d), (i) 1,435 - 14,862 - 1,435 14,862 -
The Vintage, Dallas, TX (b) 1,100 - 6,753 - 1,100 6,753 -
Windhaven Village, Plano, TX (d) 3,564 - 16,183 - 3,564 16,183 -
-----------------------------------------------------------------------------------------
Total Residential Properties 37,698 95,916 166,386 - 37,698 262,302 -
<CAPTION>
DEPRE-
CIABLE
LIVES
ACCMLTD DATE OF DATE IN
DESCRIPTION TOTAL DEPREC CONSTRUCTION ACQUIRED YEARS
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Residential Properties:
- -----------------------
High-rise Apartments:
The Residences, Dallas, TX $ 14,292 $1,662 1987 12/93 5-27
Mid-rise Apartments:
The Abbey, Dallas, TX 4,749 119 12/94-4/96 4/94 5-27
Columbus Square, Dallas, TX 20,082 323 12/94-9/96 4/94 5-27
Lakeshore, Irving, TX 30,688 2,793 1987 4/94 5-27
The Meridian, Dallas, TX 10,764 1,841 5/90-6/91 4/90 5-27
Uptown Village, Dallas, TX 15,327 864 1/94-5/95 1/94 5-27
The Vineyard, Dallas, TX 8,282 112 12/94-5/96 4/94 5-27
Winsted Village, Dallas, TX 18,523 144 8/94-8/96 8/94 5-27
The Worthington, Dallas, TX 29,848 4,214 6/91-2/93 8/90 5-27
Garden Apartments:
Ascension Point, Arlington, TX 3,174 766 1985 6/88 5-27
Ascension Point II, Arlington, TX 5,151 246 8/94-9/95 8/94 5-27
Hackberry Creek, Irving, TX 12,382 967 1987 8/94 5-27
Hackberry Creek II, Irving, TX 11,065 262 2/95-8/96 8/94 5-27
Lakeside, Dallas, TX 18,881 1,622 1986 5/94 5-27
The Mark, Jackson, MS 11,725 963 1984 10/94 5-27
Parkway Village, Dallas, TX 7,309 2,108 1986 6/88 5-27
Reflections on McCallum,
Dallas, TX 6,628 1,878 1986 6/88 5-27
The Rock, Dallas, TX 8,909 2,637 2/88-12/88 2/88 5-27
Town Lake/The Parks, Coppell, TX (d) 18,324 3,530 1/86-4/87 1/86 5-27
The Trace, Jackson, MS (d) 16,297 2,775 5/88-7/89 4/88 5-27
The Vintage, Dallas, TX 7,853 875 1/93-10/93 1/93 5-27
Windhaven Village, Plano, TX 19,747 3,782 3/90-3/91 3/90 5-27
--------------------------
Total Residential Properties 300,000 34,483
</TABLE>
F-24
<PAGE>
COLUMBUS REALTY TRUST
SCHEDULE III REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION (CONTINUED)
DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
COSTS
INITIAL COSTS CAPITALIZED REAL
------------------- SUBSEQUENT ESTATE
RELATED BLDGS & TO DISPOSED
DESCRIPTION ENCUMBRANCES LAND IMPRVMNTS ACQUISITION OF
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial Properties:
- ----------------------
Industrial:
Post and Paddock, Grand
Prairie, TX (b) 859 5,021 2,418 -
Campus Circle, Irving, TX (b) 417 2,861 1,231 -
Shopping Centers:
Towne Crossing, Mesquite, TX (b) 2,341 13,727 1,300 -
---------------------------------------------------------------------
Total Commercial Properties 3,617 21,609 4,949 -
Construction-in-progress
- ------------------------
Addison Circle One, Addison, TX (b),(f) 2,063 - 12,863 -
Cole's Corner, Dallas, TX (b) 1,290 - 3,043 -
Columbus Shore, Irving, TX (b) 3,926 - 32,883 -
Columbus Pointe, Jackson, MS (b) 620 - 4,873 -
The Heights of St. Thomas, Dallas, TX (b) 2,293 - 1,460 -
Uptown Block 580, Dallas, TX (b) 2,892 - 492 -
---------------------------------------------------------------------
Total Construction-in-progress: 13,084 - 55,614 -
---------------------------------------------------------------------
Total Real Estate held for Investment 54,399 117,525 226,949 -
- -------------------------------------
Real Estate held for Sale: (g)
- --------------------------
Springstead Condominiums, Dallas, TX (b) 426 2,466 114 -
Villas at Valley Ranch Condominiums,
Irving, TX (b) 374 2,172 148 (260)
---------------------------------------------------------------------
Total Real Estate held for Sale 800 4,638 262 (260)
- -------------------------------
---------------------------------------------------------------------
Total Real Estate Investments $55,199 $122,163 $227,211 $(260)
- -----------------------------
=====================================================================
<CAPTION>
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF PERIOD (A)
----------------------------------
BLDGS & CONSTRUCTION ACCMLTD
DESCRIPTION LAND IMPRVMNTS IN PROGRESS TOTAL DEPREC
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial Properties:
- ----------------------
Industrial:
Post and Paddock, Grand
Prairie, TX 859 7,439 - 8,298 1,481
Campus Circle, Irving, TX 417 4,092 - 4,509 875
Shopping Centers:
Towne Crossing, Mesquite, TX 2,341 15,027 - 17,368 3,272
--------------------------------------------------------------------------
Total Commercial Properties 3,617 26,558 - 30,175 5,628
Construction-in-progress
- ------------------------
Addison Circle One, Addison, TX 2,063 - 12,863 14,926 -
Cole's Corner, Dallas, TX 1,290 - 3,043 4,333 -
Columbus Shore, Irving, TX 3,926 - 32,883 36,809 -
Columbus Pointe, Jackson, MS 620 - 4,873 5,493 -
The Heights of St. Thomas, Dallas, TX 2,293 - 1,460 3,753 -
Uptown Block 580, Dallas, TX 2,892 - 492 3,384 -
--------------------------------------------------------------------------
Total Construction-in-progress: 13,084 - 55,614 68,698 -
--------------------------------------------------------------------------
Total Real Estate held for Investment 54,399 288,860 55,614 398,873 40,111
- -------------------------------------
Real Estate held for Sale:
- --------------------------
Springstead Condominiums, Dallas, TX 426 2,580 - 3,006 789
Villas at Valley Ranch Condominiums,
Irving, TX 338 2,096 - 2,434 671
--------------------------------------------------------------------------
Total Real Estate held for Sale 764 4,676 - 5,440 1,460
- -------------------------------
--------------------------------------------------------------------------
Total Real Estate Investments $55,163 $293,536 $55,614 $404,313 $41,571
- -----------------------------
==========================================================================
<CAPTION>
DEPRE-
CIABLE
LIVES
DATE OF DATE IN
DESCRIPTION CONSTRUCTION ACQUIRED YEARS
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial Properties:
- ----------------------
Industrial:
Post and Paddock, Grand
Prairie, TX 1986 6/88 5-40
Campus Circle, Irving, TX 1986 6/88 5-40
Shopping Centers:
Towne Crossing, Mesquite, TX 1985 6/88 5-40
Total Commercial Properties
Construction-in-progress
- ------------------------
Addison Circle One, Addison, TX (f) 9/95 N/A
Cole's Corner, Dallas, TX (f) 7/96 N/A
Columbus Shore, Irving, TX (f) 11/94 N/A
Columbus Pointe, Jackson, MS (f) 2/96 N/A
The Heights of St. Thomas, Dallas, TX (f) 1/96 N/A
Uptown Block 580, Dallas, TX (f) 1/96 N/A
Total Construction-in-progress:
Total Real Estate held for Investment
- -------------------------------------
Real Estate held for Sale:
- --------------------------
Springstead Condominiums, Dallas, TX 1983 6/88 N/A
Villas at Valley Ranch Condominiums,
Irving, TX 1985 6/88 N/A
Total Real Estate held for Sale
- -------------------------------
Total Real Estate Investments
- -----------------------------
</TABLE>
F-25
<PAGE>
____________________
(a) The aggregate cost of real estate investments for federal income tax
purposes is approximately $399.3 million at December 31, 1996.
(b) Denotes an operating property or property under construction which
collateralizes the Company's borrowings under its Credit Facility. Such
borrowings totaled approximately $118.0 million at December 31, 1996.
(c) Denotes a property encumbered by a first mortgage loan of approximately
$10.7 million at December 31, 1996.
(d) Denotes a property encumbered by a first mortgage loan of approximately
$49.2 million at December 31, 1996.
(e) Denotes a multifamily residential property under construction as of
December 31, 1996.
(f) In addition to the Company's borrowings under its Credit Facility, the
property is encumbered by a construction loan upon which approximately
$1.9 million had been drawn at December 31, 1996.
(g) The Company's real estate investment in two condominium communities (130
units in aggregate) were marketed for sale beginning in June 1996. The
Company sold six of the units in the year ended December 31, 1996. Cost net
of accumulated depreciation is presented as real estate held for sale
in the Company's financial statements.
(h) Management and operations of Town Lake Apartments and The Parks Apartments
were combined for financial reporting purposes as of January 1, 1996.
(i) Management and operations of Phases I and II of the Trace Apartments
were combined for financial reporting purposes as of January 1, 1996.
F-26
<PAGE>
COLUMBUS REALTY TRUST
NOTES TO SCHEDULE III -- REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
Changes in real estate and accumulated depreciation for the years ended December
31, 1996, 1995 and 1994 are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
----------------------------------------
<S> <C> <C> <C>
Real estate investments:
Balance at beginning of period $334,192 $267,061 $158,776
Real estate acquisitions (a) 7,095 8,711 84,862
Construction-in-progress 60,991 54,644 20,465
Reclassification to real estate held for sale (5,699) - -
Additions and improvements 2,294 3,776 2,958
----------------------------------------
Real estate held for investment 398,873 334,192 267,061
Reclassification to real estate held for sale 5,699 - -
Accumulated depreciation of real estate held
for sale (1,532) - -
Net book value of real estate sold (187) - -
----------------------------------------
Real estate held for sale 3,980 - -
----------------------------------------
Total real estate investments $402,853 $334,192 $267,061
========================================
Accumulated depreciation:
Balance at beginning of period $ 31,411 $ 22,600 $ 16,166
Depreciation 10,232 8,811 6,434
Reclassification to real estate held for sale (1,532) - -
----------------------------------------
Balance at end of period $ 40,111 $ 31,411 $ 22,600
========================================
</TABLE>
(a) Includes the contribution of land by a limited partner pursuant to
formation of a real estate joint venture in the year ended December 31,
1995.
F-27
<PAGE>
EXHIBIT 10.4
RICHARD L. BLOCH
----------------
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of November
15, 1996, by and between COLUMBUS REALTY TRUST, a Texas real estate investment
trust with offices at 15851 Dallas Parkway, Suite 855, Dallas, Texas 75240 (the
"Company") and Richard L. Bloch (the "Executive").
WHEREAS, the Executive is currently employed by the Company as its Chairman
of the Board;
WHEREAS, the Company is, as of the date hereof, granting to Executive
certain awards of restricted common shares of the Company;
WHEREAS, the Company desires to continue to employ the Executive, and the
Executive desires to continue to be employed by the Company upon the terms and
conditions set forth herein; and
WHEREAS, this Agreement shall supersede and replace all prior employment
agreements between the Company and the Executive.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein and for other good and valuable consideration
(including, without limitation, the awards of restricted common shares
contemplated above), the adequacy and receipt of which are hereby acknowledged,
the parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ the Executive, and the
----------
Executive hereby agrees to be employed by the Company, for a term (the
"Employment Period") commencing on the date hereof and expiring on December 31,
2001 (the "Expiration Date"); provided that, such Expiration Date shall
automatically be extended to the next December 31, if Notice of Expiration is
not given to Executive by the Company or to the Company by the Executive, as
contemplated by Section 8 hereof, at least nine (9) months prior to the
Expiration Date (as the same may have previously been extended).
2. Duties and Responsibilities. During the Employment Period, the
---------------------------
Executive will hold the position of Chairman of the Board and shall be a member
of the Executive Committee (herein so called) of the Board of Trust Managers of
the Company (the "Board"). The Executive shall, during the Employment Period,
perform such duties as are customarily performed by similar executive officers
who are employed by publicly-held,
<PAGE>
New York Stock Exchange ("NYSE")-listed, real estate investment trusts which are
similar to the Company and as such duties may be more specifically enumerated
(but not limited) from time to time by the Board or the Executive Committee of
the Board. Nothing herein shall require Executive to devote his efforts to the
Company on a full-time basis, or on any specified part-time basis, it being
acknowledged and agreed that Executive has and may pursue multiple business
interests that require a material portion of his time and attention, subject to
Paragraph 13 hereof. The Executive shall not be required to relocate in order
to perform his duties under this Agreement, but shall undertake such reasonable
business travel as may be necessary to perform his duties hereunder (for which
the Executive shall be reimbursed pursuant to Paragraph 4 below for costs and
expenses incurred in connection therewith).
3. Compensation.
------------
(a) Annual Base Salary. For all services rendered by the Executive
------------------
pursuant to this Agreement, the Company shall pay to the Executive an
annual base salary as follows: (i) for the period ending December 31, 1996,
the Annual Base Salary as currently being paid to Executive; and (ii) for
the period commencing on January 1, 1997 and ending December 31, 1997,
$100,000 per annum (as adjusted from time to time, the "Annual Base
Salary"). Thereafter, the Annual Base Salary will be increased by ten
percent (10%) on or about each January 1 during the Employment Period. In
no event shall the Annual Base Salary be reduced. All such compensation
shall be paid bi-weekly or at such other regular intervals, not less
frequently than monthly, as the Company may establish from time to time for
executive employees of the Company.
(b) Bonus. In addition to the compensation set forth in Paragraph
-----
3(a) above, the Executive shall be awarded such bonus for each calendar
year of his employment hereunder as the Executive Compensation Committee
(herein so called) of the Board shall determine in their sole discretion.
In determining such bonus, the Executive understands that the Executive
Compensation Committee will consider, without limitation, the following
factors with respect to the applicable calendar year: the Company's
financial performance, business performance and growth during such period;
Executive's responsibilities as an officer of the Company (including his
participation in transactions of particular financial or business
significance to the Company) during such period; the total compensation
package paid to executive officers having similar responsibilities as the
Executive who are employed by real estate investment trusts which are
similar to the Company; and such other factors as the Executive
Compensation Committee may deem appropriate in their sole discretion.
(c) Withholding. The Company shall have the right to deduct and
-----------
withhold from such compensation all social security and other federal,
state and
-2-
<PAGE>
local taxes and charges which currently are or which hereafter may be
required by law to be so deducted and withheld.
4. Expenses.
--------
(a) The Company shall pay for all legal and accounting fees and
expenses incurred by the Executive in connection with the structuring,
negotiation and preparation of this Agreement. The Company shall reimburse
the Executive for all out-of-pocket expenses actually and necessarily
incurred by him in the conduct of the business of the Company against
reasonable substantiation submitted with respect thereto.
(b) Unless the provisions of Paragraph 4(c) below shall apply, the
Company shall reimburse the Executive for all legal fees and related
expenses (including the costs of experts, evidence and counsel) paid by the
Executive as a result of (i) the termination of Executive's employment
(including all such fees and expenses, if any, incurred in contesting or
disputing any such termination of employment), (ii) the Executive seeking
to obtain or enforce any right or benefit provided by this Agreement or by
any other plan or arrangement maintained by the Company under which the
Executive is or may be entitled to receive benefits, (iii) the Executive's
hearing before the Board as contemplated in Paragraph 7(c) of this
Agreement or (iv) any action taken by the Company against the Executive;
provided, however, that the Company shall reimburse the legal fees and
related expenses described in this Paragraph 4(b) only if and when a final
judgment has been rendered in favor of the Executive and all appeals
related to any such action have been exhausted.
(c) The Company shall pay all legal fees and related expenses
(including the costs of experts, evidence and counsel) incurred by the
Executive as they become due as a result of (i) the termination of
Executive's employment (including all such fees and expenses, if any,
incurred in contesting or disputing any such termination of employment),
(ii) the Executive seeking to obtain or enforce any right or benefit
provided by this Agreement or by any other plan or arrangement maintained
by the Company under which the Executive is or may be entitled to receive
benefits, (iii) the Executive's hearing before the Board as contemplated in
Paragraph 7(c) of this Agreement or (iv) any action taken by the Company
against the Executive, unless and until such time that a final judgment has
been rendered in favor of the Company and all appeals related to any such
action have been exhausted; provided, however, that the circumstances set
forth above occurred on or after a Change in Control (as hereafter defined)
of the Company.
-3-
<PAGE>
5. Benefits. The Executive shall be entitled to the following benefits:
--------
(a) participation in the Company's Profit Sharing Plan, Share Option
Plan, Management Incentive Plan, Employee Stock Purchase Plan and other
benefit plans made generally available to executives of the Company;
(b) participation in any health insurance, disability insurance,
group life insurance or other welfare benefit programs made generally
available to executives of the Company plus an additional term life
insurance policy in the amount of $2,000,000.00 payable to one or more
beneficiaries designated by Executive; and
(c) four weeks of paid vacation each year, to be taken at such times
that are consistent with the reasonable business needs of the Company. All
vacation shall be subject to the policies and procedures of the Company.
6. Indemnification. The Company shall indemnify the Executive in the
---------------
performance of his duties pursuant to the Amended and Restated Bylaws of the
Company and to the fullest extent allowed by applicable law, including, without
limitation, legal fees.
7. Termination of the Agreement.
----------------------------
(a) Disability. If the Executive shall fail, because of illness or
----------
incapacity, to render the services contemplated by this Agreement for six
successive months, the Board may determine, on the basis of the advice of
an independent qualified physician, that the Executive has become disabled.
If within thirty (30) days after the date on which written notice of such
determination is given to the Executive, the Executive shall not have
returned to the full-time performance of his duties hereunder, the Company
may terminate this Agreement and the employment of the Executive hereunder
in accordance with Paragraph 10 hereof.
(b) Death. Except as otherwise provided in this Agreement, if the
-----
Executive shall die during the term of this Agreement, this Agreement shall
be deemed to have been terminated as of the date of death of the Executive.
(c) For Cause. The Company, by notice to the Executive, may terminate
---------
this Agreement prior to the Expiration Date for Cause (as hereafter
defined). As used herein, "Cause" shall mean (i) the willful and continued
failure by the Executive to substantially perform his duties hereunder
(other than any such failure resulting from the Executive's incapacity due
to physical or mental illness or any such actual or anticipated failure
resulting from termination by the Executive for Good Reason (as defined
below)) for a period of thirty (30) days after a written demand for
substantial performance is delivered to the Executive by the Company,
specifically identifying the manner in which the Company believes that the
Executive has not substantially performed his duties, (ii) the willful
engaging by the
-4-
<PAGE>
Executive in conduct which is demonstrably and materially injurious to the
Company, monetarily or otherwise or (iii) the willful violation by the
Executive of the provisions of Paragraph 13 hereof. For purposes of this
Paragraph 7(c), no act, or failure to act, on the Executive's part shall be
deemed "willful" unless done, or omitted to be done, by the Executive other
than in good faith and in a manner that the Executive reasonably believed
was in or not opposed to the best interests of the Company and its
shareholders. Notwithstanding the foregoing, the Executive shall not be
deemed to have been terminated for Cause unless and until there shall have
been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of all of the
members of the Board at a meeting of the Board called and held for such
purpose (after reasonable notice to the Executive and an opportunity for
the Executive, together with counsel of his choosing, to be heard before
the Board not less than 10 business days after the giving of such notice),
finding that in the good faith opinion of the Board, the Executive
conducted himself as set forth above in clause (i), (ii) or (iii) of the
first sentence of this Paragraph 7(c) and specifying the particulars of
such conduct in detail.
(d) For Good Reason. The Executive may terminate this Agreement prior
---------------
to the Expiration Date for "Good Reason" if any of the following events
occurs without the Executive's express written consent:
(i) the assignment to the Executive of any duties materially
different from those contemplated by Paragraph 2 hereof, or any
limitation of the powers of the Executive in any respect not
contemplated by Paragraph 2 hereof;
(ii) any removal or failure by management to nominate, or, if
nominated, by the shareholders to reelect, the Executive to the Board
of Trust Managers, except in connection with termination of the
Executive's employment for Cause or by reason of death or disability;
(iii) any removal or failure by the Board to reappoint the
Executive as a member of the Executive Committee or any comparable
committee of the Board, except in connection with termination of the
Executive's employment for Cause or by reason of death or disability;
(iv) a material reduction in the Executive's Annual Base
Salary or other benefits (except for bonuses or similar discretionary
payments) as in effect at the time in question, or any other failure
by the Company to comply with Paragraph 3 hereof; or
(v) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination or a Notice
of
-5-
<PAGE>
Expiration, (defined below), as applicable, satisfying the
requirements of Paragraph 8 below.
(e) Change of Control. Upon the occurrence of a Change of Control (as
-----------------
hereinafter defined) of the Company, Executive's employment with the
Company shall automatically terminate.
As used herein, a "Change in Control" will be deemed to have occurred if at any
time during the Employment Period any of the following events shall occur:
(i) The Company is merged, consolidated or reorganized into or with
another corporation or other legal entity, and as a result of such
merger, consolidation or reorganization less than a majority of the
combined voting power of the then outstanding securities of the
Company or such corporation or other legal entity immediately after
such transaction are held in the aggregate by the holders of Voting
Stock (as hereinafter defined) of the Company immediately prior to
such transaction;
(ii) The Company sells all or substantially all of its assets to any
other corporation or other legal entity, of which less than a
majority of the combined voting power of the then outstanding
securities (entitled to vote generally in the election of directors
or persons performing similar functions on behalf of such other
corporation or legal entity) of such other corporation or legal
entity are held in the aggregate by the holders of Voting Stock of
the Company immediately prior to such sale;
(iii) A Schedule 13D or Schedule 14D-1 (or any successor schedule, form or
report), each as promulgated pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act") is filed, disclosing that
any person (as the term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become the beneficial
owner (as the term "beneficial owner" is defined under Rule 13d-3 or
any successor rule or regulation promulgated under the Exchange Act)
of securities representing 25% or more of the combined voting power
of the then-outstanding securities entitled to vote generally in the
election of directors of the Company ("Voting Stock"); or
(iv) If during any one (1) year period, individuals who at the beginning
of any such period constitute the trust managers of the Company
cease for any reason to constitute at least a majority thereof,
unless the election, or the nomination for election by the Company's
shareholders, of each trust manager of the Company first elected
during such period was approved by a vote of at least two-thirds of
the trust managers of the Company then still
-6-
<PAGE>
in office who were trust managers of the Company at the beginning of
any such period.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have
occurred for purposes of this Agreement solely because (i) the Company, (ii) a
corporation or other legal entity in which the Company directly or indirectly
beneficially owns 50% or more of the voting securities of such entity, or (iii)
any Company-sponsored employee stock ownership plan or any other employee
benefit plan of the Company, either files or becomes obligated to file a report
or a proxy statement under or in response to Schedule 13D, Schedule 14D-1, Form
8-K or Schedule 14A (or any successor schedule, form or report or item therein)
under the Exchange Act, disclosing beneficial ownership by it of shares of
Voting Stock, whether in excess of 25% or otherwise, or because the Company
reports that a change in control of the Company has or may have occurred or will
or may occur in the future by reason of such beneficial ownership.
8. Notice of Termination. Any purported termination of the Executive's
---------------------
employment by the Company or by the Executive shall be communicated by a written
Notice of Termination or Notice of Expiration, as applicable, to the other party
hereto in accordance with Paragraph 18 hereof. For purposes of this Agreement,
(i) a "Notice of Termination" shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated and
(ii) a "Notice of Expiration" shall mean a notice which shall be delivered by
one party hereunder to the other party no later than nine (9) months prior to
the Expiration Date, to the effect that such party does not intend to extend the
term hereof beyond the Expiration Date.
9. Date of Termination, Etc. "Date of Termination" shall mean (a) if the
-------------------------
Executive's employment is terminated pursuant to Paragraph 7(a) above, thirty
(30) days after Notice of Termination is given (provided that the Executive
shall not have returned to the full-time performance of his duties during such
thirty (30) day period), and (b) if the Executive's employment is terminated
pursuant to Paragraph 7(c) or 7(d) above, or for any other reason (other than
disability), the date specified in the Notice of Termination (which, in the case
of a termination pursuant to Paragraph 7(c) above shall not be less than thirty
(30) days, and in the case of a termination pursuant to Paragraph 7(d) above
shall not be less than thirty (30) nor more than sixty (60) days, respectively,
from the date such Notice of Termination is given); provided, however, if within
-------- -------
thirty (30) days after any Notice of Termination is given the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, the Date of Termination shall be the date on which
the dispute is finally resolved, either by mutual written agreement of the
parties, by a binding arbitration award, or by a final judgment, order or decree
of a court of competent jurisdiction (which is not appealable or the time for
appeal therefrom having expired and no appeal having been perfected), except
that with respect to a termination of this Agreement by reason of expiration of
its term as provided in
-7-
<PAGE>
Paragraph 2, the Date of Termination shall be the Expiration Date pursuant to
Paragraph 2, regardless of whether a dispute exists with respect thereto;
provided, further, that the Date of Termination shall be extended by a notice of
- -------- -------
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Company will continue to
pay the Executive his full compensation in effect when the notice giving rise to
the dispute was given (including, but not limited to, base salary and
installments under any bonus or incentive compensation plan) and continue the
Executive as a participant in all compensation, benefit and insurance plans in
which he was participating when the notice giving rise to the dispute was given,
until the dispute is finally resolved in accordance with this Paragraph 9.
Amounts paid under this Paragraph 9 are in addition to all other amounts due
under this Agreement and shall not be offset against or reduce any other amounts
due under this Agreement. If it is finally determined by a binding arbitration
award, or by a final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or the time for appeal therefrom having
expired and no appeal having been perfected), that the Executive was terminated
for proper cause, the Executive shall promptly remit to the Company the amount
of any cash payments and the value of any non-cash benefits paid pursuant to
this Paragraph 9 to which the Executive would not otherwise have been entitled.
10. Compensation Upon Termination, During Disability or Upon Change of
------------------------------------------------------------------
Control.
- -------
(a) Disability or Death. During any period that the Executive fails
-------------------
to perform his duties hereunder as a result of incapacity due to physical
or mental illness, the Executive shall continue to receive his Annual Base
Salary at the rate in effect at the commencement of any such period until
his employment is terminated pursuant to Paragraph 7(a) hereof, together
with the average prorata bonus payable pursuant to Paragraph 3(b). If the
Executive's employment shall be terminated by reason of the Executive's
death, the Annual Base Salary together with the average prorata bonus
payable pursuant to Paragraph 3(b) which has accrued through the Date of
Termination shall be paid to the Executive's estate or personal
representative. Following termination pursuant to Paragraph 7(a) or
Paragraph 7(b) hereof, the Company will pay to the Executive, his estate or
personal representative 2.99 times the Executive's Total Compensation (as
defined below) for the immediately preceding twelve-month period to and
including the date of termination. "Total Compensation" shall mean
compensation of any nature and from any source, including without
limitation, (i) annual base salary, (ii) bonus awards (whether cash or
noncash), (iii) the fair market value of any common shares or other shares
of capital stock, stock options or other equity based compensation awarded
to the Executive during the relevant twelve (12) month period, whether or
not vested, restricted or subject to forfeiture (the fair market value of
which shall be determined as of the date of grant without taking into
consideration any provisions as to vesting or forfeiture or provisions as
to
-8-
<PAGE>
restriction on transfer) and (iv) all perquisites paid, awarded or
otherwise available to Executive during the relevant period. The aforesaid
amount shall be payable, at the option of the Executive, his estate or
personal representative, either (A) in full immediately upon such
termination or (B) semi-monthly over the remainder of the Employment
Period. In addition, the Company covenants and agrees to use reasonable
commercial efforts to maintain insurance sufficient to enable the repayment
of Executive's stock loans upon Executive's termination either as a result
of death or disability. Should the Company fail or be unable to obtain
such insurance, all principal and interest outstanding under any loans from
the Company to the Executive to enable the Executive to purchase Common
Shares will be forgiven in the event of termination pursuant to Paragraph
7(a) or Paragraph 7(b) above.
(b) For Cause. If the Executive's employment shall be terminated, at
---------
any time prior to a Change in Control of the Company, for Cause or by him
other than for Good Reason, the Executive shall be paid the Executive's
Annual Base Salary through the Date of Termination at the rate in effect at
the time Notice of Termination is given. All outstanding principal and
interest under any loans from the Company to the Executive to enable the
Executive to purchase Shares shall become immediately due and payable. The
Company shall thereafter have no further obligations to the Executive under
this Agreement.
(c) Other than for Cause. If the Executive's employment shall be
--------------------
terminated by the Company other than (i) for Cause or (ii) upon death or
disability, the Executive shall be paid the Executive's Annual Base Salary
plus the average prorata bonus payable pursuant to Paragraph 3(b) through
the Date of Termination. In addition, the Company will pay to the
Executive 2.99 times the Executive's Total Compensation for the immediately
preceding twelve-month period. The Executive shall be entitled to continue
to receive benefits pursuant to Paragraph 5 hereof (or the cash equivalent
thereof if the Company cannot directly provide such benefits). The
aforesaid amount shall be payable, at the option of the Executive, either
(i) in full immediately upon such termination or (ii) semi-monthly over the
remainder of the Employment Period. In addition, the Executive shall be
entitled, at the option of the Executive, (i) to exercise any options to
purchase Shares granted to the Executive, whether or not then vested, in
accordance with the terms of the applicable share option agreement or plan,
(ii) to retain any Shares awarded to the Executive whether or not vested on
the Date of Termination, and any forfeiture provisions applicable thereto
will lapse, and (iii) to require the Company (upon written notice delivered
within 180 days following the date of the Executive's termination) to
repurchase all or any portion of the Executive's options to purchase
Shares, whether or not then vested, at a price equal to the difference
between the Fair Market Value (as hereafter defined) of the Shares for
which the options to be repurchased are exercisable and the exercise price
of such options as of the date of the Executive's termination of
employment.
-9-
<PAGE>
For purposes of this Subsection 10(c) and Subsection 10(e) below, "Fair
Market Value" shall mean the average of the closing price on the New York
Stock Exchange of the Shares on each of the trading days within the 30 days
immediately preceding the date of termination of the Executive's
employment, as published in the Wall Street Journal.
(d) For Good Reason. If the Executive's employment shall be
---------------
terminated by the Executive for Good Reason, the Executive shall be paid
the Executive's Annual Base Salary plus the average prorata bonus payable
pursuant to Paragraph 3(b) through the Date of Termination. In addition,
the Company will pay to the Executive the lesser of (i) two times the
Executive's Total Compensation for the immediately preceding twelve-month
period or (ii) the Executive's Total Compensation for the preceding twelve-
month period multiplied by the number of years (or fraction thereof)
remaining until the Expiration Date (as the same may have been extended
from time to time). The Executive shall be entitled to continue to receive
benefits pursuant to Paragraph 5 hereof (or the cash equivalent thereof if
the Company cannot directly provide such benefits). The Executive shall be
entitled, at the option of the Executive, (i) to exercise any options to
purchase Shares granted to the Executive, whether or not then vested, in
accordance with the terms of the applicable share option agreement or Plan
and (ii) to retain any Shares awarded to the Executive, whether or not then
vested.
(e) Change in Control. Upon the occurrence of a Change in Control of
-----------------
the Company, the Company shall pay the Executive the greater of (i) the
amount of total compensation (from all sources) to which the Executive
would have (or could have reasonably been expected to have) been entitled
had the Agreement not been terminated or (ii) 2.99 times the Executive's
Total Compensation for the immediately preceding twelve-month period. The
Executive shall be entitled to continue to receive benefits pursuant to
Paragraph 5 hereof (or the cash equivalent thereof if the Company cannot
directly provide such benefits). The aforesaid amount shall be payable, at
the option of the Executive, either (i) in full immediately upon such
termination or (ii) semi-monthly over the remainder of the Employment
Period. In addition, the Executive shall be entitled, at the option of the
Executive, (i) to exercise any options to purchase Shares granted to the
Executive, whether or not then vested, in accordance with the terms of the
applicable share option agreement or plan, (ii) to retain any Shares
awarded to the Executive, whether or not then vested, and any forfeiture
provisions applicable thereto will lapse, (iii) to require the Company
(upon written notice delivered within 180 days following the date of the
Executive's termination) to repurchase all or any portion of the
Executive's options to purchase Shares, whether or not then vested, at a
price equal to the difference between the Fair Market Value of the Shares
for which the options to be repurchased are exercisable and the exercise
price of such options as of the Date of Termination, or (iv) receive new
options to purchase shares of the acquiring or surviving entity, which new
options shall contain terms
-10-
<PAGE>
which (A) provide, as to exercise price, the economic equivalent of
Executive's rights with respect to Executive's options to purchase Shares,
(B) have the same duration and periods of exercise as Executive's options
to purchase Shares, (C) provide for the same treatment upon the occurrence
of a Change of Control as Executive's options to purchase Shares and (D)
otherwise provide Executive the same rights and benefits to which he is
entitled with respect to options to purchase Shares.
(f) In addition to all other amounts payable to the Executive under
this Paragraph 10, the Executive shall be entitled to receive all
retirement benefits payable to him under the Company's benefit plans
applicable to him and any other plan or agreement relating to retirement
benefits as in effect upon the occurrence of a Change in Control.
(g) The Executive shall not be required to mitigate the amount of any
payment provided for in this Paragraph 10 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in
this Paragraph 10 be reduced by any compensation earned by him as the
result of employment by, or any services provided to, another employer
(whether or not a successor to the Company) or by retirement benefits after
the Date of Termination, or otherwise, except as specifically provided in
this Paragraph 10.
11. Confidential Information. The Executive understands and acknowledges
------------------------
that during his employment with the Company, he will be exposed to Confidential
Information (defined below), all of which is proprietary and which will
rightfully belong to the Company. The Executive will hold in a fiduciary
capacity for the benefit of the Company all such Confidential Information
obtained by the Executive during his employment with the Company and will not,
directly or indirectly, at any time, either during or after his employment with
the Company, without the Company's prior written consent, use, publish,
disseminate, or otherwise disclose any of such Confidential Information to any
individual or entity other than the Company or its employees, except as required
in the performance of his duties for the Company. The Executive shall take all
reasonable steps to safeguard such Confidential Information and to protect such
Confidential Information against disclosure, misuse, loss or theft. The term
"Confidential Information" shall mean any information not generally known in the
relevant trade or industry, which was obtained from the Company or its
predecessors or which was learned, discovered, developed, conceived, originated
or prepared during or as a result of the performance of any services by the
Executive on behalf of the Company or its predecessors.
12. Return of Documents. All writings, records, and other documents and
-------------------
things containing any Confidential Information shall be the exclusive property
of the Company, shall not be copied, summarized, extracted from, or removed from
the premises of the Company, except in pursuit of the business of the Company
and at the direction of the
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<PAGE>
Company, and shall be delivered to the Company, without retaining any copies,
upon the termination of the Executive's employment or at any time as requested
by the Company.
13. Noncompete. The Executive agrees that:
----------
(a) At all times during which the Executive is employed by the
Company, the Executive agrees to conduct all multifamily residential
development, construction, acquisition and management activities through
the Company. In addition, if Executive terminates his employment hereunder
prior to the Expiration Date without Good Reason or the Company terminates
Executive's employment hereunder for Cause, then beginning on the Date of
Termination and for a one (1) year period thereafter (such one (1) year
period, the "Noncompetition Period"), the Executive shall not, within
twenty (20) miles of (i) any of the multifamily residential properties
owned by the Company on the first day of the Noncompetition Period, (ii)
any tract of land owned by the Company with respect to which the Company
has undertaken substantial development activities and on which the Company
intends, as of the first day of the Noncompetition Period, to develop a
multifamily residential property or (iii) any multifamily residential
property which, prior to the first day of the Noncompetition Period, the
Company had entered into a definitive purchase agreement to acquire (the
areas described in (i), (ii) and (iii) above being collectively referred to
herein as the "Restricted Area"), directly or indirectly, engage in, or
own, invest in, manage or control any venture or enterprise engaged in, any
multifamily residential real estate development, construction, acquisition
or management activities. Nothing herein shall prohibit the Executive from
being a passive owner of not more than five percent (5%) of the outstanding
stock of any class of securities of a corporation or other entity engaged
in such business which is publicly traded, so long as he has no active
participation in the business of such corporation or other entity.
(b) If, at the time of enforcement of this Paragraph 13, a court shall
hold that the duration, scope, area or other restrictions stated herein are
unreasonable, the parties agree that reasonable maximum duration, scope,
area or other restrictions may be substituted by such court for the stated
duration, scope, area or other restrictions.
14. Remedies. The parties hereto agree that both the Company and the
--------
Executive would suffer irreparable harm from a breach by the other party of any
of the covenants or agreements contained herein. Therefore, in the event of the
actual or threatened breach by either party of any of the provisions of this
Agreement, the other party may, in addition and supplementary to other rights
and remedies existing in its favor, apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce or prevent any violation of the provisions hereof.
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<PAGE>
15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
-------------
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES.
16. Entire Agreement. This Agreement sets forth the entire agreement of
----------------
the parties with respect to the subject matter hereof and is intended to
supersede all prior employment negotiations, understandings and agreements.
Notwithstanding the foregoing, nothing contained herein shall be deemed to
limit, impair, override, supersede or adversely impact in any manner any
provisions of any specific agreements between the Company and the Executive
granting or awarding common shares or other shares of capital stock or other
securities of the Company or any options or other rights to acquire the same.
No provision of this Agreement may be waived or changed, except by a writing
signed by the party to be charged with such waiver or change.
17. Successors; Binding Agreement. This Agreement shall inure to the
-----------------------------
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amount would still
be payable to him hereunder if he had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the Executive's devisee, legatee or other designee or, if
there is no such designee, to the Executive's estate.
18. Notices. All notices provided for in this Agreement shall be in
-------
writing, and shall be deemed to have been duly given when delivered personally
to the party to receive the same, when given by telex, telegram or mailgram, or
when mailed first class postage prepaid, by registered or certified mail, return
receipt requested, addressed to the party to receive the same at his or its
address above set forth, or such other address as the party to receive the same
shall have specified by written notice given in the manner provided for in this
Paragraph 18. All notices shall be deemed to have been given as of the date of
personal delivery, transmittal or mailing thereof.
19. Survival. The Company's obligations under Paragraph 10 shall survive
--------
the termination of this Agreement. The Executive's obligations under Paragraphs
11, 12 and 13 shall survive the termination of this Agreement.
20. Severability. If any provision in this Agreement is determined to be
------------
invalid, it shall not affect the validity or enforceability of any of the other
remaining provisions hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
COLUMBUS REALTY TRUST
By: /s/ ROBERT L. SHAW
------------------------------------------------
Name: Robert L. Shaw
-------------------------------------------
Title: Chief Executive Officer
------------------------------------------
EXECUTIVE:
/s/ RICHARD L. BLOCH
---------------------------------------------------
Richard L. Bloch
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<PAGE>
EXHIBIT 10.5
ROBERT L. SHAW
--------------
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of November
15, 1996, by and between COLUMBUS REALTY TRUST, a Texas real estate investment
trust with offices at 15851 Dallas Parkway, Suite 855, Dallas, Texas 75240 (the
"Company") and Robert L. Shaw (the "Executive").
WHEREAS, the Executive is currently employed by the Company as its Chief
Executive Officer;
WHEREAS, the Company is, as of the date hereof, granting to Executive
certain awards of restricted common shares of the Company;
WHEREAS, the Company desires to continue to employ the Executive, and the
Executive desires to continue to be employed by the Company upon the terms and
conditions set forth herein; and
WHEREAS, this Agreement shall supersede and replace all prior employment
agreements between the Company and the Executive.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein and for other good and valuable consideration
(including, without limitation, the awards of restricted common shares
contemplated above), the adequacy and receipt of which are hereby acknowledged,
the parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ the Executive, and the
----------
Executive hereby agrees to be employed by the Company, for a term (the
"Employment Period") commencing on the date hereof and expiring on December 31,
2001 (the "Expiration Date"); provided that, such Expiration Date shall
automatically be extended to the next December 31, if Notice of Expiration is
not given to Executive by the Company or to the Company by the Executive, as
contemplated by Section 8 hereof, at least nine (9) months prior to the
Expiration Date (as the same may have previously been extended).
2. Duties and Responsibilities. During the Employment Period, the
---------------------------
Executive will hold the position of Chief Executive Officer and shall be a
member of the Executive Committee (herein so called) of the Board of Trust
Managers of the Company (the "Board"). The Executive shall, during the
Employment Period, devote his best efforts and all of his business time, skill
and attention to the business of the Company, and shall
<PAGE>
perform such duties as are customarily performed by chief executive officers of
publicly-held, New York Stock Exchange ("NYSE")-listed real estate investment
trusts which are similar to the Company and as such duties may be more
specifically enumerated (but not limited) from time to time by the Board or the
Executive Committee of the Board. The foregoing is not intended to preclude the
Executive from owning and managing personal investments, including real estate
investments, subject to the restrictions set forth in Paragraph 13 hereof and
provided that the time devoted to such activities shall not be material and
shall not detract from the performance of the Executive's duties hereunder. The
Executive shall not be required to relocate or conduct the Company's business
outside the Dallas, Texas metropolitan area in order to perform his duties under
this Agreement, but shall undertake such reasonable business travel as may be
necessary to perform his duties hereunder (for which the Executive shall be
reimbursed pursuant to Paragraph 4 below for costs and expenses incurred in
connection therewith).
3. Compensation.
------------
(a) Annual Base Salary. For all services rendered by the Executive
------------------
pursuant to this Agreement, the Company shall pay to the Executive an
annual base salary as follows: (i) for the period ending December 31, 1996,
the Annual Base Salary as stated in that certain Amendment No. 3 to
Employment Agreement by and between the Company and the Executive effective
as of January 1, 1996; and (ii) for the period commencing on January 1,
1997 and ending December 31, 1997, $262,000 per annum (as adjusted from
time to time, the "Annual Base Salary"). Thereafter, the Annual Base
Salary will be increased by ten percent (10%) on or about each January 1
during the Employment Period. In no event shall the Annual Base Salary be
reduced. All such compensation shall be paid bi-weekly or at such other
regular intervals, not less frequently than monthly, as the Company may
establish from time to time for executive employees of the Company.
(b) Bonus. In addition to the compensation set forth in Paragraph
-----
3(a) above, the Executive shall be awarded such bonus for each calendar
year of his employment hereunder as the Executive Compensation Committee
(herein so called) of the Board shall determine in their sole discretion.
In determining such bonus, the Executive understands that the Executive
Compensation Committee will consider, without limitation, the following
factors with respect to the applicable calendar year: the Company's
financial performance, business performance and growth during such period;
Executive's responsibilities as an officer of the Company (including his
participation in transactions of particular financial or business
significance to the Company) during such period; the total compensation
package paid to executive officers having similar responsibilities as the
Executive who are employed by real estate investment trusts which are
similar to the
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<PAGE>
Company; and such other factors as the Executive Compensation Committee may
deem appropriate in their sole discretion.
(c) Withholding. The Company shall have the right to deduct and
-----------
withhold from such compensation all social security and other federal,
state and local taxes and charges which currently are or which hereafter
may be required by law to be so deducted and withheld.
4. Expenses.
--------
(a) The Company shall pay for all legal and accounting fees and
expenses incurred by the Executive in connection with the structuring,
negotiation and preparation of this Agreement. The Company shall reimburse
the Executive for all out-of-pocket expenses actually and necessarily
incurred by him in the conduct of the business of the Company against
reasonable substantiation submitted with respect thereto.
(b) Unless the provisions of Paragraph 4(c) below shall apply, the
Company shall reimburse the Executive for all legal fees and related
expenses (including the costs of experts, evidence and counsel) paid by the
Executive as a result of (i) the termination of Executive's employment
(including all such fees and expenses, if any, incurred in contesting or
disputing any such termination of employment), (ii) the Executive seeking
to obtain or enforce any right or benefit provided by this Agreement or by
any other plan or arrangement maintained by the Company under which the
Executive is or may be entitled to receive benefits, (iii) the Executive's
hearing before the Board as contemplated in Paragraph 7(c) of this
Agreement or (iv) any action taken by the Company against the Executive;
provided, however, that the Company shall reimburse the legal fees and
related expenses described in this Paragraph 4(b) only if and when a final
judgment has been rendered in favor of the Executive and all appeals
related to any such action have been exhausted.
(c) The Company shall pay all legal fees and related expenses
(including the costs of experts, evidence and counsel) incurred by the
Executive as they become due as a result of (i) the termination of
Executive's employment (including all such fees and expenses, if any,
incurred in contesting or disputing any such termination of employment),
(ii) the Executive seeking to obtain or enforce any right or benefit
provided by this Agreement or by any other plan or arrangement maintained
by the Company under which the Executive is or may be entitled to receive
benefits, (iii) the Executive's hearing before the Board as contemplated in
Paragraph 7(c) of this Agreement or (iv) any action taken by the Company
against the Executive, unless and until such time that a final judgment has
been rendered in favor of the Company and all appeals related to any such
action have been
-3-
<PAGE>
exhausted; provided, however, that the circumstances set forth above
occurred on or after a Change in Control (as hereafter defined) of the
Company.
5. Benefits. The Executive shall be entitled to the following benefits:
--------
(a) participation in the Company's Profit Sharing Plan, Share Option
Plan, Management Incentive Plan, Employee Stock Purchase Plan and other
benefit plans made generally available to executives of the Company;
(b) participation in any health insurance, disability insurance,
group life insurance or other welfare benefit programs made generally
available to executives of the Company plus an additional term life
insurance policy in the amount of $2,000,000.00 payable to one or more
beneficiaries designated by Executive; and
(c) four weeks of paid vacation each year, to be taken at such times
that are consistent with the reasonable business needs of the Company. All
vacation shall be subject to the policies and procedures of the Company.
6. Indemnification. The Company shall indemnify the Executive in the
---------------
performance of his duties pursuant to the Amended and Restated Bylaws of the
Company and to the fullest extent allowed by applicable law, including, without
limitation, legal fees.
7. Termination of the Agreement.
----------------------------
(a) Disability. If the Executive shall fail, because of illness or
----------
incapacity, to render the services contemplated by this Agreement for six
successive months, the Board may determine, on the basis of the advice of
an independent qualified physician, that the Executive has become disabled.
If within thirty (30) days after the date on which written notice of such
determination is given to the Executive, the Executive shall not have
returned to the full-time performance of his duties hereunder, the Company
may terminate this Agreement and the employment of the Executive hereunder
in accordance with Paragraph 10 hereof.
(b) Death. Except as otherwise provided in this Agreement, if the
-----
Executive shall die during the term of this Agreement, this Agreement shall
be deemed to have been terminated as of the date of death of the Executive.
(c) For Cause. The Company, by notice to the Executive, may terminate
---------
this Agreement prior to the Expiration Date for Cause (as hereafter
defined). As used herein, "Cause" shall mean (i) the willful and continued
failure by the Executive to substantially perform his duties hereunder
(other than any such failure resulting from the Executive's incapacity due
to physical or mental illness or any such actual or anticipated failure
resulting from termination by the Executive for Good Reason (as defined
below)) for a period of thirty (30) days after a written
-4-
<PAGE>
demand for substantial performance is delivered to the Executive by the
Company, specifically identifying the manner in which the Company believes
that the Executive has not substantially performed his duties, (ii) the
willful engaging by the Executive in conduct which is demonstrably and
materially injurious to the Company, monetarily or otherwise or (iii) the
willful violation by the Executive of the provisions of Paragraph 13
hereof. For purposes of this Paragraph 7(c), no act, or failure to act, on
the Executive's part shall be deemed "willful" unless done, or omitted to
be done, by the Executive other than in good faith and in a manner that the
Executive reasonably believed was in or not opposed to the best interests
of the Company and its shareholders. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-
quarters (3/4) of all of the members of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice to the Executive
and an opportunity for the Executive, together with counsel of his
choosing, to be heard before the Board not less than 10 business days after
the giving of such notice), finding that in the good faith opinion of the
Board, the Executive conducted himself as set forth above in clause (i),
(ii) or (iii) of the first sentence of this Paragraph 7(c) and specifying
the particulars of such conduct in detail.
(d) For Good Reason. The Executive may terminate this Agreement prior
---------------
to the Expiration Date for "Good Reason" if any of the following events
occurs without the Executive's express written consent:
(i) the assignment to the Executive of any duties materially
different from those contemplated by Paragraph 2 hereof, or any
limitation of the powers of the Executive in any respect not
contemplated by Paragraph 2 hereof;
(ii) any removal or failure by management to nominate, or, if
nominated, by the shareholders to reelect, the Executive to the Board
of Trust Managers, except in connection with termination of the
Executive's employment for Cause or by reason of death or disability;
(iii) any removal or failure by the Board to reappoint the
Executive as a member of the Executive Committee or any comparable
committee of the Board, except in connection with termination of the
Executive's employment for Cause or by reason of death or disability;
(iv) a material reduction in the Executive's Annual Base
Salary or other benefits (except for bonuses or similar discretionary
payments) as in effect at the time in question, or any other failure
by the Company to comply with Paragraph 3 hereof; or
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<PAGE>
(v) any purported termination of the Executive's employment which
is not effected pursuant to a Notice of Termination or a Notice of
Expiration, (defined below), as applicable, satisfying the
requirements of Paragraph 8 below.
(e) Change of Control. Upon the occurrence of a Change of Control (as
-----------------
hereinafter defined) of the Company, Executive's employment with the
Company shall automatically terminate.
As used herein, a "Change in Control" will be deemed to have occurred if at any
time during the Employment Period any of the following events shall occur:
(i) The Company is merged, consolidated or reorganized into or with
another corporation or other legal entity, and as a result of such
merger, consolidation or reorganization less than a majority of the
combined voting power of the then outstanding securities of the
Company or such corporation or other legal entity immediately after
such transaction are held in the aggregate by the holders of Voting
Stock (as hereinafter defined) of the Company immediately prior to
such transaction;
(ii) The Company sells all or substantially all of its assets to any other
corporation or other legal entity, of which less than a majority of
the combined voting power of the then outstanding securities
(entitled to vote generally in the election of directors or persons
performing similar functions on behalf of such other corporation or
legal entity) of such other corporation or legal entity are held in
the aggregate by the holders of Voting Stock of the Company
immediately prior to such sale;
(iii) A Schedule 13D or Schedule 14D-1 (or any successor schedule, form or
report), each as promulgated pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act") is filed, disclosing that
any person (as the term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become the beneficial owner
(as the term "beneficial owner" is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Exchange Act) of
securities representing 25% or more of the combined voting power of
the then-outstanding securities entitled to vote generally in the
election of directors of the Company ("Voting Stock"); or
(iv) If during any one (1) year period, individuals who at the beginning
of any such period constitute the trust managers of the Company cease
for any reason to constitute at least a majority thereof, unless the
election, or the nomination for election by the Company's
shareholders, of each trust
-6-
<PAGE>
manager of the Company first elected during such period was approved
by a vote of at least two-thirds of the trust managers of the Company
then still in office who were trust managers of the Company at the
beginning of any such period.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have
occurred for purposes of this Agreement solely because (i) the Company, (ii) a
corporation or other legal entity in which the Company directly or indirectly
beneficially owns 50% or more of the voting securities of such entity, or (iii)
any Company-sponsored employee stock ownership plan or any other employee
benefit plan of the Company, either files or becomes obligated to file a report
or a proxy statement under or in response to Schedule 13D, Schedule 14D-1, Form
8-K or Schedule 14A (or any successor schedule, form or report or item therein)
under the Exchange Act, disclosing beneficial ownership by it of shares of
Voting Stock, whether in excess of 25% or otherwise, or because the Company
reports that a change in control of the Company has or may have occurred or will
or may occur in the future by reason of such beneficial ownership.
8. Notice of Termination. Any purported termination of the Executive's
---------------------
employment by the Company or by the Executive shall be communicated by a written
Notice of Termination or Notice of Expiration, as applicable, to the other party
hereto in accordance with Paragraph 18 hereof. For purposes of this Agreement,
(i) a "Notice of Termination" shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated and
(ii) a "Notice of Expiration" shall mean a notice which shall be delivered by
one party hereunder to the other party no later than nine (9) months prior to
the Expiration Date, to the effect that such party does not intend to extend the
term hereof beyond the Expiration Date.
9. Date of Termination, Etc. "Date of Termination" shall mean (a) if the
-------------------------
Executive's employment is terminated pursuant to Paragraph 7(a) above, thirty
(30) days after Notice of Termination is given (provided that the Executive
shall not have returned to the full-time performance of his duties during such
thirty (30) day period), and (b) if the Executive's employment is terminated
pursuant to Paragraph 7(c) or 7(d) above, or for any other reason (other than
disability), the date specified in the Notice of Termination (which, in the case
of a termination pursuant to Paragraph 7(c) above shall not be less than thirty
(30) days, and in the case of a termination pursuant to Paragraph 7(d) above
shall not be less than thirty (30) nor more than sixty (60) days, respectively,
from the date such Notice of Termination is given); provided, however, if within
-------- -------
thirty (30) days after any Notice of Termination is given the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, the Date of Termination shall be the date on which
the dispute is finally resolved, either by mutual written agreement of the
parties, by a binding arbitration award, or by a final judgment, order or decree
of a court of competent jurisdiction (which is not appealable or the time for
appeal therefrom
-7-
<PAGE>
having expired and no appeal having been perfected), except that with respect to
a termination of this Agreement by reason of expiration of its term as provided
in Paragraph 2, the Date of Termination shall be the Expiration Date pursuant to
Paragraph 2, regardless of whether a dispute exists with respect thereto;
provided, further, that the Date of Termination shall be extended by a notice of
- -------- -------
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Company will continue to
pay the Executive his full compensation in effect when the notice giving rise to
the dispute was given (including, but not limited to, base salary and
installments under any bonus or incentive compensation plan) and continue the
Executive as a participant in all compensation, benefit and insurance plans in
which he was participating when the notice giving rise to the dispute was given,
until the dispute is finally resolved in accordance with this Paragraph 9.
Amounts paid under this Paragraph 9 are in addition to all other amounts due
under this Agreement and shall not be offset against or reduce any other amounts
due under this Agreement. If it is finally determined by a binding arbitration
award, or by a final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or the time for appeal therefrom having
expired and no appeal having been perfected), that the Executive was terminated
for proper cause, the Executive shall promptly remit to the Company the amount
of any cash payments and the value of any non-cash benefits paid pursuant to
this Paragraph 9 to which the Executive would not otherwise have been entitled.
10. Compensation Upon Termination, During Disability or Upon Change of
------------------------------------------------------------------
Control.
- -------
(a) Disability or Death. During any period that the Executive fails
-------------------
to perform his duties hereunder as a result of incapacity due to physical
or mental illness, the Executive shall continue to receive his Annual Base
Salary at the rate in effect at the commencement of any such period until
his employment is terminated pursuant to Paragraph 7(a) hereof, together
with the average prorata bonus payable pursuant to Paragraph 3(b). If the
Executive's employment shall be terminated by reason of the Executive's
death, the Annual Base Salary together with the average prorata bonus
payable pursuant to Paragraph 3(b) which has accrued through the Date of
Termination shall be paid to the Executive's estate or personal
representative. Following termination pursuant to Paragraph 7(a) or
Paragraph 7(b) hereof, the Company will pay to the Executive, his estate or
personal representative 2.99 times the Executive's Total Compensation (as
defined below) for the immediately preceding twelve-month period to and
including the date of termination. "Total Compensation" shall mean
compensation of any nature and from any source, including without
limitation, (i) annual base salary, (ii) bonus awards (whether cash or
noncash), (iii) the fair market value of any common shares or other shares
of capital stock, stock options or other equity based compensation awarded
to the Executive during the relevant twelve (12) month period, whether or
not vested, restricted or subject to forfeiture (the fair market
-8-
<PAGE>
value of which shall be determined [AS OF THE DATE OF GRANT] without taking
into consideration any provisions as to vesting or forfeiture or provisions
as to restriction on transfer) and (iv) all perquisites paid, awarded or
otherwise available to Executive during the relevant period. The aforesaid
amount shall be payable, at the option of the Executive, his estate or
personal representative, either (A) in full immediately upon such
termination or (B) semi-monthly over the remainder of the Employment
Period. In addition, the Company covenants and agrees to use reasonable
commercial efforts to maintain insurance sufficient to enable the repayment
of Executive's stock loans upon Executive's termination either as a result
of death or disability. Should the Company fail or be unable to obtain
such insurance, all principal and interest outstanding under any loans from
the Company to the Executive to enable the Executive to purchase Common
Shares will be forgiven in the event of termination pursuant to Paragraph
7(a) or Paragraph 7(b) above.
(b) For Cause. If the Executive's employment shall be terminated, at
---------
any time prior to a Change in Control of the Company, for Cause or by him
other than for Good Reason, the Executive shall be paid the Executive's
Annual Base Salary through the Date of Termination at the rate in effect at
the time Notice of Termination is given. All outstanding principal and
interest under any loans from the Company to the Executive to enable the
Executive to purchase Shares shall become immediately due and payable. The
Company shall thereafter have no further obligations to the Executive under
this Agreement.
(c) Other than for Cause. If the Executive's employment shall be
--------------------
terminated by the Company other than (i) for Cause or (ii) upon death or
disability, the Executive shall be paid the Executive's Annual Base Salary
plus the average prorata bonus payable pursuant to Paragraph 3(b) through
the Date of Termination. In addition, the Company will pay to the
Executive 2.99 times the Executive's Total Compensation for the immediately
preceding twelve-month period. The Executive shall be entitled to continue
to receive benefits pursuant to Paragraph 5 hereof (or the cash equivalent
thereof if the Company cannot directly provide such benefits). The
aforesaid amount shall be payable, at the option of the Executive, either
(i) in full immediately upon such termination or (ii) semi-monthly over the
remainder of the Employment Period. The Company shall also provide to
Executive for a period of three years from the Date of Termination, office
space (comparable to that utilized by Executive during his employment with
the Company), which shall, at Executive's election, be located either at
the offices of the Company or a comparable commercial office facility and
support services which shall include an assistant (on a full-time basis),
copier, facsimile machine, telephone services and other administrative
services comparable to those available to Executive during Executive's
employment term (such office space and support services are referred to
collectively herein as "Support Services"). In addition, the Executive
shall be entitled, at the option of
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<PAGE>
the Executive, (i) to exercise any options to purchase Shares granted to
the Executive, whether or not then vested, in accordance with the terms of
the applicable share option agreement or plan, (ii) to retain any Shares
awarded to the Executive whether or not vested on the Date of Termination,
and any forfeiture provisions applicable thereto will lapse, and (iii) to
require the Company (upon written notice delivered within 180 days
following the date of the Executive's termination) to repurchase all or any
portion of the Executive's options to purchase Shares, whether or not then
vested, at a price equal to the difference between the Fair Market Value
(as hereafter defined) of the Shares for which the options to be
repurchased are exercisable and the exercise price of such options as of
the date of the Executive's termination of employment. For purposes of
this Subsection 10(c) and Subsection 10(e) below, "Fair Market Value" shall
mean the average of the closing price on the New York Stock Exchange of the
Shares on each of the trading days within the 30 days immediately preceding
the date of termination of the Executive's employment, as published in the
Wall Street Journal.
(d) For Good Reason. If the Executive's employment shall be
---------------
terminated by the Executive for Good Reason, the Executive shall be paid
the Executive's Annual Base Salary plus the average prorata bonus payable
pursuant to Paragraph 3(b) through the Date of Termination. In addition,
the Company will pay to the Executive the lesser of (i) two times the
Executive's Total Compensation for the immediately preceding twelve-month
period or (ii) the Executive's Total Compensation for the preceding twelve-
month period multiplied by the number of years (or fraction thereof)
remaining until the Expiration Date (as the same may have been extended
from time to time). The Executive shall be entitled to continue to receive
benefits pursuant to Paragraph 5 hereof (or the cash equivalent thereof if
the Company cannot directly provide such benefits). The Company shall also
provide Support Services to Executive for a period of two (2) years from
the Date of Termination. The Executive shall be entitled, at the option of
the Executive, (i) to exercise any options to purchase Shares granted to
the Executive, whether or not then vested, in accordance with the terms of
the applicable share option agreement or Plan and (ii) to retain any Shares
awarded to the Executive, whether or not then vested.
(e) Change in Control. Upon the occurrence of a Change in Control of
-----------------
the Company, the Company shall pay the Executive the greater of (i) the
amount of total compensation (from all sources) to which the Executive
would have (or could have reasonably been expected to have) been entitled
had the Agreement not been terminated or (ii) 2.99 times the Executive's
Total Compensation for the immediately preceding twelve-month period. The
Executive shall be entitled to continue to receive benefits pursuant to
Paragraph 5 hereof (or the cash equivalent thereof if the Company cannot
directly provide such benefits). The aforesaid amount shall be payable, at
the option of the Executive, either (i) in full immediately upon such
termination or (ii) semi-monthly over the remainder of the
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<PAGE>
Employment Period. The Company shall also provide Support Services to
Executive for a period of three (3) years from the Date of Termination. In
addition, the Executive shall be entitled, at the option of the Executive,
(i) to exercise any options to purchase Shares granted to the Executive,
whether or not then vested, in accordance with the terms of the applicable
share option agreement or plan, (ii) to retain any Shares awarded to the
Executive, whether or not then vested, and any forfeiture provisions
applicable thereto will lapse, (iii) to require the Company (upon written
notice delivered within 180 days following the date of the Executive's
termination) to repurchase all or any portion of the Executive's options to
purchase Shares, whether or not then vested, at a price equal to the
difference between the Fair Market Value of the Shares for which the
options to be repurchased are exercisable and the exercise price of such
options as of the Date of Termination, or (iv) receive new options to
purchase shares of the acquiring or surviving entity, which new options
shall contain terms which (A) provide, as to exercise price, the economic
equivalent of Executive's rights with respect to Executive's options to
purchase Shares, (B) have the same duration and periods of exercise as
Executive's options to purchase Shares, (C) provide for the same treatment
upon the occurrence of a Change of Control as Executive's options to
purchase Shares and (D) otherwise provide Executive the same rights and
benefits to which he is entitled with respect to options to purchase
Shares.
(f) In addition to all other amounts payable to the Executive under
this Paragraph 10, the Executive shall be entitled to receive all
retirement benefits payable to him under the Company's benefit plans
applicable to him and any other plan or agreement relating to retirement
benefits as in effect upon the occurrence of a Change in Control.
(g) The Executive shall not be required to mitigate the amount of any
payment provided for in this Paragraph 10 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in
this Paragraph 10 be reduced by any compensation earned by him as the
result of employment by, or any services provided to, another employer
(whether or not a successor to the Company) or by retirement benefits after
the Date of Termination, or otherwise, except as specifically provided in
this Paragraph 10.
11. Confidential Information. The Executive understands and acknowledges
------------------------
that during his employment with the Company, he will be exposed to Confidential
Information (defined below), all of which is proprietary and which will
rightfully belong to the Company. The Executive will hold in a fiduciary
capacity for the benefit of the Company all such Confidential Information
obtained by the Executive during his employment with the Company and will not,
directly or indirectly, at any time, either during or after his employment with
the Company, without the Company's prior written consent, use, publish,
disseminate, or otherwise disclose any of such Confidential Information to any
individual or entity other than the Company or its employees, except as required
in the performance
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<PAGE>
of his duties for the Company. The Executive shall take all reasonable steps to
safeguard such Confidential Information and to protect such Confidential
Information against disclosure, misuse, loss or theft. The term "Confidential
Information" shall mean any information not generally known in the relevant
trade or industry, which was obtained from the Company or its predecessors or
which was learned, discovered, developed, conceived, originated or prepared
during or as a result of the performance of any services by the Executive on
behalf of the Company or its predecessors.
12. Return of Documents. All writings, records, and other documents and
-------------------
things containing any Confidential Information shall be the exclusive property
of the Company, shall not be copied, summarized, extracted from, or removed from
the premises of the Company, except in pursuit of the business of the Company
and at the direction of the Company, and shall be delivered to the Company,
without retaining any copies, upon the termination of the Executive's employment
or at any time as requested by the Company.
13. Noncompete. The Executive agrees that:
----------
(a) At all times during which the Executive is employed by the
Company, the Executive agrees to conduct all multifamily residential
development, construction, acquisition and management activities through
the Company. In addition, if Executive terminates his employment hereunder
prior to the Expiration Date without Good Reason or the Company terminates
Executive's employment hereunder for Cause, then beginning on the Date of
Termination and for a one (1) year period thereafter (such one (1) year
period, the "Noncompetition Period"), the Executive shall not, within
twenty (20) miles of (i) any of the multifamily residential properties
owned by the Company on the first day of the Noncompetition Period, (ii)
any tract of land owned by the Company with respect to which the Company
has undertaken substantial development activities and on which the Company
intends, as of the first day of the Noncompetition Period, to develop a
multifamily residential property or (iii) any multifamily residential
property which, prior to the first day of the Noncompetition Period, the
Company had entered into a definitive purchase agreement to acquire (the
areas described in (i), (ii) and (iii) above being collectively referred to
herein as the "Restricted Area"), directly or indirectly, engage in, or
own, invest in, manage or control any venture or enterprise engaged in, any
multifamily residential real estate development, construction, acquisition
or management activities. Nothing herein shall prohibit the Executive from
being a passive owner of not more than five percent (5%) of the outstanding
stock of any class of securities of a corporation or other entity engaged
in such business which is publicly traded, so long as he has no active
participation in the business of such corporation or other entity.
(b) If, at the time of enforcement of this Paragraph 13, a court shall
hold that the duration, scope, area or other restrictions stated herein are
unreasonable, the parties agree that reasonable maximum duration, scope,
area or other
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<PAGE>
restrictions may be substituted by such court for the stated duration,
scope, area or other restrictions.
14. Remedies. The parties hereto agree that both the Company and the
--------
Executive would suffer irreparable harm from a breach by the other party of any
of the covenants or agreements contained herein. Therefore, in the event of the
actual or threatened breach by either party of any of the provisions of this
Agreement, the other party may, in addition and supplementary to other rights
and remedies existing in its favor, apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce or prevent any violation of the provisions hereof.
15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
-------------
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES.
16. Entire Agreement. This Agreement sets forth the entire agreement of
----------------
the parties with respect to the subject matter hereof and is intended to
supersede all prior employment negotiations, understandings and agreements.
Notwithstanding the foregoing, nothing contained herein shall be deemed to
limit, impair, override, supersede or adversely impact in any manner any
provisions of any specific agreements between the Company and the Executive
granting or awarding common shares or other shares of capital stock or other
securities of the Company or any options or other rights to acquire the same.
No provision of this Agreement may be waived or changed, except by a writing
signed by the party to be charged with such waiver or change.
17. Successors; Binding Agreement. This Agreement shall inure to the
-----------------------------
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amount would still
be payable to him hereunder if he had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the Executive's devisee, legatee or other designee or, if
there is no such designee, to the Executive's estate.
18. Notices. All notices provided for in this Agreement shall be in
-------
writing, and shall be deemed to have been duly given when delivered personally
to the party to receive the same, when given by telex, telegram or mailgram, or
when mailed first class postage prepaid, by registered or certified mail, return
receipt requested, addressed to the party to receive the same at his or its
address above set forth, or such other address as the party to receive the same
shall have specified by written notice given in the manner provided for in this
Paragraph 18. All notices shall be deemed to have been given as of the date of
personal delivery, transmittal or mailing thereof.
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<PAGE>
19. Survival. The Company's obligations under Paragraph 10 shall survive
--------
the termination of this Agreement. The Executive's obligations under Paragraphs
11, 12 and 13 shall survive the termination of this Agreement.
20. Severability. If any provision in this Agreement is determined to be
------------
invalid, it shall not affect the validity or enforceability of any of the other
remaining provisions hereof.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
COLUMBUS REALTY TRUST
By: /s/ Richard L. Bloch
------------------------------------------------
Name: Richard L. Bloch
-------------------------------------------
Title: Chairman of the Board
------------------------------------------
EXECUTIVE:
/s/ Robert L. Shaw
---------------------------------------------------
Robert L. Shaw
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<PAGE>
EXHIBIT 10.6
WILL CURETON
------------
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of November
15, 1996, by and between COLUMBUS REALTY TRUST, a Texas real estate investment
trust with offices at 15851 Dallas Parkway, Suite 855, Dallas, Texas 75240 (the
"Company") and Will Cureton (the "Executive").
WHEREAS, the Executive is currently employed by the Company as its Chief
Operating Officer;
WHEREAS, the Company is, as of the date hereof, granting to Executive
certain awards of restricted common shares of the Company;
WHEREAS, the Company desires to continue to employ the Executive, and the
Executive desires to continue to be employed by the Company upon the terms and
conditions set forth herein; and
WHEREAS, this Agreement shall supersede and replace all prior employment
agreements between the Company and the Executive.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein and for other good and valuable consideration
(including, without limitation, the awards of restricted common shares
contemplated above), the adequacy and receipt of which are hereby acknowledged,
the parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ the Executive, and the
----------
Executive hereby agrees to be employed by the Company, for a term (the
"Employment Period") commencing on the date hereof and expiring on December 31,
2001 (the "Expiration Date"); provided that, such Expiration Date shall
automatically be extended to the next December 31, if Notice of Expiration is
not given to Executive by the Company or to the Company by the Executive, as
contemplated by Section 8 hereof, at least nine (9) months prior to the
Expiration Date (as the same may have previously been extended).
2. Duties and Responsibilities. During the Employment Period, the
---------------------------
Executive will hold the position of Chief Operating Officer and shall be a
member of the Executive Committee (herein so called) of the Board of Trust
Managers of the Company (the "Board"). The Executive shall, during the
Employment Period, devote his best efforts and all of his business time, skill
and attention to the business of the Company, and shall
<PAGE>
perform such duties as are customarily performed by chief operating officers who
are employed by publicly-held, New York Stock Exchange ("NYSE")-listed real
estate investment trusts which are similar to the Company and as such duties may
be more specifically enumerated (but not limited) from time to time by the Board
or the Executive Committee of the Board. The foregoing is not intended to
preclude the Executive from owning and managing personal investments, including
real estate investments, subject to the restrictions set forth in Paragraph 13
hereof and provided that the time devoted to such activities shall not be
material and shall not detract from the performance of the Executive's duties
hereunder. The Executive shall not be required to relocate or conduct the
Company's business outside the Dallas, Texas metropolitan area in order to
perform his duties under this Agreement, but shall undertake such reasonable
business travel as may be necessary to perform his duties hereunder (for which
the Executive shall be reimbursed pursuant to Paragraph 4 below for costs and
expenses incurred in connection therewith).
3. Compensation.
------------
(a) Annual Base Salary. For all services rendered by the Executive
------------------
pursuant to this Agreement, the Company shall pay to the Executive an
annual base salary as follows: (i) for the period ending December 31, 1996,
the Annual Base Salary as stated in that certain Amendment No. 3 to
Employment Agreement by and between the Company and the Executive effective
as of January 1, 1996; and (ii) for the period commencing on January 1,
1997 and ending December 31, 1997, $262,000 per annum (as adjusted from
time to time, the "Annual Base Salary"). Thereafter, the Annual Base
Salary will be increased by ten percent (10%) on or about each January 1
during the Employment Period. In no event shall the Annual Base Salary be
reduced. All such compensation shall be paid bi-weekly or at such other
regular intervals, not less frequently than monthly, as the Company may
establish from time to time for executive employees of the Company.
(b) Bonus. In addition to the compensation set forth in Paragraph
-----
3(a) above, the Executive shall be awarded such bonus for each calendar
year of his employment hereunder as the Executive Compensation Committee
(herein so called) of the Board shall determine in their sole discretion.
In determining such bonus, the Executive understands that the Executive
Compensation Committee will consider, without limitation, the following
factors with respect to the applicable calendar year: the Company's
financial performance, business performance and growth during such period;
Executive's responsibilities as an officer of the Company (including his
participation in transactions of particular financial or business
significance to the Company) during such period; the total compensation
package paid to executive officers having similar responsibilities as the
Executive who are employed by real estate investment trusts which are
similar to the
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<PAGE>
Company; and such other factors as the Executive Compensation Committee may
deem appropriate in their sole discretion.
(c) Withholding. The Company shall have the right to deduct and
-----------
withhold from such compensation all social security and other federal,
state and local taxes and charges which currently are or which hereafter
may be required by law to be so deducted and withheld.
4. Expenses.
--------
(a) The Company shall pay for all legal and accounting fees and
expenses incurred by the Executive in connection with the structuring,
negotiation and preparation of this Agreement. The Company shall reimburse
the Executive for all out-of-pocket expenses actually and necessarily
incurred by him in the conduct of the business of the Company against
reasonable substantiation submitted with respect thereto.
(b) Unless the provisions of Paragraph 4(c) below shall apply, the
Company shall reimburse the Executive for all legal fees and related
expenses (including the costs of experts, evidence and counsel) paid by the
Executive as a result of (i) the termination of Executive's employment
(including all such fees and expenses, if any, incurred in contesting or
disputing any such termination of employment), (ii) the Executive seeking
to obtain or enforce any right or benefit provided by this Agreement or by
any other plan or arrangement maintained by the Company under which the
Executive is or may be entitled to receive benefits, (iii) the Executive's
hearing before the Board as contemplated in Paragraph 7(c) of this
Agreement or (iv) any action taken by the Company against the Executive;
provided, however, that the Company shall reimburse the legal fees and
related expenses described in this Paragraph 4(b) only if and when a final
judgment has been rendered in favor of the Executive and all appeals
related to any such action have been exhausted.
(c) The Company shall pay all legal fees and related expenses
(including the costs of experts, evidence and counsel) incurred by the
Executive as they become due as a result of (i) the termination of
Executive's employment (including all such fees and expenses, if any,
incurred in contesting or disputing any such termination of employment),
(ii) the Executive seeking to obtain or enforce any right or benefit
provided by this Agreement or by any other plan or arrangement maintained
by the Company under which the Executive is or may be entitled to receive
benefits, (iii) the Executive's hearing before the Board as contemplated in
Paragraph 7(c) of this Agreement or (iv) any action taken by the Company
against the Executive, unless and until such time that a final judgment has
been rendered in favor of the Company and all appeals related to any such
action have been
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<PAGE>
exhausted; provided, however, that the circumstances set forth above
occurred on or after a Change in Control (as hereafter defined) of the
Company.
5. Benefits. The Executive shall be entitled to the following benefits:
--------
(a) participation in the Company's Profit Sharing Plan, Share Option
Plan, Management Incentive Plan, Employee Stock Purchase Plan and other
benefit plans made generally available to executives of the Company;
(b) participation in any health insurance, disability insurance,
group life insurance or other welfare benefit programs made generally
available to executives of the Company plus an additional term life
insurance policy in the amount of $2,000,000.00 payable to one or more
beneficiaries designated by Executive; and
(c) four weeks of paid vacation each year, to be taken at such times
that are consistent with the reasonable business needs of the Company. All
vacation shall be subject to the policies and procedures of the Company.
6. Indemnification. The Company shall indemnify the Executive in the
---------------
performance of his duties pursuant to the Amended and Restated Bylaws of the
Company and to the fullest extent allowed by applicable law, including, without
limitation, legal fees.
7. Termination of the Agreement.
----------------------------
(a) Disability. If the Executive shall fail, because of illness or
----------
incapacity, to render the services contemplated by this Agreement for six
successive months, the Board may determine, on the basis of the advice of
an independent qualified physician, that the Executive has become disabled.
If within thirty (30) days after the date on which written notice of such
determination is given to the Executive, the Executive shall not have
returned to the full-time performance of his duties hereunder, the Company
may terminate this Agreement and the employment of the Executive hereunder
in accordance with Paragraph 10 hereof.
(b) Death. Except as otherwise provided in this Agreement, if the
-----
Executive shall die during the term of this Agreement, this Agreement shall
be deemed to have been terminated as of the date of death of the Executive.
(c) For Cause. The Company, by notice to the Executive, may terminate
---------
this Agreement prior to the Expiration Date for Cause (as hereafter
defined). As used herein, "Cause" shall mean (i) the willful and continued
failure by the Executive to substantially perform his duties hereunder
(other than any such failure resulting from the Executive's incapacity due
to physical or mental illness or any such actual or anticipated failure
resulting from termination by the Executive for Good Reason (as defined
below)) for a period of thirty (30) days after a written
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<PAGE>
demand for substantial performance is delivered to the Executive by the
Company, specifically identifying the manner in which the Company believes
that the Executive has not substantially performed his duties, (ii) the
willful engaging by the Executive in conduct which is demonstrably and
materially injurious to the Company, monetarily or otherwise or (iii) the
willful violation by the Executive of the provisions of Paragraph 13
hereof. For purposes of this Paragraph 7(c), no act, or failure to act, on
the Executive's part shall be deemed "willful" unless done, or omitted to
be done, by the Executive other than in good faith and in a manner that the
Executive reasonably believed was in or not opposed to the best interests
of the Company and its shareholders. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-
quarters (3/4) of all of the members of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice to the Executive
and an opportunity for the Executive, together with counsel of his
choosing, to be heard before the Board not less than 10 business days after
the giving of such notice), finding that in the good faith opinion of the
Board, the Executive conducted himself as set forth above in clause (i),
(ii) or (iii) of the first sentence of this Paragraph 7(c) and specifying
the particulars of such conduct in detail.
(d) For Good Reason. The Executive may terminate this Agreement prior
---------------
to the Expiration Date for "Good Reason" if any of the following events
occurs without the Executive's express written consent:
(i) the assignment to the Executive of any duties materially
different from those contemplated by Paragraph 2 hereof, or any
limitation of the powers of the Executive in any respect not
contemplated by Paragraph 2 hereof;
(ii) any removal or failure by management to nominate, or, if
nominated, by the shareholders to reelect, the Executive to the Board
of Trust Managers, except in connection with termination of the
Executive's employment for Cause or by reason of death or disability;
(iii) any removal or failure by the Board to reappoint the
Executive as a member of the Executive Committee or any comparable
committee of the Board, except in connection with termination of the
Executive's employment for Cause or by reason of death or disability;
(iv) a material reduction in the Executive's Annual Base
Salary or other benefits (except for bonuses or similar discretionary
payments) as in effect at the time in question, or any other failure
by the Company to comply with Paragraph 3 hereof; or
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<PAGE>
(v) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination or a Notice
of Expiration, (defined below), as applicable, satisfying the
requirements of Paragraph 8 below.
(e) Change of Control. Upon the occurrence of a Change of Control (as
-----------------
hereinafter defined) of the Company, Executive's employment with the
Company shall automatically terminate.
As used herein, a "Change in Control" will be deemed to have occurred if at any
time during the Employment Period any of the following events shall occur:
(i) The Company is merged, consolidated or reorganized into or with
another corporation or other legal entity, and as a result of such
merger, consolidation or reorganization less than a majority of the
combined voting power of the then outstanding securities of the
Company or such corporation or other legal entity immediately after
such transaction are held in the aggregate by the holders of Voting
Stock (as hereinafter defined) of the Company immediately prior to
such transaction;
(ii) The Company sells all or substantially all of its assets to any other
corporation or other legal entity, of which less than a majority of
the combined voting power of the then outstanding securities
(entitled to vote generally in the election of directors or persons
performing similar functions on behalf of such other corporation or
legal entity) of such other corporation or legal entity are held in
the aggregate by the holders of Voting Stock of the Company
immediately prior to such sale;
(iii) A Schedule 13D or Schedule 14D-1 (or any successor schedule, form or
report), each as promulgated pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act") is filed, disclosing that
any person (as the term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become the beneficial owner
(as the term "beneficial owner" is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Exchange Act) of
securities representing 25% or more of the combined voting power of
the then-outstanding securities entitled to vote generally in the
election of directors of the Company ("Voting Stock"); or
(iv) If during any one (1) year period, individuals who at the beginning
of any such period constitute the trust managers of the Company cease
for any reason to constitute at least a majority thereof, unless the
election, or the nomination for election by the Company's
shareholders, of each trust
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<PAGE>
manager of the Company first elected during such period was approved
by a vote of at least two-thirds of the trust managers of the Company
then still in office who were trust managers of the Company at the
beginning of any such period.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have
occurred for purposes of this Agreement solely because (i) the Company, (ii) a
corporation or other legal entity in which the Company directly or indirectly
beneficially owns 50% or more of the voting securities of such entity, or (iii)
any Company-sponsored employee stock ownership plan or any other employee
benefit plan of the Company, either files or becomes obligated to file a report
or a proxy statement under or in response to Schedule 13D, Schedule 14D-1, Form
8-K or Schedule 14A (or any successor schedule, form or report or item therein)
under the Exchange Act, disclosing beneficial ownership by it of shares of
Voting Stock, whether in excess of 25% or otherwise, or because the Company
reports that a change in control of the Company has or may have occurred or will
or may occur in the future by reason of such beneficial ownership.
8. Notice of Termination. Any purported termination of the Executive's
---------------------
employment by the Company or by the Executive shall be communicated by a written
Notice of Termination or Notice of Expiration, as applicable, to the other party
hereto in accordance with Paragraph 18 hereof. For purposes of this Agreement,
(i) a "Notice of Termination" shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated and
(ii) a "Notice of Expiration" shall mean a notice which shall be delivered by
one party hereunder to the other party no later than nine (9) months prior to
the Expiration Date, to the effect that such party does not intend to extend the
term hereof beyond the Expiration Date.
9. Date of Termination, Etc. "Date of Termination" shall mean (a) if the
-------------------------
Executive's employment is terminated pursuant to Paragraph 7(a) above, thirty
(30) days after Notice of Termination is given (provided that the Executive
shall not have returned to the full-time performance of his duties during such
thirty (30) day period), and (b) if the Executive's employment is terminated
pursuant to Paragraph 7(c) or 7(d) above, or for any other reason (other than
disability), the date specified in the Notice of Termination (which, in the case
of a termination pursuant to Paragraph 7(c) above shall not be less than thirty
(30) days, and in the case of a termination pursuant to Paragraph 7(d) above
shall not be less than thirty (30) nor more than sixty (60) days, respectively,
from the date such Notice of Termination is given); provided, however, if within
-------- -------
thirty (30) days after any Notice of Termination is given the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, the Date of Termination shall be the date on which
the dispute is finally resolved, either by mutual written agreement of the
parties, by a binding arbitration award, or by a final judgment, order or decree
of a court of competent jurisdiction (which is not appealable or the time for
appeal therefrom
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<PAGE>
having expired and no appeal having been perfected), except that with respect to
a termination of this Agreement by reason of expiration of its term as provided
in Paragraph 2, the Date of Termination shall be the Expiration Date pursuant to
Paragraph 2, regardless of whether a dispute exists with respect thereto;
provided, further, that the Date of Termination shall be extended by a notice of
- -------- -------
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Company will continue to
pay the Executive his full compensation in effect when the notice giving rise to
the dispute was given (including, but not limited to, base salary and
installments under any bonus or incentive compensation plan) and continue the
Executive as a participant in all compensation, benefit and insurance plans in
which he was participating when the notice giving rise to the dispute was given,
until the dispute is finally resolved in accordance with this Paragraph 9.
Amounts paid under this Paragraph 9 are in addition to all other amounts due
under this Agreement and shall not be offset against or reduce any other amounts
due under this Agreement. If it is finally determined by a binding arbitration
award, or by a final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or the time for appeal therefrom having
expired and no appeal having been perfected), that the Executive was terminated
for proper cause, the Executive shall promptly remit to the Company the amount
of any cash payments and the value of any non-cash benefits paid pursuant to
this Paragraph 9 to which the Executive would not otherwise have been entitled.
10. Compensation Upon Termination, During Disability or Upon Change of
------------------------------------------------------------------
Control.
- -------
(a) Disability or Death. During any period that the Executive fails
-------------------
to perform his duties hereunder as a result of incapacity due to physical
or mental illness, the Executive shall continue to receive his Annual Base
Salary at the rate in effect at the commencement of any such period until
his employment is terminated pursuant to Paragraph 7(a) hereof, together
with the average prorata bonus payable pursuant to Paragraph 3(b). If the
Executive's employment shall be terminated by reason of the Executive's
death, the Annual Base Salary together with the average prorata bonus
payable pursuant to Paragraph 3(b) which has accrued through the Date of
Termination shall be paid to the Executive's estate or personal
representative. Following termination pursuant to Paragraph 7(a) or
Paragraph 7(b) hereof, the Company will pay to the Executive, his estate or
personal representative 2.99 times the Executive's Total Compensation (as
defined below) for the immediately preceding twelve-month period to and
including the date of termination. "Total Compensation" shall mean
compensation of any nature and from any source, including without
limitation, (i) annual base salary, (ii) bonus awards (whether cash or
noncash), (iii) the fair market value of any common shares or other shares
of capital stock, stock options or other equity based compensation awarded
to the Executive during the relevant twelve (12) month period, whether or
not vested, restricted or subject to forfeiture (the fair market
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<PAGE>
value of which shall be determined as of the date of grant without taking
into consideration any provisions as to vesting or forfeiture or provisions
as to restriction on transfer) and (iv) all perquisites paid, awarded or
otherwise available to Executive during the relevant period. The aforesaid
amount shall be payable, at the option of the Executive, his estate or
personal representative, either (A) in full immediately upon such
termination or (B) semi-monthly over the remainder of the Employment
Period. In addition, the Company covenants and agrees to use reasonable
commercial efforts to maintain insurance sufficient to enable the repayment
of Executive's stock loans upon Executive's termination either as a result
of death or disability. Should the Company fail or be unable to obtain
such insurance, all principal and interest outstanding under any loans from
the Company to the Executive to enable the Executive to purchase Common
Shares will be forgiven in the event of termination pursuant to Paragraph
7(a) or Paragraph 7(b) above.
(b) For Cause. If the Executive's employment shall be terminated, at
---------
any time prior to a Change in Control of the Company, for Cause or by him
other than for Good Reason, the Executive shall be paid the Executive's
Annual Base Salary through the Date of Termination at the rate in effect at
the time Notice of Termination is given. All outstanding principal and
interest under any loans from the Company to the Executive to enable the
Executive to purchase Shares shall become immediately due and payable. The
Company shall thereafter have no further obligations to the Executive under
this Agreement.
(c) Other than for Cause. If the Executive's employment shall be
--------------------
terminated by the Company other than (i) for Cause or (ii) upon death or
disability, the Executive shall be paid the Executive's Annual Base Salary
plus the average prorata bonus payable pursuant to Paragraph 3(b) through
the Date of Termination. In addition, the Company will pay to the
Executive 2.99 times the Executive's Total Compensation for the immediately
preceding twelve-month period. The Executive shall be entitled to continue
to receive benefits pursuant to Paragraph 5 hereof (or the cash equivalent
thereof if the Company cannot directly provide such benefits). The
aforesaid amount shall be payable, at the option of the Executive, either
(i) in full immediately upon such termination or (ii) semi-monthly over the
remainder of the Employment Period. The Company shall also provide to
Executive for a period of three years from the Date of Termination, office
space (comparable to that utilized by Executive during his employment with
the Company), which shall, at Executive's election, be located either at
the offices of the Company or a comparable commercial office facility and
support services which shall include an assistant (on a full-time basis),
copier, facsimile machine, telephone services and other administrative
services comparable to those available to Executive during Executive's
employment term (such office space and support services are referred to
collectively herein as "Support Services"). In addition, the Executive
shall be entitled, at the option of
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<PAGE>
the Executive, (i) to exercise any options to purchase Shares granted to
the Executive, whether or not then vested, in accordance with the terms of
the applicable share option agreement or plan, (ii) to retain any Shares
awarded to the Executive whether or not vested on the Date of Termination,
and any forfeiture provisions applicable thereto will lapse, and (iii) to
require the Company (upon written notice delivered within 180 days
following the date of the Executive's termination) to repurchase all or any
portion of the Executive's options to purchase Shares, whether or not then
vested, at a price equal to the difference between the Fair Market Value
(as hereafter defined) of the Shares for which the options to be
repurchased are exercisable and the exercise price of such options as of
the date of the Executive's termination of employment. For purposes of
this Subsection 10(c) and Subsection 10(e) below, "Fair Market Value" shall
mean the average of the closing price on the New York Stock Exchange of the
Shares on each of the trading days within the 30 days immediately preceding
the date of termination of the Executive's employment, as published in the
Wall Street Journal.
(d) For Good Reason. If the Executive's employment shall be
---------------
terminated by the Executive for Good Reason, the Executive shall be paid
the Executive's Annual Base Salary plus the average prorata bonus payable
pursuant to Paragraph 3(b) through the Date of Termination. In addition,
the Company will pay to the Executive the lesser of (i) two times the
Executive's Total Compensation for the immediately preceding twelve-month
period or (ii) the Executive's Total Compensation for the preceding twelve-
month period multiplied by the number of years (or fraction thereof)
remaining until the Expiration Date (as the same may have been extended
from time to time). The Executive shall be entitled to continue to receive
benefits pursuant to Paragraph 5 hereof (or the cash equivalent thereof if
the Company cannot directly provide such benefits). The Company shall also
provide Support Services to Executive for a period of two (2) years from
the Date of Termination. The Executive shall be entitled, at the option of
the Executive, (i) to exercise any options to purchase Shares granted to
the Executive, whether or not then vested, in accordance with the terms of
the applicable share option agreement or Plan and (ii) to retain any Shares
awarded to the Executive, whether or not then vested.
(e) Change in Control. Upon the occurrence of a Change in Control of
-----------------
the Company, the Company shall pay the Executive the greater of (i) the
amount of total compensation (from all sources) to which the Executive
would have (or could have reasonably been expected to have) been entitled
had the Agreement not been terminated or (ii) 2.99 times the Executive's
Total Compensation for the immediately preceding twelve-month period. The
Executive shall be entitled to continue to receive benefits pursuant to
Paragraph 5 hereof (or the cash equivalent thereof if the Company cannot
directly provide such benefits). The aforesaid amount shall be payable, at
the option of the Executive, either (i) in full immediately upon such
termination or (ii) semi-monthly over the remainder of the
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<PAGE>
Employment Period. The Company shall also provide Support Services to
Executive for a period of three (3) years from the Date of Termination. In
addition, the Executive shall be entitled, at the option of the Executive,
(i) to exercise any options to purchase Shares granted to the Executive,
whether or not then vested, in accordance with the terms of the applicable
share option agreement or plan, (ii) to retain any Shares awarded to the
Executive, whether or not then vested, and any forfeiture provisions
applicable thereto will lapse, (iii) to require the Company (upon written
notice delivered within 180 days following the date of the Executive's
termination) to repurchase all or any portion of the Executive's options to
purchase Shares, whether or not then vested, at a price equal to the
difference between the Fair Market Value of the Shares for which the
options to be repurchased are exercisable and the exercise price of such
options as of the Date of Termination, or (iv) receive new options to
purchase shares of the acquiring or surviving entity, which new options
shall contain terms which (A) provide, as to exercise price, the economic
equivalent of Executive's rights with respect to Executive's options to
purchase Shares, (B) have the same duration and periods of exercise as
Executive's options to purchase Shares, (C) provide for the same treatment
upon the occurrence of a Change of Control as Executive's options to
purchase Shares and (D) otherwise provide Executive the same rights and
benefits to which he is entitled with respect to options to purchase
Shares.
(f) In addition to all other amounts payable to the Executive under
this Paragraph 10, the Executive shall be entitled to receive all
retirement benefits payable to him under the Company's benefit plans
applicable to him and any other plan or agreement relating to retirement
benefits as in effect upon the occurrence of a Change in Control.
(g) The Executive shall not be required to mitigate the amount of any
payment provided for in this Paragraph 10 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in
this Paragraph 10 be reduced by any compensation earned by him as the
result of employment by, or any services provided to, another employer
(whether or not a successor to the Company) or by retirement benefits after
the Date of Termination, or otherwise, except as specifically provided in
this Paragraph 10.
11. Confidential Information. The Executive understands and acknowledges
------------------------
that during his employment with the Company, he will be exposed to Confidential
Information (defined below), all of which is proprietary and which will
rightfully belong to the Company. The Executive will hold in a fiduciary
capacity for the benefit of the Company all such Confidential Information
obtained by the Executive during his employment with the Company and will not,
directly or indirectly, at any time, either during or after his employment with
the Company, without the Company's prior written consent, use, publish,
disseminate, or otherwise disclose any of such Confidential Information to any
individual or entity other than the Company or its employees, except as required
in the performance
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<PAGE>
of his duties for the Company. The Executive shall take all reasonable steps to
safeguard such Confidential Information and to protect such Confidential
Information against disclosure, misuse, loss or theft. The term "Confidential
Information" shall mean any information not generally known in the relevant
trade or industry, which was obtained from the Company or its predecessors or
which was learned, discovered, developed, conceived, originated or prepared
during or as a result of the performance of any services by the Executive on
behalf of the Company or its predecessors.
12. Return of Documents. All writings, records, and other documents and
-------------------
things containing any Confidential Information shall be the exclusive property
of the Company, shall not be copied, summarized, extracted from, or removed from
the premises of the Company, except in pursuit of the business of the Company
and at the direction of the Company, and shall be delivered to the Company,
without retaining any copies, upon the termination of the Executive's employment
or at any time as requested by the Company.
13. Noncompete. The Executive agrees that:
----------
(a) At all times during which the Executive is employed by the
Company, the Executive agrees to conduct all multifamily residential
development, construction, acquisition and management activities through
the Company. In addition, if Executive terminates his employment hereunder
prior to the Expiration Date without Good Reason or the Company terminates
Executive's employment hereunder for Cause, then beginning on the Date of
Termination and for a one (1) year period thereafter (such one (1) year
period, the "Noncompetition Period"), the Executive shall not, within
twenty (20) miles of (i) any of the multifamily residential properties
owned by the Company on the first day of the Noncompetition Period, (ii)
any tract of land owned by the Company with respect to which the Company
has undertaken substantial development activities and on which the Company
intends, as of the first day of the Noncompetition Period, to develop a
multifamily residential property or (iii) any multifamily residential
property which, prior to the first day of the Noncompetition Period, the
Company had entered into a definitive purchase agreement to acquire (the
areas described in (i), (ii) and (iii) above being collectively referred to
herein as the "Restricted Area"), directly or indirectly, engage in, or
own, invest in, manage or control any venture or enterprise engaged in, any
multifamily residential real estate development, construction, acquisition
or management activities. Nothing herein shall prohibit the Executive from
being a passive owner of not more than five percent (5%) of the outstanding
stock of any class of securities of a corporation or other entity engaged
in such business which is publicly traded, so long as he has no active
participation in the business of such corporation or other entity.
(b) If, at the time of enforcement of this Paragraph 13, a court shall
hold that the duration, scope, area or other restrictions stated herein are
unreasonable, the parties agree that reasonable maximum duration, scope,
area or other
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<PAGE>
restrictions may be substituted by such court for the stated duration,
scope, area or other restrictions.
14. Remedies. The parties hereto agree that both the Company and the
--------
Executive would suffer irreparable harm from a breach by the other party of any
of the covenants or agreements contained herein. Therefore, in the event of the
actual or threatened breach by either party of any of the provisions of this
Agreement, the other party may, in addition and supplementary to other rights
and remedies existing in its favor, apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce or prevent any violation of the provisions hereof.
15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
-------------
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES.
16. Entire Agreement. This Agreement sets forth the entire agreement of
----------------
the parties with respect to the subject matter hereof and is intended to
supersede all prior employment negotiations, understandings and agreements.
Notwithstanding the foregoing, nothing contained herein shall be deemed to
limit, impair, override, supersede or adversely impact in any manner any
provisions of any specific agreements between the Company and the Executive
granting or awarding common shares or other shares of capital stock or other
securities of the Company or any options or other rights to acquire the same.
No provision of this Agreement may be waived or changed, except by a writing
signed by the party to be charged with such waiver or change.
17. Successors; Binding Agreement. This Agreement shall inure to the
-----------------------------
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amount would still
be payable to him hereunder if he had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the Executive's devisee, legatee or other designee or, if
there is no such designee, to the Executive's estate.
18. Notices. All notices provided for in this Agreement shall be in
-------
writing, and shall be deemed to have been duly given when delivered personally
to the party to receive the same, when given by telex, telegram or mailgram, or
when mailed first class postage prepaid, by registered or certified mail, return
receipt requested, addressed to the party to receive the same at his or its
address above set forth, or such other address as the party to receive the same
shall have specified by written notice given in the manner provided for in this
Paragraph 18. All notices shall be deemed to have been given as of the date of
personal delivery, transmittal or mailing thereof.
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<PAGE>
19. Survival. The Company's obligations under Paragraph 10 shall survive
--------
the termination of this Agreement. The Executive's obligations under Paragraphs
11, 12 and 13 shall survive the termination of this Agreement.
20. Severability. If any provision in this Agreement is determined to be
------------
invalid, it shall not affect the validity or enforceability of any of the other
remaining provisions hereof.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
COLUMBUS REALTY TRUST
By: /s/ Richard L. Bloch
-------------------------------------
Name: Richard L. Bloch
--------------------------------
Title: Chairman of the Board
-------------------------------
EXECUTIVE:
/s/ Will Cureton
----------------------------------------
Will Cureton
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<PAGE>
EXHIBIT 10.7
RICHARD R. REUPKE
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of January
1, 1997, by and between COLUMBUS REALTY TRUST, a Texas real estate investment
trust with offices at 15851 Dallas Parkway, Suite 855, Dallas, Texas 75240 (the
"Company") and Richard R. Reupke, an individual residing at 2704 Moffett Court,
Plano, Texas 75093 (the "Executive").
WHEREAS, the Executive is currently employed by the Company as its Chief
Financial Officer;
WHEREAS, the Company desires to continue to employ the Executive, and the
Executive desires to continue to be employed by the Company; and
WHEREAS, this Agreement shall supersede and replace all prior employment
agreements between the Company and the Executive.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein and for other good and valuable consideration
(including, without limitation, the award of restricted Common Shares
contemplated herein), the adequacy and receipt of which are hereby acknowledged,
the parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ the Executive, and the
----------
Executive hereby agrees to be employed by the Company, for a term (the
"Employment Period") commencing on the date hereof and expiring on December 31,
1999 (the "Expiration Date"); provided that such Expiration Date shall
automatically be extended to December 31, 2000 and each December 31 thereafter,
if written notice is not given by Executive to the Company or by the Company to
the Executive of such party's intent not to extend or renew this Agreement at
least twelve (12) months prior to the Expiration Date (as such date may have
been previously extended pursuant to this Paragraph 1).
2. Duties and Responsibilities. During the Employment Period, the
---------------------------
Executive shall devote his best efforts and substantially all of his business
time, skill and attention to the business of the Company. Executive shall hold
the offices of Chief Financial Officer of the Company and shall, during the
Employment Period, hold such additional offices to which Executive may be
elected by the Board of Trust Managers of the Company (the "Board"). Executive
shall perform such duties as may, from time to time be specifically enumerated
by the Board, the Chairman of the Board, Chief Executive Officer, Chief
Operating Officer or any other executive officer of the Company; provided that
Executive's duties shall not be materially different than those typically held
by other comparable officers of real estate investment trusts similar to the
Company. The foregoing is not intended to preclude the Executive from owning
and managing personal
<PAGE>
investments, including real estate investments, subject to the restrictions set
forth in Paragraph 11 hereof and provided that the time devoted to such
activities shall not be material and shall not detract from the performance of
the Executive's duties hereunder.
3. Compensation.
------------
(a) Annual Base Salary. For all services rendered by the Executive
------------------
pursuant to this Agreement, the Company shall pay to the Executive an
annual base salary in the amount of $150,000 (which may consist, in part,
of restricted Common Shares as contemplated below) for the period from the
date hereof through December 31, 1997 (as adjusted from time to time, the
"Annual Base Salary"). Thereafter, the Annual Base Salary may be increased
as determined by the Executive Compensation Committee (herein so called) of
the Board in its sole discretion. In no event shall the Annual Base Salary
be reduced. All such compensation shall be paid bi-weekly or at such other
regular intervals, not less frequently than monthly, as the Company may
establish from time to time for executive employees of the Company. In
each calendar year during the term hereof, the Company may issue to
Executive, in satisfaction of a portion of Executive's Annual Base Salary,
restricted common shares of beneficial interest of the Company, par value
$.01 per share (the "Common Shares"), having a fair market value of up to
$25,000, determined as of the date of grant (based upon the average closing
price of the Company's Common Shares on the New York Stock Exchange during
the 30-day period preceding the date of grant) and without taking in
account any conditions, restrictions or forfeiture provisions applicable to
the restricted Common Shares to be awarded to Executive. Any such award of
restricted Common Shares shall be made on such date during the first
quarter of the applicable calendar year as determined by the Board or the
committee administering any plan pursuant to which such restricted Common
Shares may be issued. The date of grant and the terms, conditions,
restrictions and forfeiture provisions applicable to such Common Shares
shall be set forth in a written award agreement evidencing such grant which
shall contain substantially the same terms and conditions as contained in
the Award Agreement dated January 8, 1996, awarding Executive 2,324
restricted Common Shares. Any such award of restricted Common Shares in
any calendar year shall reduce the cash portion of the Annual Base Salary
payable for such calendar year by an amount equal to the fair market value
(determined as set forth above) of the restricted Common Shares issued.
(b) Bonus. In addition to the compensation set forth in Paragraph
-----
3(a) above, the Executive may be awarded such bonus for each calendar year
of his employment hereunder as the Executive Compensation Committee shall
determine in their sole discretion. In determining such bonus, the
Executive understands that the Executive Compensation Committee will
consider, without limitation, the following factors with respect to the
applicable calendar year: the financial
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<PAGE>
performance, business performance and growth of the Company and the
Executive's department during such period; whether Executive's department
has satisfied or achieved specified goals; Executive's responsibilities as
an officer of the Company (including his participation in transactions of
particular financial or business significance to the Company) during such
period; the total compensation package paid to executive officers having
similar responsibilities as the Executive who are employed by real estate
investment trusts which are similar to the Company; and such other factors
as the Executive Compensation Committee may deem appropriate in its sole
discretion.
(c) Withholding. The Company shall have the right to deduct and
-----------
withhold from such compensation all social security and other federal,
state and local taxes and charges which currently are or which hereafter
may be required by law to be so deducted and withheld.
(d) Expenses. The Company shall promptly reimburse the Executive for
--------
all out-of-pocket expenses actually and necessarily incurred by him in the
conduct of the business of the Company against reasonable substantiation
submitted with respect thereto.
4. Benefits. The Executive shall be entitled to the following benefits:
--------
(a) participation in the Company's Profit Sharing Plan, Share Option
Plan, Management Incentive Plan, Employee Stock Purchase Plan and other
benefit plans made generally available to executives of the Company;
(b) participation in any health insurance, disability insurance,
group life insurance or other welfare benefit programs made generally
available to executives of the Company; and
(c) paid vacation each year, to be taken at such times that are
consistent with the reasonable business needs of the Company. All vacation
shall be subject to the policies and procedures of the Company.
5. Indemnification. The Company shall indemnify the Executive in the
---------------
performance of his duties pursuant to the Amended and Restated Bylaws of the
Company and to the fullest extent allowed by applicable law.
6. Termination of the Agreement.
----------------------------
(a) Disability. If the Executive shall fail, because of illness or
----------
incapacity, to render the services contemplated by this Agreement for six
successive months, the Board may determine, on the basis of the advice of
an independent qualified physician, that the Executive has become disabled.
If within thirty (30) days after
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<PAGE>
the date on which written notice of such determination is given to the
Executive, the Executive shall not have returned to the full-time
performance of his duties hereunder, the Company may terminate this
Agreement and the employment of the Executive hereunder in accordance with
Paragraph 8 hereof.
(b) Death. Except as otherwise provided in this Agreement, if the
-----
Executive shall die during the term of this Agreement, this Agreement shall
be deemed to have been terminated as of the date of death of the Executive.
(c) For Cause. The Company, by notice to the Executive, may terminate
---------
this Agreement prior to the Expiration Date for Cause (as hereafter
defined). As used herein, "Cause" shall mean (i) the continued failure by
the Executive to substantially perform his duties hereunder (other than any
such failure resulting from the Executive's incapacity due to physical or
mental illness) for a period of thirty (30) days after a written demand for
performance is delivered to the Executive by the Company, specifically
identifying the manner in which the Company believes that the Executive has
not satisfactorily performed his duties, (ii) the engaging by the Executive
in misconduct which is injurious to the Company, monetarily or otherwise or
(iii) the violation by the Executive of the provisions of Paragraphs 9, 10
or 11 hereof.
(d) For Good Reason. The Executive may terminate this Agreement prior
---------------
to the Expiration Date for "Good Reason" if any of the following events
occurs without the Executive's express written consent:
(i) any demotion, material change of Executive's title or
any diminution, limitation or restriction on Executive's powers or
duties contemplated by Paragraph 2 above, in each case, without
Executive's prior written consent;
(ii) a reduction in the Executive's Annual Base Salary or any
material reduction in other benefits (except for bonuses or similar
discretionary payments) as in effect at the time in question, or any
other failure by the Company to comply with Paragraph 3 hereof;
(iii) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Paragraph 15 hereof; or
(iv) any requirement by the Company that Executive relocate
outside of the Dallas/Fort Worth metropolitan area or any requirement
that Executive perform all or substantially all of his duties,
consistently over any six (6) month period, outside of the Dallas/Fort
Worth metropolitan area.
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<PAGE>
7. Date of Termination, Etc. "Date of Termination" shall mean the date
-------------------------
Executive's employment is terminated pursuant to Paragraph 6 above.
8. Compensation Upon Termination or During Disability.
--------------------------------------------------
(a) Disability or Death. During any period that the Executive fails
-------------------
to perform his duties hereunder as a result of incapacity due to physical
or mental illness, the Executive shall continue to receive his Annual Base
Salary at the rate in effect at the commencement of any such period until
his employment is terminated pursuant to Paragraph 6(a) hereof, together
with the average prorata bonus payable pursuant to Paragraph 3(b). If the
Executive's employment shall be terminated by reason of the Executive's
death, the Annual Base Salary together with the average prorata bonus
payable pursuant to Paragraph 3(b) which has accrued through the Date of
Termination shall be paid to the Executive's estate or personal
representative. Following termination pursuant to Paragraph 6(a) or
Paragraph 6(b) hereof, the Company will pay to the Executive, his estate or
personal representative 2.99 times the Executive's Total Compensation (as
defined below) for the immediately preceding twelve-month period to and
including the date of termination. "Total Compensation" shall mean
compensation of any nature and from any source, including, without
limitation, (i) Annual Base Salary, (ii) bonus awards (whether cash or
noncash), (iii) the fair market value of any common shares or other shares
of capital stock, stock options or other equity based compensation awarded
to the Executive during the relevant twelve (12) month period, whether or
not vested, restricted or subject to forfeiture (the fair market value
which shall be determined as of the date of grant without taking into
consideration any provisions as to vesting or forfeiture or provisions as
to restriction on transfer) and (iv) all perquisites paid, awarded or
otherwise available to the Executive during the relevant period. The
aforesaid amount shall be payable, at the option of the Executive, his
estate or personal representative, either (A) in full immediately upon such
termination or (B) semi-monthly over the remainder of the Employment
Period.
(b) For Cause. If the Executive's employment shall be terminated, at
---------
any time prior to the Expiration Date, for Cause or by him other than for
Good Reason, the Executive shall be paid the Executive's Annual Base Salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given. The Company shall thereafter have no further
obligations to the Executive under this Agreement.
(c) Other than for Cause. If the Executive's employment shall be
--------------------
terminated by the Company other than (i) for Cause or (ii) upon death or
disability, the Executive shall be paid the Executive's Annual Base Salary
plus the average prorata bonus payable pursuant to Paragraph 3(b) through
the Date of Termination. In addition, the Company will pay to the
Executive 2.99 times the
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<PAGE>
Executive's Total Compensation for the immediately preceding twelve-month
period. The aforesaid amount shall be payable, at the option of the
Executive, either (i) in full immediately upon such termination or (ii)
semi-monthly over the remainder of the Employment Period. In addition, the
Executive shall be entitled, at the option of the Executive, (i) to
exercise any options to purchase Shares granted to the Executive, whether
or not then vested, in accordance with the terms of the applicable share
option agreement or plan, or (ii) to retain any Shares awarded to the
Executive whether or not vested on the Date of Termination.
(d) For Good Reason. If the Executive's employment shall be
---------------
terminated by the Executive for Good Reason, the Executive shall be paid
the Executive's Annual Base Salary plus the average prorata bonus payable
pursuant to Paragraph 3(b) through the Date of Termination. In addition,
the Company will pay to the Executive the lesser of (i) two times the
Executive's Total Compensation for the immediately preceding twelve-month
period or (ii) the Executive's Total Compensation for the preceding twelve-
month period multiplied by the number of years, including any fractions
thereof, remaining until the Expiration Date. The Executive shall be
entitled, at the option of the Executive, (i) to exercise any options to
purchase Shares granted to the Executive whether or not then vested, in
accordance with the terms of the applicable share option agreement or Plan
and (ii) to retain any Shares awarded to the Executive (whether or not then
vested).
(e) Other Benefits. In addition to all other amounts payable to the
--------------
Executive under this Paragraph 8, the Executive shall be entitled to
receive all retirement benefits payable to him under the Company's benefit
plans applicable to him and any other plan or agreement relating to
retirement benefits as in effect on the Date of Termination.
(f) No Requirement to Mitigate. The Executive shall not be required
--------------------------
to mitigate the amount of any payment provided for in this Paragraph 8 by
seeking other employment or otherwise, nor shall the amount of any payment
or benefit provided for in this Paragraph 8 be reduced by any compensation
earned by him as the result of employment by, or any services provided to,
another employer (whether or not a successor to the Company) or by
retirement benefits after the Date of Termination, or otherwise.
9. Confidential Information. The Executive understands and acknowledges
------------------------
that during his employment with the Company, he will be exposed to Confidential
Information (defined below), all of which is proprietary and which will
rightfully belong to the Company. The Executive will hold in a fiduciary
capacity for the benefit of the Company all such Confidential Information
obtained by the Executive during his employment with the Company and will not,
directly or indirectly, at any time, either during or after his employment with
the Company, without the Company's prior written consent, use, publish,
disseminate, or otherwise disclose any of such Confidential Information to any
individual
-6-
<PAGE>
or entity other than the Company or its employees, except as required in the
performance of his duties for the Company. The Executive shall take all
reasonable steps to safeguard such Confidential Information and to protect such
Confidential Information against disclosure, misuse, loss or theft. The term
"Confidential Information" shall mean any information not generally known in the
relevant trade or industry which was (i) obtained from the Company or its
predecessors or (ii) learned, discovered, developed, conceived, originated or
prepared during or as a result of the performance of any services by the
Executive on behalf of the Company or its predecessors.
10. Return of Documents. All writings, records, and other documents and
-------------------
things containing any Confidential Information shall be the exclusive property
of the Company, shall not be copied, summarized, extracted from, or removed from
the premises of the Company, except in pursuit of the business of the Company
and at the direction of the Company, and shall be delivered to the Company,
without retaining any copies, upon the termination of the Executive's employment
or at any time as requested by the Company.
11. Noncompete. The Executive agrees that:
----------
(a) At all times during which the Executive is employed by the
Company, the Executive agrees to conduct all multifamily residential
development, construction, acquisition and management activities through
the Company. In addition, if Executive terminates his employment hereunder
prior to the Expiration Date without Good Reason or the Company terminates
Executive's employment hereunder for Cause, then beginning on the Date of
Termination and for a one (1) year period thereafter (such one (1) year
period, the "Noncompetition Period"), the Executive shall not, within
twenty (20) miles of (i) any of the multifamily residential properties
owned by the Company on the first day of the Noncompetition Period, (ii)
any tract of land owned by the Company with respect to which the Company
has undertaken substantial development activities and on which the Company
intends, as of the first day of the Noncompetition Period, to develop a
multifamily residential property or (iii) any property which, prior to the
first day of the Noncompetition Period, the Company had entered into a
definitive purchase agreement to acquire or had proposed to acquire for the
purposes of development thereof (the areas described in (i), (ii) and (iii)
above being collectively referred to herein as the "Restricted Area"),
directly or indirectly, engage in, or own, invest in, manage or control any
venture or enterprise engaged in, any multifamily residential real estate
development, construction, acquisition or management activities. Nothing
herein shall prohibit the Executive from being a passive owner of not more
than five percent (5%) of the outstanding stock of any class of securities
of a corporation or other entity engaged in such business which is
publicly traded, so long as he has no active participation in the business
of such corporation or other entity.
-7-
<PAGE>
(b) If, at the time of enforcement of this Paragraph 11, a court shall
hold that the duration, scope, area or other restrictions stated herein are
unreasonable, the parties agree that reasonable maximum duration, scope,
area or other restrictions may be substituted by such court for the stated
duration, scope, area or other restrictions.
12. Remedies. The parties hereto agree that both the Company and the
--------
Executive would suffer irreparable harm from a breach by the other party of any
of the covenants or agreements contained herein. Therefore, in the event of the
actual or threatened breach by either party of any of the provisions of this
Agreement, the other party may, in addition and supplementary to other rights
and remedies existing in its favor, apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce or prevent any violation of the provisions hereof.
13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
-------------
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES.
14. Entire Agreement. This Agreement sets forth the entire agreement of
----------------
the parties with respect to the subject matter hereof and is intended to
supersede all prior employment negotiations, understandings and agreements.
Notwithstanding the foregoing, no provisions of this Agreement are intended or
shall be deemed to supersede, alter, impair or detract from, in any manner, any
rights or benefits awarded to Executive or to which Executive may otherwise be
entitled pursuant to any grant or award by the Company to the Executive of Stock
Options, restricted Common Shares or other rights with respect to securities of
the Company, whether now existing or hereafter granted.
15. Successors; Binding Agreement.
-----------------------------
(a) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
the Executive should die while any amount would still be payable to him
hereunder if he had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's devisee, legatee or other designee or, if
there is no such designee, to the Executive's estate.
(b) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree in writing to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if
no such succession had taken place. Failure of the Company to obtain and
deliver to Executive such assumption and
-8-
<PAGE>
agreement prior to (but effective only upon) such succession shall be a
breach of this Agreement, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement, expressly, by operation of law, or otherwise.
16. Notices. All notices provided for in this Agreement shall be in
-------
writing, and shall be deemed to have been duly given when delivered personally
to the party to receive the same, when given by telex, telegram or mailgram, or
when mailed first class postage prepaid, by registered or certified mail, return
receipt requested, addressed to the party to receive the same at his or its
address above set forth, or such other address as the party to receive the same
shall have specified by written notice given in the manner provided for in this
Paragraph 16. All notices shall be deemed to have been given as of the date of
personal delivery, transmittal or mailing thereof.
17. Survival. The Company's obligations under Paragraph 8 shall survive
--------
the termination of this Agreement. The Executive's obligations under Paragraphs
9, 10 and 11 shall survive the termination of this Agreement.
18. Severability. If any provision in this Agreement is determined to be
------------
invalid, it shall not affect the validity or enforceability of any of the other
remaining provisions hereof.
[BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
-9-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
COLUMBUS REALTY TRUST:
By: /s/ Will Cureton
-----------------------------------------
Name: Will Cureton
-------------------------------------
Title: Chief Operating Officer
------------------------------------
EXECUTIVE:
/s/ Richard R. Reupke
--------------------------------------------
Richard R. Reupke
-10-
<PAGE>
EXHIBIT 10.8
THOMAS L. WILKES
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of January
1, 1997, by and between COLUMBUS REALTY TRUST, a Texas real estate investment
trust with offices at 15851 Dallas Parkway, Suite 855, Dallas, Texas 75240 (the
"Company") and Thomas L. Wilkes, an individual residing at 4005 Echo Ridge,
Carrollton, Texas 75007 (the "Executive").
WHEREAS, the Executive is currently employed by the Company as its Senior
Vice President-Management;
WHEREAS, the Company desires to continue to employ the Executive, and the
Executive desires to continue to be employed by the Company; and
WHEREAS, this Agreement shall supersede and replace all prior employment
agreements between the Company and the Executive.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein and for other good and valuable consideration
(including, without limitation, the award of restricted Common Shares
contemplated herein), the adequacy and receipt of which are hereby acknowledged,
the parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ the Executive, and the
----------
Executive hereby agrees to be employed by the Company, for a term (the
"Employment Period") commencing on the date hereof and expiring on December 31,
1999 (the "Expiration Date"); provided that such Expiration Date shall
automatically be extended to December 31, 2000 and each December 31 thereafter,
if written notice is not given, by Executive to the Company or by the Company to
Executive, of such party's intent not to extend or renew this Agreement at least
six (6) months prior to the Expiration Date (as such date may have been
previously extended pursuant to this Paragraph 1).
2. Duties and Responsibilities. During the Employment Period, the
---------------------------
Executive shall devote substantially all of his best efforts and all of his
business time, skill and attention to the business of the Company. Executive
shall hold the office of Senior Vice President-Management of the Company and
shall, during the Employment Period, hold such additional offices to which
Executive may be elected by the Board of Trust Managers of the Company (the
"Board"). Executive shall perform such duties as may, from time to time be
specifically enumerated by the Board, the Chairman of the Board, Chief Executive
Officer, Chief Operating Officer or any other executive officer of the Company;
provided
<PAGE>
that Executive's duties shall not be materially different than those typically
held by other comparable officers of real estate investment trusts similar to
the Company. The foregoing is not intended to preclude the Executive from
owning and managing personal investments, including real estate investments,
subject to the restrictions set forth in Paragraph 11 hereof and provided that
the time devoted to such activities shall not be material and shall not detract
from the performance of the Executive's duties hereunder.
3. Compensation.
------------
(a) Annual Base Salary. For all services rendered by the Executive
------------------
pursuant to this Agreement, the Company shall pay to the Executive an
annual base salary in the amount of $150,000 (which may consist, in part,
of restricted Common Shares as contemplated below) for the period from the
date hereof through December 31, 1997 (as adjusted from time to time, the
"Annual Base Salary"). Thereafter, the Annual Base Salary may be increased
as determined by the Executive Compensation Committee (herein so called) of
the Board in its sole discretion. In no event shall the Annual Base Salary
be reduced. All such compensation shall be paid bi-weekly or at such other
regular intervals, not less frequently than monthly, as the Company may
establish from time to time for executive employees of the Company. In
each calendar year during the term hereof, the Company may issue to
Executive, in satisfaction of a portion of Executive's Annual Base Salary,
restricted common shares of beneficial interest of the Company, par value
$.01 per share (the "Common Shares") having a fair market value of up to
$25,000, determined as of the date of grant (based upon the average closing
price of the Company's Common Shares on the New York Stock Exchange during
the 30-day period preceding the date of grant) and without taking into
account any conditions, restrictions or forfeiture provisions applicable to
such Common Shares to be issued to Executive. Any such award of restricted
Common Shares shall be made on such date during the first quarter of the
applicable calendar year as determined by the Board or the committee
administering any plan pursuant to which such restricted Common Shares may
be issued. The date of grant and the terms, conditions, restrictions and
forfeiture provisions shall be set forth in a written award agreement
evidencing such grant which shall contain substantially the same terms and
conditions as contained in the Award Agreement dated January 8, 1996,
awarding Executive 3,099 restricted Common Shares. Any such award of
restricted Common Shares in any calendar year shall reduce the cash portion
of the Annual Base Salary payable for such calendar year by an amount equal
to the fair market value (determined as set forth above) of the restricted
Common Shares issued.
(b) Bonus. In addition to the compensation set forth in Paragraph
-----
3(a) above, the Executive may be awarded such bonus for each calendar year
of his employment hereunder as the Executive Compensation Committee shall
determine in their sole discretion. In determining such bonus, the
Executive understands that
-2-
<PAGE>
the Executive Compensation Committee will consider, without limitation, the
following factors with respect to the applicable calendar year: the
financial performance, business performance and growth of the Company and
the Executive's department during such period; whether Executive's
department has satisfied or achieved specified goals; Executive's
responsibilities as an officer of the Company (including his participation
in transactions of particular financial or business significance to the
Company) during such period; the total compensation package paid to
executive officers having similar responsibilities as the Executive who are
employed by real estate investment trusts which are similar to the Company;
and such other factors as the Executive Compensation Committee may deem
appropriate in its sole discretion.
(c) Withholding. The Company shall have the right to deduct and
-----------
withhold from such compensation all social security and other federal,
state and local taxes and charges which currently are or which hereafter
may be required by law to be so deducted and withheld.
(d) Expenses. The Company shall promptly reimburse the Executive for
--------
all out-of-pocket expenses actually and necessarily incurred by him in the
conduct of the business of the Company against reasonable substantiation
submitted with respect thereto.
4. Benefits. The Executive shall be entitled to the following benefits:
--------
(a) participation in the Company's Profit Sharing Plan, Share Option
Plan, Management Incentive Plan, Employee Stock Purchase Plan and other
benefit plans made generally available to executives of the Company;
(b) participation in any health insurance, disability insurance,
group life insurance or other welfare benefit programs made generally
available to executives of the Company; and
(c) paid vacation each year, to be taken at such times that are
consistent with the reasonable business needs of the Company. All vacation
shall be subject to the policies and procedures of the Company.
5. Indemnification. The Company shall indemnify the Executive in the
---------------
performance of his duties pursuant to the Amended and Restated Bylaws of the
Company and to the fullest extent allowed by applicable law.
6. Termination of the Agreement.
----------------------------
(a) Disability. If the Executive shall fail, because of illness or
----------
incapacity, to render the services contemplated by this Agreement for six
successive months,
-3-
<PAGE>
the Board may determine, on the basis of the advice of an independent
qualified physician, that the Executive has become disabled. If within
thirty (30) days after the date on which written notice of such
determination is given to the Executive, the Executive shall not have
returned to the full-time performance of his duties hereunder, the Company
may terminate this Agreement and the employment of the Executive hereunder
in accordance with Paragraph 8 hereof.
(b) Death. Except as otherwise provided in this Agreement, if the
-----
Executive shall die during the term of this Agreement, this Agreement shall
be deemed to have been terminated as of the date of death of the Executive.
(c) For Cause. The Company, by notice to the Executive, may terminate
---------
this Agreement prior to the Expiration Date for Cause (as hereafter
defined). As used herein, "Cause" shall mean (i) the continued failure by
the Executive to substantially perform his duties hereunder (other than any
such failure resulting from the Executive's incapacity due to physical or
mental illness) for a period of thirty (30) days after a written demand for
performance is delivered to the Executive by the Company, specifically
identifying the manner in which the Company believes that the Executive has
not satisfactorily performed his duties, (ii) the engaging by the Executive
in misconduct which is injurious to the Company, monetarily or otherwise or
(iii) the violation by the Executive of the provisions of Paragraphs 9, 10
or 11 hereof.
(d) For Good Reason. The Executive may terminate this Agreement prior
---------------
to the Expiration Date for "Good Reason" if any of the following events
occurs without the Executive's express written consent:
(i) any assignment to Executive, without Executive's prior
written consent, of duties materially different than those
contemplated by Paragraph 2 hereof;
(ii) a reduction in the Executive's Annual Base Salary or any
material reduction in other benefits (except for bonuses or similar
discretionary payments) as in effect at the time in question, or any
other failure by the Company to comply with Paragraph 3 hereof; or
(iii) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Paragraph 15 hereof.
7. Date of Termination, Etc. "Date of Termination" shall mean the date
-------------------------
Executive's employment is terminated pursuant to Paragraph 6 above.
-4-
<PAGE>
8. Compensation Upon Termination, During Disability or Upon Change of
------------------------------------------------------------------
Control.
- -------
(a) Disability or Death. During any period that the Executive fails
-------------------
to perform his duties hereunder as a result of incapacity due to physical
or mental illness, the Executive shall continue to receive his Annual Base
Salary at the rate in effect at the commencement of any such period until
his employment is terminated pursuant to Paragraph 6(a) hereof, together
with the average prorata bonus payable pursuant to Paragraph 3(b). If the
Executive's employment shall be terminated by reason of the Executive's
death, the Annual Base Salary together with the average prorata bonus
payable pursuant to Paragraph 3(b) which has accrued through the Date of
Termination shall be paid to the Executive's estate or personal
representative. Following termination pursuant to Paragraph 6(a) or
Paragraph 6(b) hereof, the Company will pay to the Executive, his estate or
personal representative 2.99 times the Executive's Total Compensation (as
defined below) for the immediately preceding twelve-month period to and
including the date of termination. "Total Compensation" shall mean
compensation of any nature and from any source, including, without
limitation, (i) Annual Base Salary, (ii) bonus awards (whether cash or
noncash), (iii) the fair market value of any common shares or other shares
of capital stock, stock options or other equity based compensation awarded
to the Executive during the relevant twelve (12) month period, whether or
not vested, restricted or subject to forfeiture (the fair market value
which shall be determined as of the date of grant without taking into
consideration any provisions as to vesting or forfeiture or provisions as
to restriction on transfer) and (iv) all perquisites paid, awarded or
otherwise available to the Executive during the relevant period. The
aforesaid amount shall be payable, at the option of the Executive, his
estate or personal representative, either (A) in full immediately upon such
termination or (B) semi-monthly over the remainder of the Employment
Period.
(b) For Cause or Without Good Reason. If the Executive's employment
--------------------------------
shall be terminated, at any time prior to the Expiration Date, for Cause or
by him other than for Good Reason, the Executive shall be paid the
Executive's Annual Base Salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given. The Company shall
thereafter have no further obligations to the Executive under this
Agreement. Notwithstanding the foregoing, in the event of the termination
by Executive of his employment without Good Reason at any time within the
twelve (12) month period following the date of the occurrence of a "Change
of Control" as defined below, the Company shall pay to Executive, in
addition to Executive's Annual Base Salary through the Date of Termination,
a lump sum payment in an amount equal to the prorata portion of Executive's
Annual Base Salary which would have been payable to Executive during the
three (3) month period following the Date of Termination. In addition,
notwithstanding the foregoing or any provisions of any stock option or
stock award agreement, in the
-5-
<PAGE>
event of such termination following a "Change in Control," all unvested
Common Shares of the Company owned or held by Executive (whether restricted
or unrestricted) and all unvested options or other rights to acquire Common
Shares of the Company shall become immediately vested and no longer subject
to forfeiture or shall become fully vested and immediately exercisable for
the sixty (60) days following Executive's termination of employment, as
applicable. In the event of any conflict between the provisions of any
stock option award agreement or any agreement evidencing a grant of
restricted stock or other similar award and the foregoing provisions, the
foregoing provisions shall control. A "Change in Control" for purposes of
this Agreement shall mean the occurrence of any of the following events:
(i) any "person" or "group" of persons, as such terms are used in Sections
13 and 14 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), other than any employee benefit plan sponsored by the Company,
becomes the "beneficial owner," as such term is used in Section 13 of the
Exchange Act, of thirty percent (30%) or more of the Common Shares of the
Company issued and outstanding immediately prior to such acquisition; (ii)
any Common Shares of the Company are purchased pursuant to a tender or
exchange offer other than an offer by the Company; or (iii) the dissolution
or liquidation of the Company or the consummation of any merger or
consolidation of the Company or any sale or other disposition of all or
substantially all of its assets, if the shareholders of the Company
immediately before such transaction own, immediately after consummation of
such transaction, equity securities (other than options and other rights to
acquire equity securities) possessing less than thirty percent (30%) of the
voting power of the surviving or acquiring corporation.
(c) Other than for Cause. If the Executive's employment shall be
--------------------
terminated by the Company other than (i) for Cause or (ii) upon death or
disability, the Executive shall be paid the Executive's Annual Base Salary
plus the average prorata bonus payable pursuant to Paragraph 3(b) through
the Date of Termination. In addition, the Company will pay to the
Executive 2.99 times the Executive's Total Compensation for the immediately
preceding twelve-month period. The aforesaid amount shall be payable, at
the option of the Executive, either (i) in full immediately upon such
termination or (ii) semi-monthly over the remainder of the Employment
Period. In addition, the Executive shall be entitled, at the option of the
Executive, (i) to exercise any options to purchase Shares granted to the
Executive, whether or not then vested, in accordance with the terms of the
applicable share option agreement or plan, or (ii) to retain any Shares
awarded to the Executive whether or not vested on the Date of Termination.
(d) For Good Reason. If the Executive's employment shall be
---------------
terminated by the Executive for Good Reason, the Executive shall be paid
the Executive's Annual Base Salary plus the average prorata bonus payable
pursuant to Paragraph 3(b) through the Date of Termination. In addition,
the Company will pay to the Executive the lesser of (i) two times the
Executive's Total Compensation for
-6-
<PAGE>
the immediately preceding twelve-month period or (ii) the Executive's Total
Compensation for the preceding twelve-month period multiplied by the number
of years, including any fractions thereof, remaining until the Expiration
Date. The Executive shall be entitled, at the option of the Executive, (i)
to exercise any options to purchase Shares granted to the Executive whether
or not then vested, in accordance with the terms of the applicable share
option agreement or Plan and (ii) to retain any Shares awarded to the
Executive (whether or not then vested).
(e) Other Benefits. In addition to all other amounts payable to the
--------------
Executive under this Paragraph 8, the Executive shall be entitled to
receive all retirement benefits payable to him under the Company's benefit
plans applicable to him and any other plan or agreement relating to
retirement benefits as in effect on the Date of Termination.
(f) No Requirement to Mitigate. The Executive shall not be required
--------------------------
to mitigate the amount of any payment provided for in this Paragraph 8 by
seeking other employment or otherwise, nor shall the amount of any payment
or benefit provided for in this Paragraph 8 be reduced by any compensation
earned by him as the result of employment by, or any services provided to,
another employer (whether or not a successor to the Company) or by
retirement benefits after the Date of Termination, or otherwise.
9. Confidential Information. The Executive understands and acknowledges
------------------------
that during his employment with the Company, he will be exposed to Confidential
Information (defined below), all of which is proprietary and which will
rightfully belong to the Company. The Executive will hold in a fiduciary
capacity for the benefit of the Company all such Confidential Information
obtained by the Executive during his employment with the Company and will not,
directly or indirectly, at any time, either during or after his employment with
the Company, without the Company's prior written consent, use, publish,
disseminate, or otherwise disclose any of such Confidential Information to any
individual or entity other than the Company or its employees, except as required
in the performance of his duties for the Company. The Executive shall take all
reasonable steps to safeguard such Confidential Information and to protect such
Confidential Information against disclosure, misuse, loss or theft. The term
"Confidential Information" shall mean any information not generally known in the
relevant trade or industry which was (i) obtained from the Company or its
predecessors or (ii) learned, discovered, developed, conceived, originated or
prepared during or as a result of the performance of any services by the
Executive on behalf of the Company or its predecessors.
10. Return of Documents. All writings, records, and other documents and
-------------------
things containing any Confidential Information shall be the exclusive property
of the Company, shall not be copied, summarized, extracted from, or removed from
the premises of the Company, except in pursuit of the business of the Company
and at the direction of the
-7-
<PAGE>
Company, and shall be delivered to the Company, without retaining any copies,
upon the termination of the Executive's employment or at any time as requested
by the Company.
11. Noncompete. The Executive agrees that:
----------
(a) At all times during which the Executive is employed by the
Company, the Executive agrees to conduct all multifamily residential
development, construction, acquisition and management activities through
the Company. In addition, if Executive terminates his employment hereunder
prior to the Expiration Date without Good Reason (other than termination by
Executive of his employment within the twelve (12) month period following
the occurrence of a "Change of Control") or the Company terminates
Executive's employment hereunder for Cause, then beginning on the Date of
Termination and for a one (1) year period thereafter (such one (1) year
period, the "Noncompetition Period"), the Executive shall not, within
twenty (20) miles of (i) any of the multifamily residential properties
owned by the Company on the first day of the Noncompetition Period, (ii)
any tract of land owned by the Company with respect to which the Company
has undertaken substantial development activities and on which the Company
intends, as of the first day of the Noncompetition Period, to develop a
multifamily residential property or (iii) any property which, prior to the
first day of the Noncompetition Period, the Company had entered into a
definitive purchase agreement to acquire or had proposed to acquire for the
purposes of development thereof (the areas described in (i), (ii) and (iii)
above being collectively referred to herein as the "Restricted Area"),
directly or indirectly, engage in, or own, invest in, manage or control any
venture or enterprise engaged in, any multifamily residential real estate
development, construction, acquisition or management activities. Nothing
herein shall prohibit the Executive from being a passive owner of not more
than five percent (5%) of the outstanding stock of any class of securities
of a corporation or other entity engaged in such business which is
publicly traded, so long as he has no active participation in the business
of such corporation or other entity.
(b) If, at the time of enforcement of this Paragraph 11, a court shall
hold that the duration, scope, area or other restrictions stated herein are
unreasonable, the parties agree that reasonable maximum duration, scope,
area or other restrictions may be substituted by such court for the stated
duration, scope, area or other restrictions.
12. Remedies. The parties hereto agree that both the Company and the
--------
Executive would suffer irreparable harm from a breach by the other party of any
of the covenants or agreements contained herein. Therefore, in the event of the
actual or threatened breach by either party of any of the provisions of this
Agreement, the other party may, in addition and supplementary to other rights
and remedies existing in its favor, apply to any court of law or equity of
competent jurisdiction for specific performance
-8-
<PAGE>
and/or injunctive or other relief in order to enforce or prevent any violation
of the provisions hereof.
13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
-------------
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES.
14. Entire Agreement. This Agreement sets forth the entire agreement of
----------------
the parties with respect to the subject matter hereof and is intended to
supersede all prior employment negotiations, understandings and agreements.
Notwithstanding the foregoing, no provisions of this Agreement are intended to
or shall be deemed to supersede (except as expressly set forth in Paragraph
8(b)), alter, impair or detract from in any manner any rights or benefits
awarded to Executive or to which Executive may otherwise be entitled pursuant to
any grant or award by the Company to the Executive of stock options, restricted
Common Shares or other rights with respect to securities of the Company, whether
now existing or hereafter granted.
15. Successors; Binding Agreement.
-----------------------------
(a) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
the Executive should die while any amount would still be payable to him
hereunder if he had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's devisee, legatee or other designee or, if
there is no such designee, to the Executive's estate.
(b) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree in writing to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if
no such succession had taken place. Failure of the Company to obtain and
deliver to Executive such assumption and agreement prior to (but effective
only upon) such succession shall be a breach of this Agreement, except that
for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. As
used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement, expressly, by operation of
law, or otherwise.
16. Notices. All notices provided for in this Agreement shall be in
-------
writing, and shall be deemed to have been duly given when delivered personally
to the party to receive the same, when given by telex, telegram or mailgram, or
when mailed first class
-9-
<PAGE>
postage prepaid, by registered or certified mail, return receipt requested,
addressed to the party to receive the same at his or its address above set
forth, or such other address as the party to receive the same shall have
specified by written notice given in the manner provided for in this Paragraph
16. All notices shall be deemed to have been given as of the date of personal
delivery, transmittal or mailing thereof.
17. Survival. The Company's obligations under Paragraph 8 shall survive
--------
the termination of this Agreement. The Executive's obligations under Paragraphs
9, 10 and 11 shall survive the termination of this Agreement.
18. Severability. If any provision in this Agreement is determined to be
------------
invalid, it shall not affect the validity or enforceability of any of the other
remaining provisions hereof.
[BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
-10-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
COLUMBUS REALTY TRUST:
By: /s/ Will Cureton
-----------------------------------------
Name: Will Cureton
------------------------------------
Title: Chief Operating Officer
-----------------------------------
EXECUTIVE:
/s/ Thomas L. Wilkes
--------------------------------------------
Thomas L. Wilkes
-11-
<PAGE>
EXHIBIT 10.9
J. MICHAEL LEWIS
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of January
1, 1997, by and between COLUMBUS REALTY TRUST, a Texas real estate investment
trust with offices at 15851 Dallas Parkway, Suite 855, Dallas, Texas 75240 (the
"Company") and J. Michael Lewis, an individual residing at 3513 Marquette
Street, Dallas, Texas 75225 (the "Executive").
WHEREAS, the Executive is currently employed by the Company as its Senior
Vice President and Treasurer;
WHEREAS, the Company desires to continue to employ the Executive, and the
Executive desires to continue to be employed by the Company; and
WHEREAS, this Agreement shall supersede and replace all prior employment
agreements between the Company and the Executive.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein and for other good and valuable consideration
(including, without limitation, the award of restricted Common Shares
contemplated herein), the adequacy and receipt of which are hereby acknowledged,
the parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ the Executive, and the
----------
Executive hereby agrees to be employed by the Company, for a term (the
"Employment Period") commencing on the date hereof and expiring on December 31,
1999 (the "Expiration Date"); provided that such Expiration Date shall
automatically be extended to December 31, 2000 and each December 31 thereafter,
if written notice is not given by Executive to the Company or by the Company to
the Executive of such party's intent not to extend or renew this Agreement at
least twelve (12) months prior to the Expiration Date (as such date may have
been previously extended pursuant to this Section 1).
2. Duties and Responsibilities. During the Employment Period, the
---------------------------
Executive shall devote his best efforts and substantially all of his business
time, skill and attention to the business of the Company. Executive shall hold
the offices of Senior Vice President and Treasurer of the Company and shall,
during the Employment Period, hold such additional offices to which Executive
may be elected by the Board of Trust Managers of the Company (the "Board").
Executive shall perform such duties as may, from time to time be specifically
enumerated by the Board, the Chairman of the Board, Chief Executive Officer,
Chief Operating Officer or any other executive officer of the Company; provided
that Executive's duties shall not be materially different than those typically
held by other comparable officers of real estate investment trusts similar to
the Company. The foregoing is not intended to preclude the Executive from
owning and managing personal
<PAGE>
investments, including real estate investments, subject to the restrictions set
forth in Paragraph 11 hereof and provided that the time devoted to such
activities shall not be material and shall not detract from the performance of
the Executive's duties hereunder.
3. Compensation.
------------
(a) Annual Base Salary. For all services rendered by the Executive
------------------
pursuant to this Agreement, the Company shall pay to the Executive an
annual base salary in the amount of $150,000 (which may consist, in part,
of restricted Common Shares as contemplated below) for the period from the
date hereof through December 31, 1997 (as adjusted from time to time, the
"Annual Base Salary"). Thereafter, the Annual Base Salary may be increased
as determined by the Executive Compensation Committee (herein so called) of
the Board in its sole discretion. In no event shall the Annual Base Salary
be reduced. All such compensation shall be paid bi-weekly or at such other
regular intervals, not less frequently than monthly, as the Company may
establish from time to time for executive employees of the Company. In
each calendar year during the term hereof, the Company may issue to
Executive, in satisfaction of a portion of Executive's Annual Base Salary,
restricted common shares of beneficial interest of the Company, par value
$.01 per share (the "Common Shares"), having a fair market value of up to
$25,000, determined as of the date of grant (based upon the average closing
price of the Company's Common Shares on the New York Stock Exchange during
the 30-day period preceding the date of grant) and without taking in
account any conditions, restrictions or forfeiture provisions applicable to
the restricted Common Shares to be awarded to Executive. Any such award of
restricted Common Shares shall be made on such date during the first
quarter of the applicable calendar year as determined by the Board or the
committee administering any plan pursuant to which such restricted Common
Shares may be issued. The date of grant and the terms, conditions,
restrictions and forfeiture provisions applicable to such Common Shares
shall be set forth in a written award agreement evidencing such grant which
shall contain substantially the same terms and conditions as contained in
the Award Agreement dated January 8, 1996, awarding Executive 2,324
restricted Common Shares. Any such award of restricted Common Shares in
any calendar year shall reduce the cash portion of the Annual Base Salary
payable for such calendar year by an amount equal to the fair market value
(determined as set forth above) of the restricted Common Shares issued.
(b) Bonus. In addition to the compensation set forth in Paragraph
-----
3(a) above, the Executive may be awarded such bonus for each calendar year
of his employment hereunder as the Executive Compensation Committee shall
determine in their sole discretion. In determining such bonus, the
Executive understands that the Executive Compensation Committee will
consider, without limitation, the following factors with respect to the
applicable calendar year: the financial
-2-
<PAGE>
performance, business performance and growth of the Company and the
Executive's department during such period; whether Executive's department
has satisfied or achieved specified goals; Executive's responsibilities as
an officer of the Company (including his participation in transactions of
particular financial or business significance to the Company) during such
period; the total compensation package paid to executive officers having
similar responsibilities as the Executive who are employed by real estate
investment trusts which are similar to the Company; and such other factors
as the Executive Compensation Committee may deem appropriate in its sole
discretion.
(c) Withholding. The Company shall have the right to deduct and
-----------
withhold from such compensation all social security and other federal,
state and local taxes and charges which currently are or which hereafter
may be required by law to be so deducted and withheld.
(d) Expenses. The Company shall promptly reimburse the Executive for
--------
all out-of-pocket expenses actually and necessarily incurred by him in the
conduct of the business of the Company against reasonable substantiation
submitted with respect thereto.
4. Benefits. The Executive shall be entitled to the following benefits:
--------
(a) participation in the Company's Profit Sharing Plan, Share Option
Plan, Management Incentive Plan, Employee Stock Purchase Plan and other
benefit plans made generally available to executives of the Company;
(b) participation in any health insurance, disability insurance,
group life insurance or other welfare benefit programs made generally
available to executives of the Company; and
(c) paid vacation each year, to be taken at such times that are
consistent with the reasonable business needs of the Company. All vacation
shall be subject to the policies and procedures of the Company.
5. Indemnification. The Company shall indemnify the Executive in the
---------------
performance of his duties pursuant to the Amended and Restated Bylaws of the
Company and to the fullest extent allowed by applicable law.
6. Termination of the Agreement.
----------------------------
(a) Disability. If the Executive shall fail, because of illness or
----------
incapacity, to render the services contemplated by this Agreement for six
successive months, the Board may determine, on the basis of the advice of
an independent qualified physician, that the Executive has become disabled.
If within thirty (30) days after
-3-
<PAGE>
the date on which written notice of such determination is given to the
Executive, the Executive shall not have returned to the full-time
performance of his duties hereunder, the Company may terminate this
Agreement and the employment of the Executive hereunder in accordance with
Paragraph 8 hereof.
(b) Death. Except as otherwise provided in this Agreement, if the
-----
Executive shall die during the term of this Agreement, this Agreement shall
be deemed to have been terminated as of the date of death of the Executive.
(c) For Cause. The Company, by notice to the Executive, may terminate
---------
this Agreement prior to the Expiration Date for Cause (as hereafter
defined). As used herein, "Cause" shall mean (i) the continued failure by
the Executive to substantially perform his duties hereunder (other than any
such failure resulting from the Executive's incapacity due to physical or
mental illness) for a period of thirty (30) days after a written demand for
performance is delivered to the Executive by the Company, specifically
identifying the manner in which the Company believes that the Executive has
not satisfactorily performed his duties, (ii) the engaging by the Executive
in misconduct which is injurious to the Company, monetarily or otherwise or
(iii) the violation by the Executive of the provisions of Paragraphs 9, 10
or 11 hereof.
(d) For Good Reason. The Executive may terminate this Agreement prior
---------------
to the Expiration Date for "Good Reason" if any of the following events
occurs without the Executive's express written consent:
(i) any demotion, material change of Executive's title or any
diminution, limitation or restriction on Executive's powers or duties
contemplated by Paragraph 2 above, in each case, without Executive's
prior written consent;
(ii) a reduction in the Executive's Annual Base Salary or any
material reduction in other benefits (except for bonuses or similar
discretionary payments) as in effect at the time in question, or any
other failure by the Company to comply with Paragraph 3 hereof;
(iii) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Paragraph 15 hereof; or
(iv) any requirement by the Company that Executive relocate
outside of the Dallas/Fort Worth metropolitan area or any requirement
that Executive perform all or substantially all of his duties,
consistently over any six (6) month period, outside of the Dallas/Fort
Worth metropolitan area.
-4-
<PAGE>
7. Date of Termination, Etc. "Date of Termination" shall mean the date
-------------------------
Executive's employment is terminated pursuant to Paragraph 6 above.
8. Compensation Upon Termination or During Disability.
--------------------------------------------------
(a) Disability or Death. During any period that the Executive fails
-------------------
to perform his duties hereunder as a result of incapacity due to physical
or mental illness, the Executive shall continue to receive his Annual Base
Salary at the rate in effect at the commencement of any such period until
his employment is terminated pursuant to Paragraph 6(a) hereof, together
with the average prorata bonus payable pursuant to Paragraph 3(b). If the
Executive's employment shall be terminated by reason of the Executive's
death, the Annual Base Salary together with the average prorata bonus
payable pursuant to Paragraph 3(b) which has accrued through the Date of
Termination shall be paid to the Executive's estate or personal
representative. Following termination pursuant to Paragraph 6(a) or
Paragraph 6(b) hereof, the Company will pay to the Executive, his estate or
personal representative 2.99 times the Executive's Total Compensation (as
defined below) for the immediately preceding twelve-month period to and
including the date of termination. "Total Compensation" shall mean
compensation of any nature and from any source, including, without
limitation, (i) Annual Base Salary, (ii) bonus awards (whether cash or
noncash), (iii) the fair market value of any common shares or other shares
of capital stock, stock options or other equity based compensation awarded
to the Executive during the relevant twelve (12) month period, whether or
not vested, restricted or subject to forfeiture (the fair market value
which shall be determined as of the date of grant without taking into
consideration any provisions as to vesting or forfeiture or provisions as
to restriction on transfer) and (iv) all perquisites paid, awarded or
otherwise available to the Executive during the relevant period. The
aforesaid amount shall be payable, at the option of the Executive, his
estate or personal representative, either (A) in full immediately upon such
termination or (B) semi-monthly over the remainder of the Employment
Period.
(b) For Cause. If the Executive's employment shall be terminated, at
---------
any time prior to the Expiration Date, for Cause or by him other than for
Good Reason, the Executive shall be paid the Executive's Annual Base Salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given. The Company shall thereafter have no further
obligations to the Executive under this Agreement.
(c) Other than for Cause. If the Executive's employment shall be
--------------------
terminated by the Company other than (i) for Cause or (ii) upon death or
disability, the Executive shall be paid the Executive's Annual Base Salary
plus the average prorata bonus payable pursuant to Paragraph 3(b) through
the Date of Termination. In addition, the Company will pay to the
Executive 2.99 times the
-5-
<PAGE>
Executive's Total Compensation for the immediately preceding twelve-month
period. The aforesaid amount shall be payable, at the option of the
Executive, either (i) in full immediately upon such termination or (ii)
semi-monthly over the remainder of the Employment Period. In addition, the
Executive shall be entitled, at the option of the Executive, (i) to
exercise any options to purchase Shares granted to the Executive, whether
or not then vested, in accordance with the terms of the applicable share
option agreement or plan, or (ii) to retain any Shares awarded to the
Executive whether or not vested on the Date of Termination.
(d) For Good Reason. If the Executive's employment shall be
---------------
terminated by the Executive for Good Reason, the Executive shall be paid
the Executive's Annual Base Salary plus the average prorata bonus payable
pursuant to Paragraph 3(b) through the Date of Termination. In addition,
the Company will pay to the Executive the lesser of (i) two times the
Executive's Total Compensation for the immediately preceding twelve-month
period or (ii) the Executive's Total Compensation for the preceding twelve-
month period multiplied by the number of years, including any fractions
thereof, remaining until the Expiration Date. The Executive shall be
entitled, at the option of the Executive, (i) to exercise any options to
purchase Shares granted to the Executive whether or not then vested, in
accordance with the terms of the applicable share option agreement or Plan
and (ii) to retain any Shares awarded to the Executive (whether or not then
vested).
(e) Other Benefits. In addition to all other amounts payable to the
--------------
Executive under this Paragraph 8, the Executive shall be entitled to
receive all retirement benefits payable to him under the Company's benefit
plans applicable to him and any other plan or agreement relating to
retirement benefits as in effect on the Date of Termination.
(f) No Requirement to Mitigate. The Executive shall not be required
--------------------------
to mitigate the amount of any payment provided for in this Paragraph 8 by
seeking other employment or otherwise, nor shall the amount of any payment
or benefit provided for in this Paragraph 8 be reduced by any compensation
earned by him as the result of employment by, or any services provided to,
another employer (whether or not a successor to the Company) or by
retirement benefits after the Date of Termination, or otherwise.
9. Confidential Information. The Executive understands and acknowledges
------------------------
that during his employment with the Company, he will be exposed to Confidential
Information (defined below), all of which is proprietary and which will
rightfully belong to the Company. The Executive will hold in a fiduciary
capacity for the benefit of the Company all such Confidential Information
obtained by the Executive during his employment with the Company and will not,
directly or indirectly, at any time, either during or after his employment with
the Company, without the Company's prior written consent, use, publish,
disseminate, or otherwise disclose any of such Confidential Information to any
individual
-6-
<PAGE>
or entity other than the Company or its employees, except as required in the
performance of his duties for the Company. The Executive shall take all
reasonable steps to safeguard such Confidential Information and to protect such
Confidential Information against disclosure, misuse, loss or theft. The term
"Confidential Information" shall mean any information not generally known in the
relevant trade or industry which was (i) obtained from the Company or its
predecessors or (ii) learned, discovered, developed, conceived, originated or
prepared during or as a result of the performance of any services by the
Executive on behalf of the Company or its predecessors.
10. Return of Documents. All writings, records, and other documents and
-------------------
things containing any Confidential Information shall be the exclusive property
of the Company, shall not be copied, summarized, extracted from, or removed from
the premises of the Company, except in pursuit of the business of the Company
and at the direction of the Company, and shall be delivered to the Company,
without retaining any copies, upon the termination of the Executive's employment
or at any time as requested by the Company.
11. Noncompete. The Executive agrees that:
----------
(a) At all times during which the Executive is employed by the
Company, the Executive agrees to conduct all multifamily residential
development, construction, acquisition and management activities through
the Company. In addition, if Executive terminates his employment hereunder
prior to the Expiration Date without Good Reason or the Company terminates
Executive's employment hereunder for Cause, then beginning on the Date of
Termination and for a one (1) year period thereafter (such one (1) year
period, the "Noncompetition Period"), the Executive shall not, within
twenty (20) miles of (i) any of the multifamily residential properties
owned by the Company on the first day of the Noncompetition Period, (ii)
any tract of land owned by the Company with respect to which the Company
has undertaken substantial development activities and on which the Company
intends, as of the first day of the Noncompetition Period, to develop a
multifamily residential property or (iii) any property which, prior to the
first day of the Noncompetition Period, the Company had entered into a
definitive purchase agreement to acquire or had proposed to acquire for the
purposes of development thereof (the areas described in (i), (ii) and (iii)
above being collectively referred to herein as the "Restricted Area"),
directly or indirectly, engage in, or own, invest in, manage or control any
venture or enterprise engaged in, any multifamily residential real estate
development, construction, acquisition or management activities. Nothing
herein shall prohibit the Executive from being a passive owner of not more
than five percent (5%) of the outstanding stock of any class of securities
of a corporation or other entity engaged in such business which is
publicly traded, so long as he has no active participation in the business
of such corporation or other entity.
-7-
<PAGE>
(b) If, at the time of enforcement of this Paragraph 11, a court shall
hold that the duration, scope, area or other restrictions stated herein are
unreasonable, the parties agree that reasonable maximum duration, scope,
area or other restrictions may be substituted by such court for the stated
duration, scope, area or other restrictions.
12. Remedies. The parties hereto agree that both the Company and the
--------
Executive would suffer irreparable harm from a breach by the other party of any
of the covenants or agreements contained herein. Therefore, in the event of the
actual or threatened breach by either party of any of the provisions of this
Agreement, the other party may, in addition and supplementary to other rights
and remedies existing in its favor, apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce or prevent any violation of the provisions hereof.
13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
-------------
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES.
14. Entire Agreement. This Agreement sets forth the entire agreement of
----------------
the parties with respect to the subject matter hereof and is intended to
supersede all prior employment negotiations, understandings and agreements.
Notwithstanding the foregoing, no provisions of this Agreement are intended or
shall be deemed to supersede, alter, impair or detract from, in any manner, any
rights or benefits awarded to Executive or to which Executive may otherwise be
entitled pursuant to any grant or award by the Company to the Executive of Stock
Options, restricted Common Shares or other rights with respect to securities of
the Company, whether now existing or hereafter granted.
15. Successors; Binding Agreement.
-----------------------------
(a) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
the Executive should die while any amount would still be payable to him
hereunder if he had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's devisee, legatee or other designee or, if
there is no such designee, to the Executive's estate.
(b) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree in writing to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if
no such succession had taken place. Failure of the Company to obtain and
deliver to Executive such assumption and
-8-
<PAGE>
agreement prior to (but effective only upon) such succession shall be a
breach of this Agreement, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement, expressly, by operation of law, or otherwise.
16. Notices. All notices provided for in this Agreement shall be in
-------
writing, and shall be deemed to have been duly given when delivered personally
to the party to receive the same, when given by telex, telegram or mailgram, or
when mailed first class postage prepaid, by registered or certified mail, return
receipt requested, addressed to the party to receive the same at his or its
address above set forth, or such other address as the party to receive the same
shall have specified by written notice given in the manner provided for in this
Paragraph 16. All notices shall be deemed to have been given as of the date of
personal delivery, transmittal or mailing thereof.
17. Survival. The Company's obligations under Paragraph 8 shall survive
--------
the termination of this Agreement. The Executive's obligations under Paragraphs
9, 10 and 11 shall survive the termination of this Agreement.
18. Severability. If any provision in this Agreement is determined to be
------------
invalid, it shall not affect the validity or enforceability of any of the other
remaining provisions hereof.
[BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
-9-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
COLUMBUS REALTY TRUST:
By: /s/ Will Cureton
-----------------------------------------
Name: Will Cureton
-------------------------------------
Title: Chief Operating Officer
------------------------------------
EXECUTIVE:
/s/ J. Michael Lewis
--------------------------------------------
J. Michael Lewis
-10-
<PAGE>
EXHIBIT 10.10
ARTHUR E. LOMENICK
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of January
1, 1997, by and between COLUMBUS REALTY TRUST, a Texas real estate investment
trust with offices at 15851 Dallas Parkway, Suite 855, Dallas, Texas 75240 (the
"Company") and Arthur E. Lomenick, an individual residing at 6629 Willow Lane,
Dallas, Texas 75230 (the "Executive").
WHEREAS, the Executive is currently employed by the Company as its Senior
Vice President-Development;
WHEREAS, the Company desires to continue to employ the Executive, and the
Executive desires to continue to be employed by the Company; and
WHEREAS, this Agreement shall supersede and replace all prior employment
agreements between the Company and the Executive.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein and for other good and valuable consideration
(including, without limitation, the award of restricted Common Shares
contemplated herein), the adequacy and receipt of which are hereby acknowledged,
the parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ the Executive, and the
----------
Executive hereby agrees to be employed by the Company, for a term (the
"Employment Period") commencing on the date hereof and expiring on December 31,
1999 (the "Expiration Date"); provided that such Expiration Date shall
automatically be extended to December 31, 2000 and each December 31 thereafter,
if written notice is not given, by Executive to the Company or by the Company to
Executive, of such party's intent not to extend or renew this Agreement at least
six (6) months prior to the Expiration Date (as such date may have been
previously extended pursuant to this Paragraph 1).
2. Duties and Responsibilities. During the Employment Period, the
---------------------------
Executive shall devote substantially all of his best efforts and all of his
business time, skill and attention to the business of the Company. Executive
shall hold the office of Senior Vice President-Development of the Company and
shall, during the Employment Period, hold such additional offices to which
Executive may be elected by the Board of Trust Managers of the Company (the
"Board"). Executive shall perform such duties as may, from time to time be
specifically enumerated by the Board, the Chairman of the Board, Chief Executive
Officer, Chief Operating Officer or any other executive officer of the Company;
provided
<PAGE>
that Executive's duties shall not be materially different than those typically
held by other comparable officers of real estate investment trusts similar to
the Company. The foregoing is not intended to preclude the Executive from
owning and managing personal investments, including real estate investments,
subject to the restrictions set forth in Paragraph 11 hereof and provided that
the time devoted to such activities shall not be material and shall not detract
from the performance of the Executive's duties hereunder.
3. Compensation.
------------
(a) Annual Base Salary. For all services rendered by the Executive
------------------
pursuant to this Agreement, the Company shall pay to the Executive an
annual base salary in the amount of $150,000 (which may consist, in part,
of restricted Common Shares as contemplated below) for the period from the
date hereof through December 31, 1997 (as adjusted from time to time, the
"Annual Base Salary"). Thereafter, the Annual Base Salary may be increased
as determined by the Executive Compensation Committee (herein so called) of
the Board in its sole discretion. In no event shall the Annual Base Salary
be reduced. All such compensation shall be paid bi-weekly or at such other
regular intervals, not less frequently than monthly, as the Company may
establish from time to time for executive employees of the Company. In
each calendar year during the term hereof, the Company may issue to
Executive, in satisfaction of a portion of Executive's Annual Base Salary,
restricted common shares of beneficial interest of the Company, par value
$.01 per share (the "Common Shares") having a fair market value of up to
$25,000, determined as of the date of grant (based upon the average closing
price of the Company's Common Shares on the New York Stock Exchange during
the 30-day period preceding the date of grant) and without taking into
account any conditions, restrictions or forfeiture provisions applicable to
such Common Shares to be issued to Executive. Any such award of restricted
Common Shares shall be made on such date during the first quarter of the
applicable calendar year as determined by the Board or the committee
administering any plan pursuant to which such restricted Common Shares may
be issued. The date of grant and the terms, conditions, restrictions and
forfeiture provisions shall be set forth in a written award agreement
evidencing such grant which shall contain substantially the same terms and
conditions as contained in the Award Agreement dated January 8, 1996,
awarding Executive 2,711 restricted Common Shares. Any such award of
restricted Common Shares in any calendar year shall reduce the cash portion
of the Annual Base Salary payable for such calendar year by an amount equal
to the fair market value (determined as set forth above) of the restricted
Common Shares issued.
(b) Bonus. In addition to the compensation set forth in Paragraph
-----
3(a) above, the Executive may be awarded such bonus for each calendar year
of his employment hereunder as the Executive Compensation Committee shall
determine in their sole discretion. In determining such bonus, the
Executive understands that
-2-
<PAGE>
the Executive Compensation Committee will consider, without limitation, the
following factors with respect to the applicable calendar year: the
financial performance, business performance and growth of the Company and
the Executive's department during such period; whether Executive's
department has satisfied or achieved specified goals; Executive's
responsibilities as an officer of the Company (including his participation
in transactions of particular financial or business significance to the
Company) during such period; the total compensation package paid to
executive officers having similar responsibilities as the Executive who are
employed by real estate investment trusts which are similar to the Company;
and such other factors as the Executive Compensation Committee may deem
appropriate in its sole discretion.
(c) Withholding. The Company shall have the right to deduct and
-----------
withhold from such compensation all social security and other federal,
state and local taxes and charges which currently are or which hereafter
may be required by law to be so deducted and withheld.
(d) Expenses. The Company shall promptly reimburse the Executive for
--------
all out-of-pocket expenses actually and necessarily incurred by him in the
conduct of the business of the Company against reasonable substantiation
submitted with respect thereto.
4. Benefits. The Executive shall be entitled to the following benefits:
--------
(a) participation in the Company's Profit Sharing Plan, Share Option
Plan, Management Incentive Plan, Employee Stock Purchase Plan and other
benefit plans made generally available to executives of the Company;
(b) participation in any health insurance, disability insurance,
group life insurance or other welfare benefit programs made generally
available to executives of the Company; and
(c) paid vacation each year, to be taken at such times that are
consistent with the reasonable business needs of the Company. All vacation
shall be subject to the policies and procedures of the Company.
5. Indemnification. The Company shall indemnify the Executive in the
---------------
performance of his duties pursuant to the Amended and Restated Bylaws of the
Company and to the fullest extent allowed by applicable law.
6. Termination of the Agreement.
----------------------------
(a) Disability. If the Executive shall fail, because of illness or
----------
incapacity, to render the services contemplated by this Agreement for six
successive months,
-3-
<PAGE>
the Board may determine, on the basis of the advice of an independent
qualified physician, that the Executive has become disabled. If within
thirty (30) days after the date on which written notice of such
determination is given to the Executive, the Executive shall not have
returned to the full-time performance of his duties hereunder, the Company
may terminate this Agreement and the employment of the Executive hereunder
in accordance with Paragraph 8 hereof.
(b) Death. Except as otherwise provided in this Agreement, if the
-----
Executive shall die during the term of this Agreement, this Agreement shall
be deemed to have been terminated as of the date of death of the Executive.
(c) For Cause. The Company, by notice to the Executive, may terminate
---------
this Agreement prior to the Expiration Date for Cause (as hereafter
defined). As used herein, "Cause" shall mean (i) the willful and continued
failure by the Executive to substantially perform his duties hereunder
(other than any such failure resulting from the Executive's incapacity due
to physical or mental illness) for a period of thirty (30) days after a
written demand for performance is delivered to the Executive by the
Company, specifically identifying the manner in which the Company believes
that the Executive has not satisfactorily performed his duties, (ii) the
engaging by the Executive in misconduct which is materially injurious to
the Company, monetarily or otherwise or (iii) the violation by the
Executive of the provisions of Paragraphs 9, 10 or 11 hereof.
(d) For Good Reason. The Executive may terminate this Agreement prior
---------------
to the Expiration Date for "Good Reason" if any of the following events
occurs without the Executive's express written consent:
(i) any assignment to Executive, without Executive's prior
written consent, of duties materially different than those
contemplated by Paragraph 2 hereof;
(ii) a reduction in the Executive's Annual Base Salary or any
material reduction in other benefits (except for bonuses or similar
discretionary payments) as in effect at the time in question, or any
other failure by the Company to comply with Paragraph 3 hereof; or
(iii) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Paragraph 15 hereof.
7. Date of Termination, Etc. "Date of Termination" shall mean the date
-------------------------
Executive's employment is terminated pursuant to Paragraph 6 above.
-4-
<PAGE>
8. Compensation Upon Termination, During Disability or Upon Change of
------------------------------------------------------------------
Control.
- -------
(a) Disability or Death. During any period that the Executive fails
-------------------
to perform his duties hereunder as a result of incapacity due to physical
or mental illness, the Executive shall continue to receive his Annual Base
Salary at the rate in effect at the commencement of any such period until
his employment is terminated pursuant to Paragraph 6(a) hereof, together
with the average prorata bonus payable pursuant to Paragraph 3(b). If the
Executive's employment shall be terminated by reason of the Executive's
death, the Annual Base Salary together with the average prorata bonus
payable pursuant to Paragraph 3(b) which has accrued through the Date of
Termination shall be paid to the Executive's estate or personal
representative. Following termination pursuant to Paragraph 6(a) or
Paragraph 6(b) hereof, the Company will pay to the Executive, his estate or
personal representative 2.99 times the Executive's Total Compensation (as
defined below) for the immediately preceding twelve-month period to and
including the date of termination. "Total Compensation" shall mean
compensation of any nature and from any source, including, without
limitation, (i) Annual Base Salary, (ii) bonus awards (whether cash or
noncash), (iii) the fair market value of any common shares or other shares
of capital stock, stock options or other equity based compensation awarded
to the Executive during the relevant twelve (12) month period, whether or
not vested, restricted or subject to forfeiture (the fair market value
which shall be determined as of the date of grant without taking into
consideration any provisions as to vesting or forfeiture or provisions as
to restriction on transfer) and (iv) all perquisites paid, awarded or
otherwise available to the Executive during the relevant period. The
aforesaid amount shall be payable, at the option of the Executive, his
estate or personal representative, either (A) in full immediately upon such
termination or (B) semi-monthly over the remainder of the Employment
Period.
(b) For Cause or Without Good Reason. If the Executive's employment
--------------------------------
shall be terminated, at any time prior to the Expiration Date, for Cause or
by him other than for Good Reason, the Executive shall be paid the
Executive's Annual Base Salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given. The Company shall
thereafter have no further obligations to the Executive under this
Agreement. Notwithstanding the foregoing, in the event of the termination
by Executive of his employment without Good Reason at any time within the
twelve (12) month period following the date of the occurrence of a "Change
of Control" as defined below, the Company shall pay to Executive, in
addition to Executive's Annual Base Salary through the Date of Termination,
a lump sum payment in an amount equal to the prorata portion of Executive's
Annual Base Salary which would have been payable to Executive during the
three (3) month period following the Date of Termination. In addition,
notwithstanding the foregoing or any provisions of any stock option or
stock award agreement, in the
-5-
<PAGE>
event of such termination following a "Change in Control," all unvested
Common Shares of the Company owned or held by Executive (whether restricted
or unrestricted) and all unvested options or other rights to acquire Common
Shares of the Company shall become immediately vested and no longer subject
to forfeiture or shall become fully vested and immediately exercisable for
the sixty (60) days following Executive's termination of employment, as
applicable. In the event of any conflict between the provisions of any
stock option award agreement or any agreement evidencing a grant of
restricted stock or other similar award and the foregoing provisions, the
foregoing provisions shall control. A "Change in Control" for purposes of
this Agreement shall mean the occurrence of any of the following events:
(i) any "person" or "group" of persons, as such terms are used in Sections
13 and 14 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), other than any employee benefit plan sponsored by the Company,
becomes the "beneficial owner," as such term is used in Section 13 of the
Exchange Act, of thirty percent (30%) or more of the Common Shares of the
Company issued and outstanding immediately prior to such acquisition; (ii)
any Common Shares of the Company are purchased pursuant to a tender or
exchange offer other than an offer by the Company; or (iii) the dissolution
or liquidation of the Company or the consummation of any merger or
consolidation of the Company or any sale or other disposition of all or
substantially all of its assets, if the shareholders of the Company
immediately before such transaction own, immediately after consummation of
such transaction, equity securities (other than options and other rights to
acquire equity securities) possessing less than thirty percent (30%) of the
voting power of the surviving or acquiring corporation.
(c) Other than for Cause. If the Executive's employment shall be
--------------------
terminated by the Company other than (i) for Cause or (ii) upon death or
disability, the Executive shall be paid the Executive's Annual Base Salary
plus the average prorata bonus payable pursuant to Paragraph 3(b) through
the Date of Termination. In addition, the Company will pay to the
Executive 2.99 times the Executive's Total Compensation for the immediately
preceding twelve-month period. The aforesaid amount shall be payable, at
the option of the Executive, either (i) in full immediately upon such
termination or (ii) semi-monthly over the remainder of the Employment
Period. In addition, the Executive shall be entitled, at the option of the
Executive, (i) to exercise any options to purchase Shares granted to the
Executive, whether or not then vested, in accordance with the terms of the
applicable share option agreement or plan, or (ii) to retain any Shares
awarded to the Executive whether or not vested on the Date of Termination.
(d) For Good Reason. If the Executive's employment shall be
---------------
terminated by the Executive for Good Reason, the Executive shall be paid
the Executive's Annual Base Salary plus the average prorata bonus payable
pursuant to Paragraph 3(b) through the Date of Termination. In addition,
the Company will pay to the Executive the lesser of (i) two times the
Executive's Total Compensation for
-6-
<PAGE>
the immediately preceding twelve-month period or (ii) the Executive's Total
Compensation for the preceding twelve-month period multiplied by the number
of years, including any fractions thereof, remaining until the Expiration
Date. The Executive shall be entitled, at the option of the Executive, (i)
to exercise any options to purchase Shares granted to the Executive whether
or not then vested, in accordance with the terms of the applicable share
option agreement or Plan and (ii) to retain any Shares awarded to the
Executive (whether or not then vested).
(e) Other Benefits. In addition to all other amounts payable to the
--------------
Executive under this Paragraph 8, the Executive shall be entitled to
receive all retirement benefits payable to him under the Company's benefit
plans applicable to him and any other plan or agreement relating to
retirement benefits as in effect on the Date of Termination.
(f) No Requirement to Mitigate. The Executive shall not be required
--------------------------
to mitigate the amount of any payment provided for in this Paragraph 8 by
seeking other employment or otherwise, nor shall the amount of any payment
or benefit provided for in this Paragraph 8 be reduced by any compensation
earned by him as the result of employment by, or any services provided to,
another employer (whether or not a successor to the Company) or by
retirement benefits after the Date of Termination, or otherwise.
9. Confidential Information. The Executive understands and acknowledges
------------------------
that during his employment with the Company, he will be exposed to Confidential
Information (defined below), all of which is proprietary and which will
rightfully belong to the Company. The Executive will hold in a fiduciary
capacity for the benefit of the Company all such Confidential Information
obtained by the Executive during his employment with the Company and will not,
directly or indirectly, at any time, either during or after his employment with
the Company, without the Company's prior written consent, use, publish,
disseminate, or otherwise disclose any of such Confidential Information to any
individual or entity other than the Company or its employees, except as required
in the performance of his duties for the Company. The Executive shall take all
reasonable steps to safeguard such Confidential Information and to protect such
Confidential Information against disclosure, misuse, loss or theft. The term
"Confidential Information" shall mean any information not generally known in the
relevant trade or industry which was (i) obtained from the Company or its
predecessors or (ii) learned, discovered, developed, conceived, originated or
prepared during or as a result of the performance of any services by the
Executive on behalf of the Company or its predecessors.
10. Return of Documents. All writings, records, and other documents and
-------------------
things containing any Confidential Information shall be the exclusive property
of the Company, shall not be copied, summarized, extracted from, or removed from
the premises of the Company, except in pursuit of the business of the Company
and at the direction of the
-7-
<PAGE>
Company, and shall be delivered to the Company, without retaining any copies,
upon the termination of the Executive's employment or at any time as requested
by the Company.
11. Noncompete. The Executive agrees that:
----------
(a) At all times during which the Executive is employed by the
Company, the Executive agrees to conduct all multifamily residential
development, construction, acquisition and management activities through
the Company. In addition, if Executive terminates his employment hereunder
prior to the Expiration Date without Good Reason (other than termination by
Executive of his employment within the twelve (12) month period following
the occurrence of a "Change of Control") or the Company terminates
Executive's employment hereunder for Cause, then beginning on the Date of
Termination and for a one (1) year period thereafter (such one (1) year
period, the "Noncompetition Period"), the Executive shall not, within
twenty (20) miles of (i) any of the multifamily residential properties
owned by the Company on the first day of the Noncompetition Period, (ii)
any tract of land owned by the Company with respect to which the Company
has undertaken substantial development activities and on which the Company
intends, as of the first day of the Noncompetition Period, to develop a
multifamily residential property or (iii) any property which, prior to the
first day of the Noncompetition Period, the Company had entered into a
definitive purchase agreement to acquire or had proposed to acquire for the
purposes of development thereof (the areas described in (i), (ii) and (iii)
above being collectively referred to herein as the "Restricted Area"),
directly or indirectly, engage in, or own, invest in, manage or control any
venture or enterprise engaged in, any multifamily residential real estate
development, construction, acquisition or management activities. Nothing
herein shall prohibit the Executive from being a passive owner of not more
than five percent (5%) of the outstanding stock of any class of securities
of a corporation or other entity engaged in such business which is
publicly traded, so long as he has no active participation in the business
of such corporation or other entity.
(b) If, at the time of enforcement of this Paragraph 11, a court shall
hold that the duration, scope, area or other restrictions stated herein are
unreasonable, the parties agree that reasonable maximum duration, scope,
area or other restrictions may be substituted by such court for the stated
duration, scope, area or other restrictions.
12. Remedies. The parties hereto agree that both the Company and the
--------
Executive would suffer irreparable harm from a breach by the other party of any
of the covenants or agreements contained herein. Therefore, in the event of the
actual or threatened breach by either party of any of the provisions of this
Agreement, the other party may, in addition and supplementary to other rights
and remedies existing in its favor, apply to any court of law or equity of
competent jurisdiction for specific performance
-8-
<PAGE>
and/or injunctive or other relief in order to enforce or prevent any violation
of the provisions hereof.
13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
-------------
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES.
14. Entire Agreement. This Agreement sets forth the entire agreement of
----------------
the parties with respect to the subject matter hereof and is intended to
supersede all prior employment negotiations, understandings and agreements.
Notwithstanding the foregoing, no provisions of this Agreement are intended to
or shall be deemed to supersede (except as expressly set forth in Paragraph
8(b)), alter, impair or detract from in any manner any rights or benefits
awarded to Executive or to which Executive may otherwise be entitled pursuant to
any grant or award by the Company to the Executive of stock options, restricted
Common Shares or other rights with respect to securities of the Company, whether
now existing or hereafter granted.
15. Successors; Binding Agreement.
-----------------------------
(a) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
the Executive should die while any amount would still be payable to him
hereunder if he had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's devisee, legatee or other designee or, if
there is no such designee, to the Executive's estate.
(b) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree in writing to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if
no such succession had taken place. Failure of the Company to obtain and
deliver to Executive such assumption and agreement prior to (but effective
only upon) such succession shall be a breach of this Agreement, except that
for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. As
used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement, expressly, by operation of
law, or otherwise.
16. Notices. All notices provided for in this Agreement shall be in
-------
writing, and shall be deemed to have been duly given when delivered personally
to the party to receive the same, when given by telex, telegram or mailgram, or
when mailed first class
-9-
<PAGE>
postage prepaid, by registered or certified mail, return receipt requested,
addressed to the party to receive the same at his or its address above set
forth, or such other address as the party to receive the same shall have
specified by written notice given in the manner provided for in this Paragraph
16. All notices shall be deemed to have been given as of the date of personal
delivery, transmittal or mailing thereof.
17. Survival. The Company's obligations under Paragraph 8 shall survive
--------
the termination of this Agreement. The Executive's obligations under Paragraphs
9, 10 and 11 shall survive the termination of this Agreement.
18. Severability. If any provision in this Agreement is determined to be
------------
invalid, it shall not affect the validity or enforceability of any of the other
remaining provisions hereof.
[BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
-10-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
COLUMBUS REALTY TRUST:
By: /s/ Will Cureton
-----------------------------------------
Name: Will Cureton
-------------------------------------
Title: Chief Operating Officer
------------------------------------
EXECUTIVE:
/s/ Arthur E. Lomenick
--------------------------------------------
Arthur E. Lomenick
-11-
<PAGE>
EXHIBIT 10.11
JAMES F. DUFFY
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of October
15, 1996, by and between COLUMBUS REALTY TRUST, a Texas real estate investment
trust with offices at 15851 Dallas Parkway, Suite 855, Dallas, Texas 75240 (the
"Company") and James F. Duffy, an individual residing at 3887 Ridgelake Court,
Addison, Texas 75244 (the "Executive").
WHEREAS, the Executive is currently employed by the Company as its Senior
Vice President-Construction;
WHEREAS, the Company is awarding to Executive certain stock options;
WHEREAS, the Company desires to continue to employ the Executive, and the
Executive desires to continue to be employed by the Company; and
WHEREAS, this Agreement shall supersede and replace all prior employment
agreements between the Company and the Executive.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein and for other good and valuable consideration
(including, without limitation, the award of stock options), the adequacy and
receipt of which are hereby acknowledged, the parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ the Executive, and the
----------
Executive hereby agrees to be employed by the Company, for a term (the
"Employment Period") commencing on the date hereof and expiring on December 31,
1999 (the "Expiration Date"); provided that such Expiration Date shall
automatically be extended to December 31, 2000 and each December 31 thereafter,
if written notice is not given, by Executive to the Company or by the Company to
Executive, of such party's intent not to extend or renew this Agreement at least
six (6) months prior to the Expiration Date (as such date may have been
previously extended pursuant to this Paragraph 1).
2. Duties and Responsibilities. During the Employment Period, the
---------------------------
Executive shall devote substantially all of his best efforts and all of his
business time, skill and attention to the business of the Company. Executive
shall hold the office of Senior Vice President-Construction of the Company and
shall, during the Employment Period, hold such additional offices to which
Executive may be elected by the Board of Trust Managers of the Company (the
"Board"). Executive shall perform such duties as may, from time to
<PAGE>
time be specifically enumerated by the Board, the Chairman of the Board, Chief
Executive Officer, Chief Operating Officer or any other executive officer of the
Company; provided that Executive's duties shall not be materially different than
those typically held by other comparable officers of real estate investment
trusts similar to the Company. The foregoing is not intended to preclude the
Executive from owning and managing personal investments, including real estate
investments, subject to the restrictions set forth in Paragraph 11 hereof and
provided that the time devoted to such activities shall not be material and
shall not detract from the performance of the Executive's duties hereunder.
3. Compensation.
------------
(a) Annual Base Salary. For all services rendered by the Executive
------------------
pursuant to this Agreement, the Company shall pay to the Executive an
annual base salary in the amount of $116,000 for the period from the date
hereof through December 31, 1996 (as adjusted from time to time, the
"Annual Base Salary"). Effective January 1, 1997, the Annual Base Salary
shall be increased to $125,000. Thereafter, the Annual Base Salary may be
increased as determined by the Executive Compensation Committee (herein so
called) of the Board in its sole discretion. In no event shall the Annual
Base Salary be reduced. All such compensation shall be paid bi-weekly or
at such other regular intervals, not less frequently than monthly, as the
Company may establish from time to time for executive employees of the
Company.
(b) Bonus. In addition to the compensation set forth in Paragraph
-----
3(a) above, the Executive may be awarded such bonus for each calendar year
of his employment hereunder as the Executive Compensation Committee shall
determine in their sole discretion. In determining such bonus, the
Executive understands that the Executive Compensation Committee will
consider, without limitation, the following factors with respect to the
applicable calendar year: the financial performance, business performance
and growth of the Company and the Executive's department during such
period; whether Executive's department has satisfied or achieved specified
goals; Executive's responsibilities as an officer of the Company (including
his participation in transactions of particular financial or business
significance to the Company) during such period; the total compensation
package paid to executive officers having similar responsibilities as the
Executive who are employed by real estate investment trusts which are
similar to the Company; and such other factors as the Executive
Compensation Committee may deem appropriate in its sole discretion.
(c) Withholding. The Company shall have the right to deduct and
-----------
withhold from such compensation all social security and other federal,
state and local taxes and charges which currently are or which hereafter
may be required by law to be so deducted and withheld.
-2-
<PAGE>
(d) Expenses. The Company shall promptly reimburse the Executive for
--------
all out-of-pocket expenses actually and necessarily incurred by him in the
conduct of the business of the Company against reasonable substantiation
submitted with respect thereto.
4. Benefits. The Executive shall be entitled to the following benefits:
--------
(a) participation in the Company's Profit Sharing Plan, Share Option
Plan, Management Incentive Plan, Employee Stock Purchase Plan and other
benefit plans made generally available to executives of the Company;
(b) participation in any health insurance, disability insurance,
group life insurance or other welfare benefit programs made generally
available to executives of the Company; and
(c) paid vacation each year, to be taken at such times that are
consistent with the reasonable business needs of the Company. All vacation
shall be subject to the policies and procedures of the Company.
5. Indemnification. The Company shall indemnify the Executive in the
---------------
performance of his duties pursuant to the Amended and Restated Bylaws of the
Company and to the fullest extent allowed by applicable law.
6. Termination of the Agreement.
----------------------------
(a) Disability. If the Executive shall fail, because of illness or
----------
incapacity, to render the services contemplated by this Agreement for six
successive months, the Board may determine, on the basis of the advice of
an independent qualified physician, that the Executive has become disabled.
If within thirty (30) days after the date on which written notice of such
determination is given to the Executive, the Executive shall not have
returned to the full-time performance of his duties hereunder, the Company
may terminate this Agreement and the employment of the Executive hereunder
in accordance with Paragraph 8 hereof.
(b) Death. Except as otherwise provided in this Agreement, if the
-----
Executive shall die during the term of this Agreement, this Agreement shall
be deemed to have been terminated as of the date of death of the Executive.
(c) For Cause. The Company, by notice to the Executive, may terminate
---------
this Agreement prior to the Expiration Date for Cause (as hereafter
defined). As used herein, "Cause" shall mean (i) the continued failure by
the Executive to substantially perform his duties hereunder (other than any
such failure resulting from the Executive's incapacity due to physical or
mental illness) for a period of thirty (30) days after a written demand for
performance is delivered to the
-3-
<PAGE>
Executive by the Company, specifically identifying the manner in which the
Company believes that the Executive has not satisfactorily performed his
duties, (ii) the engaging by the Executive in misconduct which is injurious
to the Company, monetarily or otherwise or (iii) the violation by the
Executive of the provisions of Paragraphs 9, 10 or 11 hereof.
(d) For Good Reason. The Executive may terminate this Agreement prior
---------------
to the Expiration Date for "Good Reason" if any of the following events
occurs without the Executive's express written consent:
(i) any assignment to Executive, without Executive's prior
written consent, of duties materially different than those
contemplated by Paragraph 2 hereof;
(ii) a reduction in the Executive's Annual Base Salary or any
material reduction in other benefits (except for bonuses or similar
discretionary payments) as in effect at the time in question, or any
other failure by the Company to comply with Paragraph 3 hereof; or
(iii) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Paragraph 15 hereof.
7. Date of Termination, Etc. "Date of Termination" shall mean the date
-------------------------
Executive's employment is terminated pursuant to Paragraph 6 above.
8. Compensation Upon Termination, During Disability or Upon Change of
------------------------------------------------------------------
Control.
- -------
(a) Disability or Death. During any period that the Executive fails
-------------------
to perform his duties hereunder as a result of incapacity due to physical
or mental illness, the Executive shall continue to receive his Annual Base
Salary at the rate in effect at the commencement of any such period until
his employment is terminated pursuant to Paragraph 6(a) hereof, together
with the average prorata bonus payable pursuant to Paragraph 3(b). If the
Executive's employment shall be terminated by reason of the Executive's
death, the Annual Base Salary together with the average prorata bonus
payable pursuant to Paragraph 3(b) which has accrued through the Date of
Termination shall be paid to the Executive's estate or personal
representative. Following termination pursuant to Paragraph 6(a) or
Paragraph 6(b) hereof, the Company will pay to the Executive, his estate or
personal representative 2.99 times the Executive's Total Compensation (as
defined below) for the immediately preceding twelve-month period to and
including the date of termination. "Total Compensation" shall mean
compensation of any nature and from any source, including, without
limitation, (i) Annual Base Salary, (ii) bonus
-4-
<PAGE>
awards (whether cash or noncash), (iii) the fair market value of any common
shares or other shares of capital stock, stock options or other equity
based compensation awarded to the Executive during the relevant twelve (12)
month period, whether or not vested, restricted or subject to forfeiture
(the fair market value which shall be determined as of the date of grant
without taking into consideration any provisions as to vesting or
forfeiture or provisions as to restriction on transfer) and (iv) all
perquisites paid, awarded or otherwise available to the Executive during
the relevant period. The aforesaid amount shall be payable, at the option
of the Executive, his estate or personal representative, either (A) in full
immediately upon such termination or (B) semi-monthly over the remainder of
the Employment Period.
(b) For Cause or Without Good Reason. If the Executive's employment
--------------------------------
shall be terminated, at any time prior to the Expiration Date, for Cause or
by him other than for Good Reason, the Executive shall be paid the
Executive's Annual Base Salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given. The Company shall
thereafter have no further obligations to the Executive under this
Agreement. Notwithstanding the foregoing, in the event of the termination
by Executive of his employment without Good Reason at any time within the
twelve (12) month period following the date of the occurrence of a "Change
of Control" as defined below, the Company shall pay to Executive, in
addition to Executive's Annual Base Salary through the Date of Termination,
a lump sum payment in an amount equal to the prorata portion of Executive's
Annual Base Salary which would have been payable to Executive during the
three (3) month period following the Date of Termination. In addition,
notwithstanding the foregoing or any provisions of any stock option or
stock award agreement, in the event of such termination following a "Change
in Control," all unvested Common Shares of the Company owned or held by
Executive (whether restricted or unrestricted) and all unvested options or
other rights to acquire Common Shares of the Company shall become
immediately vested and no longer subject to forfeiture or shall become
fully vested and immediately exercisable for the sixty (60) days following
Executive's termination of employment, as applicable. In the event of any
conflict between the provisions of any stock option award agreement or any
agreement evidencing a grant of restricted stock or other similar award and
the foregoing provisions, the foregoing provisions shall control. A
"Change in Control" for purposes of this Agreement shall mean the
occurrence of any of the following events: (i) any "person" or "group" of
persons, as such terms are used in Sections 13 and 14 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), other than any
employee benefit plan sponsored by the Company, becomes the "beneficial
owner," as such term is used in Section 13 of the Exchange Act, of thirty
percent (30%) or more of the Common Shares of the Company issued and
outstanding immediately prior to such acquisition; (ii) any Common Shares
of the Company are purchased pursuant to a tender or exchange offer other
than an offer by the Company; or (iii) the dissolution or liquidation of
the
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<PAGE>
Company or the consummation of any merger or consolidation of the Company
or any sale or other disposition of all or substantially all of its assets,
if the shareholders of the Company immediately before such transaction own,
immediately after consummation of such transaction, equity securities
(other than options and other rights to acquire equity securities)
possessing less than thirty percent (30%) of the voting power of the
surviving or acquiring corporation.
(c) Other than for Cause. If the Executive's employment shall be
--------------------
terminated by the Company other than (i) for Cause or (ii) upon death or
disability, the Executive shall be paid the Executive's Annual Base Salary
plus the average prorata bonus payable pursuant to Paragraph 3(b) through
the Date of Termination. In addition, the Company will pay to the
Executive 2.99 times the Executive's Total Compensation for the immediately
preceding twelve-month period. The aforesaid amount shall be payable, at
the option of the Executive, either (i) in full immediately upon such
termination or (ii) semi-monthly over the remainder of the Employment
Period. In addition, the Executive shall be entitled, at the option of the
Executive, (i) to exercise any options to purchase Shares granted to the
Executive, whether or not then vested, in accordance with the terms of the
applicable share option agreement or plan, or (ii) to retain any Shares
awarded to the Executive whether or not vested on the Date of Termination.
(d) For Good Reason. If the Executive's employment shall be
---------------
terminated by the Executive for Good Reason, the Executive shall be paid
the Executive's Annual Base Salary plus the average prorata bonus payable
pursuant to Paragraph 3(b) through the Date of Termination. In addition,
the Company will pay to the Executive the lesser of (i) two times the
Executive's Total Compensation for the immediately preceding twelve-month
period or (ii) the Executive's Total Compensation for the preceding twelve-
month period multiplied by the number of years, including any fractions
thereof, remaining until the Expiration Date. The Executive shall be
entitled, at the option of the Executive, (i) to exercise any options to
purchase Shares granted to the Executive whether or not then vested, in
accordance with the terms of the applicable share option agreement or Plan
and (ii) to retain any Shares awarded to the Executive (whether or not then
vested).
(e) Other Benefits. In addition to all other amounts payable to the
--------------
Executive under this Paragraph 8, the Executive shall be entitled to
receive all retirement benefits payable to him under the Company's benefit
plans applicable to him and any other plan or agreement relating to
retirement benefits as in effect on the Date of Termination.
(f) No Requirement to Mitigate. The Executive shall not be required
--------------------------
to mitigate the amount of any payment provided for in this Paragraph 8 by
seeking other employment or otherwise, nor shall the amount of any payment
or benefit provided for in this Paragraph 8 be reduced by any compensation
earned by him
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<PAGE>
as the result of employment by, or any services provided to, another
employer (whether or not a successor to the Company) or by retirement
benefits after the Date of Termination, or otherwise.
9. Confidential Information. The Executive understands and acknowledges
------------------------
that during his employment with the Company, he will be exposed to Confidential
Information (defined below), all of which is proprietary and which will
rightfully belong to the Company. The Executive will hold in a fiduciary
capacity for the benefit of the Company all such Confidential Information
obtained by the Executive during his employment with the Company and will not,
directly or indirectly, at any time, either during or after his employment with
the Company, without the Company's prior written consent, use, publish,
disseminate, or otherwise disclose any of such Confidential Information to any
individual or entity other than the Company or its employees, except as required
in the performance of his duties for the Company. The Executive shall take all
reasonable steps to safeguard such Confidential Information and to protect such
Confidential Information against disclosure, misuse, loss or theft. The term
"Confidential Information" shall mean any information not generally known in the
relevant trade or industry which was (i) obtained from the Company or its
predecessors or (ii) learned, discovered, developed, conceived, originated or
prepared during or as a result of the performance of any services by the
Executive on behalf of the Company or its predecessors.
10. Return of Documents. All writings, records, and other documents and
-------------------
things containing any Confidential Information shall be the exclusive property
of the Company, shall not be copied, summarized, extracted from, or removed from
the premises of the Company, except in pursuit of the business of the Company
and at the direction of the Company, and shall be delivered to the Company,
without retaining any copies, upon the termination of the Executive's employment
or at any time as requested by the Company.
11. Noncompete. The Executive agrees that:
----------
(a) At all times during which the Executive is employed by the
Company, the Executive agrees to conduct all multifamily residential
development, construction, acquisition and management activities through
the Company. In addition, if Executive terminates his employment hereunder
prior to the Expiration Date without Good Reason (other than termination by
Executive of his employment within the twelve (12) month period following
the occurrence of a "Change of Control") or the Company terminates
Executive's employment hereunder for Cause, then beginning on the Date of
Termination and for a one (1) year period thereafter (such one (1) year
period, the "Noncompetition Period"), the Executive shall not, within
twenty (20) miles of (i) any of the multifamily residential properties
owned by the Company on the first day of the Noncompetition Period, (ii)
any tract of land owned by the Company with respect to which the Company
has undertaken substantial development activities and on which the Company
intends, as of the first day of the Noncompetition Period, to develop a
multifamily residential
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<PAGE>
property or (iii) any property which, prior to the first day of the
Noncompetition Period, the Company had entered into a definitive purchase
agreement to acquire or had proposed to acquire for the purposes of
development thereof (the areas described in (i), (ii) and (iii) above being
collectively referred to herein as the "Restricted Area"), directly or
indirectly, engage in, or own, invest in, manage or control any venture or
enterprise engaged in, any multifamily residential real estate development,
construction, acquisition or management activities. Nothing herein shall
prohibit the Executive from being a passive owner of not more than five
percent (5%) of the outstanding stock of any class of securities of a
corporation or other entity engaged in such business which is publicly
traded, so long as he has no active participation in the business of such
corporation or other entity.
(b) If, at the time of enforcement of this Paragraph 11, a court shall
hold that the duration, scope, area or other restrictions stated herein are
unreasonable, the parties agree that reasonable maximum duration, scope,
area or other restrictions may be substituted by such court for the stated
duration, scope, area or other restrictions.
12. Remedies. The parties hereto agree that both the Company and the
--------
Executive would suffer irreparable harm from a breach by the other party of any
of the covenants or agreements contained herein. Therefore, in the event of the
actual or threatened breach by either party of any of the provisions of this
Agreement, the other party may, in addition and supplementary to other rights
and remedies existing in its favor, apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce or prevent any violation of the provisions hereof.
13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
-------------
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES.
14. Entire Agreement. This Agreement sets forth the entire agreement of
----------------
the parties with respect to the subject matter hereof and is intended to
supersede all prior employment negotiations, understandings and agreements.
Notwithstanding the foregoing, no provisions of this Agreement are intended to
or shall be deemed to supersede (except as expressly set forth in Paragraph
8(b)), alter, impair or detract from in any manner any rights or benefits
awarded to Executive or to which Executive may otherwise be entitled pursuant to
any grant or award by the Company to the Executive of stock options, restricted
Common Shares or other rights with respect to securities of the Company, whether
now existing or hereafter granted.
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<PAGE>
15. Successors; Binding Agreement.
-----------------------------
(a) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
the Executive should die while any amount would still be payable to him
hereunder if he had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's devisee, legatee or other designee or, if
there is no such designee, to the Executive's estate.
(b) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree in writing to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if
no such succession had taken place. Failure of the Company to obtain and
deliver to Executive such assumption and agreement prior to (but effective
only upon) such succession shall be a breach of this Agreement, except that
for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. As
used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement, expressly, by operation of
law, or otherwise.
16. Notices. All notices provided for in this Agreement shall be in
-------
writing, and shall be deemed to have been duly given when delivered personally
to the party to receive the same, when given by telex, telegram or mailgram, or
when mailed first class postage prepaid, by registered or certified mail, return
receipt requested, addressed to the party to receive the same at his or its
address above set forth, or such other address as the party to receive the same
shall have specified by written notice given in the manner provided for in this
Paragraph 16. All notices shall be deemed to have been given as of the date of
personal delivery, transmittal or mailing thereof.
17. Survival. The Company's obligations under Paragraph 8 shall survive
--------
the termination of this Agreement. The Executive's obligations under Paragraphs
9, 10 and 11 shall survive the termination of this Agreement.
18. Severability. If any provision in this Agreement is determined to be
------------
invalid, it shall not affect the validity or enforceability of any of the other
remaining provisions hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
COLUMBUS REALTY TRUST:
By: /s/ WILL CURETON
-----------------------------------------
Name: Will Cureton
-------------------------------------
Title: Chief Operating Officer
------------------------------------
EXECUTIVE:
/s/ JAMES F. DUFFY
--------------------------------------------
James F. Duffy
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<PAGE>
EXHIBIT 10.27
COLUMBUS REALTY TRUST
LONG-TERM MANAGEMENT INCENTIVE PLAN
PERFORMANCE-BASED STOCK AND DIVIDEND EQUIVALENT
AWARD AGREEMENT
I
PURPOSE
-------
The purpose of this Award Agreement (the "Award Agreement") is to reward
the Participating Grantee (as defined below) for his or her service to Columbus
Realty Trust and its subsidiaries (collectively, the "Company"), to promote the
interests of Participating Grantee in the Company and to stimulate his or her
endeavors on behalf of the Company and strengthen the desire of such individual
to remain with the Company, thus advancing the interests of the Company and its
shareholders by providing an incentive to those responsible for the success and
growth of the Company.
II
EFFECTIVE DATE
--------------
This Award Agreement is dated as of November 15, 1996 (the "Effective
Date").
III
DEFINITIONS
-----------
For purposes of this Award Agreement, the following terms will have the
definitions set forth below:
(a) Board: The Board of Trust Managers of the Company or any
-----
successor board of directors or other persons serving in such capacity on behalf
of the Company.
(b) Cause: (A) the willful and continued failure by the Participating
-----
Grantee to substantially perform the duties of his or her position with the
Company (other than any such failure resulting from the Participating Grantee's
incapacity due to physical or mental illness or any such actual or anticipated
failure resulting from termination by the Participating Grantee for Good Reason
as defined below) for a period of 30 days after written demand for substantial
performance is delivered to Participating Grantee by the Company, specifically
identifying the manner in which the Company believes the Participating Grantee
has not substantially performed his duties, (B) willful engaging by the
Participating Grantee in conduct which is demonstrably and materially injurious
to the Company, monetarily or otherwise or (C) the willful violation by
Participating Grantee of the provisions of Paragraph 13 of the Employment
Agreement. For purposes of this definition, no act, or failure to act, on the
Participating Grantee's part shall be considered "willful" unless done, or
omitted to be done, by him not in good faith and without
<PAGE>
reasonable belief that his action or omission was in the best interest of the
Company and its shareholders. Notwithstanding the foregoing, the Participating
Grantee shall not be deemed to have been terminated for proper "Cause" unless
and until there shall have been delivered to the Participating Grantee a copy of
a resolution duly adopted by the affirmative vote of not less than three-
quarters (3/4) of all of the members of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice to the Participating
Grantee and an opportunity for the Participating Grantee, together with counsel
of his choosing, to be heard before the Board not less than 10 business days
after the giving of such notice), finding that in the good faith opinion of the
Board, the Participating Grantee conducted himself as set forth above in clause
(A), (B) or (C) and specifying the particulars of such conduct in detail.
(c) Change in Control: The occurrence at any time during the term of
-----------------
this Award Agreement of any of the following events:
(i) The Company is merged, consolidated or reorganized into or with
another corporation or other legal entity, and, as a result of
such merger, consolidation or reorganization, less than a
majority of the combined voting power of the then outstanding
securities of the Company or such corporation or other legal
entity immediately after such transaction are held in the
aggregate by the holders of voting stock of the Company
immediately prior to such transaction;
(ii) The Company sells all or substantially all of its assets to any
other corporation or other legal entity, of which less than a
majority of the combined voting power of the then outstanding
securities (entitled to vote generally in the election of
directors or persons performing similar functions on behalf of
such other corporation or legal entity) of such other
corporation or legal entity are held in the aggregate by the
holders of voting stock of the Company immediately prior to such
sale;
(iii) A Schedule 13D or Schedule 14D-1 (or any successor schedule,
form or report), each as promulgated pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act") is filed,
disclosing that any person (as the term "person" is used in
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has
become the beneficial owner (as the term "beneficial owner" is
defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of securities representing
25% or more of the combined voting power of the then-outstanding
securities entitled to vote generally in the election of
directors of the Company ("Voting Stock"); or
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<PAGE>
(iv) During any one (1) year period, individuals who at the beginning
of any such period constitute the Board cease for any reason to
constitute at least a majority thereof, unless the election, or
the nomination for election by the Company's shareholders, of
each member of the Board first elected during such period was
approved by a vote of at least two-thirds of the members of the
Board then still in office who were members of the Board at the
beginning of any such period.
Notwithstanding the foregoing provisions, a "Change in Control" shall not be
deemed to have occurred for purposes of this Award Agreement solely because (i)
the Company, (ii) a corporation or other legal entity in which the Company
directly or indirectly beneficially owns 50% or more of the voting securities of
such entity, or (iii) any Company-sponsored employee stock ownership plan or any
other employee benefit plan of the Company, either files or becomes obligated to
file a report or a proxy statement under or in response to Schedule 13D,
Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule, form or
report or item therein) under the Exchange Act, disclosing beneficial ownership
by it of shares of voting stock, whether in excess of 25% or otherwise, or
because the Company reports that a change in control of the Company has or may
have occurred or will or may occur in the future by reason of such beneficial
ownership.
(d) Columbus Cost of Funds: For any period, the Company's average
----------------------
rate of interest paid on all funded indebtedness.
(e) Columbus Cumulative Total Return: For a specified period, the
--------------------------------
total return on the Common Shares computed solely as to the Common Shares in
accordance with the procedures of the National Association of Real Estate
Investment Trusts ("NAREIT") specified on Exhibit "A" attached hereto,
-----------
calculated to ten decimal points.
(f) Columbus Total Annual Return: For each calendar year, the total
----------------------------
return for the Common Shares computed solely as to the Common Shares in
accordance with the procedures of NAREIT specified on Exhibit "A" attached
-----------
hereto, calculated to ten decimal points.
(g) Commission: The Securities and Exchange Commission.
----------
(h) Committee: The committee which has responsibility for
---------
administering the Plan.
(i) Common Shares: The common shares of beneficial interest, par
-------------
value $.01 per share, of the Company or such other securities into which such
Common Shares may be converted, exchanged or otherwise reclassified.
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<PAGE>
(j) Company: Columbus Realty Trust, a Texas real estate investment
-------
trust.
(k) Disability: The determination by the Company, upon the advice of
----------
an independent qualified physician, that the Participating Grantee has become
physically or mentally incapable of performing the duties of his or her position
with the Company and such disability has disabled the Participating Grantee for
a period of six successive months.
(l) Dividend Equivalent: For each calendar year, or applicable
-------------------
portion thereof, the product of (i) the aggregate amount of dividends (whether
cash or noncash) declared per outstanding Common Share during the applicable
calendar year, or portion thereof, and (ii) the number of Shares potentially
issuable to Participating Grantee hereunder, as such number may be adjusted from
time to time in accordance with Article IX of this Award Agreement.
(m) Dividend Equivalent Payment Criteria: With respect to each
------------------------------------
calendar year, the Columbus Total Annual Return, determined on each Measurement
Date for the calendar year ending immediately prior to such Measurement Date,
shall exceed (by at least .00000001%) the NAREIT Equity Apartment Total Return
Index for such calendar year.
(n) Dividend Reinvestment Plan: The Company's Dividend Reinvestment
--------------------------
and Share Purchase Plan, as the same shall be amended from time to time.
(o) Employment Agreement: The Employment Agreement dated as of the
--------------------
date hereof between the Company and the Participating Grantee, as in effect on
the date hereof. References herein to the Employment Agreement shall remain in
full force and effect, whether or not such Employment Agreement shall remain in
effect or be modified or amended in any manner.
(p) Good Reason: (i) the assignment to the Participating Grantee of
-----------
any duties materially different from those contemplated by Paragraph 2 of
Participating Grantee's Employment Agreement, or any limitation of the powers of
the Participating Grantee in any respect not contemplated by Paragraph 2
thereof; (ii) any removal or failure by management to nominate, or, if
nominated, by the shareholders to reelect, the Participating Grantee to the
Board of Trust Managers, except in connection with termination of the
Participating Grantee's employment for Cause or by reason of death or
Disability; (iii) any removal or failure by the Board to reappoint the
Participating Grantee as a member of the Executive Committee or any comparable
committee of the Board, except in connection with termination of the employment
for Cause or by reason of death or Disability; (iv) a material reduction in the
Participating Grantee's annual base salary or other benefits (except for bonuses
or similar discretionary payments) as in effect at the time in question, or any
other failure by the Company to comply with Paragraph 3 of Participating
Grantee's Employment Agreement; or (v) any purported termination of the
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<PAGE>
Participating Grantee's employment which is not effected pursuant to a Notice of
Termination or a Notice of Expiration (as defined in the Employment Agreement)
satisfying the requirements of the Employment Agreement.
(q) Measurement Date(s): The 15th day of January of each of 1998,
-------------------
1999, 2000, 2001 and 2002, provided that if such date is not a business day, the
Measurement Date shall be the next succeeding business day.
(r) NAREIT Equity Apartment Total Return Series: The statistical
-------------------------------------------
calculation determined by NAREIT of the weighted average total return per common
share for all publicly-traded equity residential apartment real estate
investment trusts, calculated to ten decimal points, determined as of December
31 of a specified year for the preceding one-year, three-year or five-year
periods, as applicable, in accordance with the procedures described on Exhibit
-------
"A" hereto, provided that if NAREIT (or any other comparable REIT industry
- ---
organization) no longer prepares such index, the Company shall cause such
calculation to be performed by its independent public accountants in accordance
with procedures described on Exhibit "A" hereto.
-----------
(s) Participating Grantee: The individual who has signed this Award
---------------------
Agreement and is entitled, subject to the terms and conditions hereof, to
receive the Shares pursuant to the grant under this Award Agreement.
(t) Plan: The Columbus Realty Trust Long-Term Management Incentive
----
Plan, as the same may be amended from time to time.
(u) Registration Statement: The Registration Statement on Form S-8
----------------------
(Registration No. 333-02276), filed with and declared effective by the
Commission, as such Registration Statement may be amended and supplemented from
time to time.
(v) Shares: The Common Shares which may be granted to the
------
Participating Grantee pursuant to this Award Agreement.
(w) Vesting Criteria: (a) With respect to the January 15, 2000
----------------
Measurement Date, the Columbus Total Cumulative Return for the three calendar
years ending on the December 31 immediately preceding such Measurement Date
shall exceed (by at least .00000001%) the NAREIT Equity Apartment Total Return
Series for such period plus 2.0% or (b) with respect to the January 15, 2002
Measurement Date, the Columbus Total Cumulative Return for the five calendar
years ending on the December 31 immediately preceding such Measurement Date
shall exceed (by at least .00000001%) the NAREIT Equity Apartment Total Return
Series for such period.
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<PAGE>
IV
ADMINISTRATION
--------------
This Award Agreement shall be administered by the Committee whose
determinations and interpretations made in good faith on matters relating to the
Award Agreement shall be conclusive and final.
V
TERMS OF GRANT OF SHARES
------------------------
On January 15, 2000, if the Vesting Criteria has been satisfied, the
Company shall issue to the Participating Grantee [AMOUNT] Shares, subject to
adjustment as provided in Article IX of this Award Agreement. If the Vesting
Criteria has not been satisfied on January 15, 2000, then on January 15, 2002,
if the Vesting Criteria has been satisfied, the Company shall issue to the
Participating Grantee [AMOUNT] Shares, subject to adjustment as provided in
Article IX of this Award Agreement.
In addition to the foregoing, in the event that, prior to the date on
which the Shares become vested and are to be issued in accordance with the
foregoing provisions of this Article V, either (i) the Participating Grantee's
employment with the Company is terminated by the Company without Cause, or (ii)
a Change of Control occurs, all Shares shall immediately vest and be issued on
the date of such occurrence.
In addition to the foregoing, in the event that, prior to the date on which
the Shares become vested and are to be issued in accordance with the foregoing
provisions of this Article V, either (i) the Participating Grantee's employment
with the Company is terminated as a result of his death or Disability or (ii)
the Participating Grantee terminates his employment with the Company with Good
Reason, the number of Shares equal to the product of (i) the percentage of the
Dividend Equivalent required to be paid to Participating Grantee with respect to
the Company's most recently completed calendar year preceding the date of
termination, determined in accordance with Section VI hereof, and (ii) the total
number of Shares issuable pursuant to this Award Agreement (as the same may have
been adjusted), shall immediately vest and be issued on the date of such
termination.
Upon satisfaction of the Vesting Criteria on either January 15, 2000
or January 15, 2002, or the occurrence of any of the events described above in
this Article V entitling Participating Grantee to receive all or any portion of
the Shares, the Company shall issue a certificate in the name of the
Participating Grantee for the applicable number of Shares to be issued pursuant
to this Award Agreement. Such Shares shall be issued pursuant to the
Registration Statement, free of restriction (except for any restriction
resulting solely as a result of Participating Grantee's status as an executive
officer or Trust Manager of the Company) and shall, on the date of issuance, be
listed on the New York Stock
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<PAGE>
Exchange, or such other national securities exchange on which the Company's
Common Shares are then listed.
Commencing on the date the Vesting Criteria is satisfied or on the
date of the occurrence of any of the events described above in this Article V
entitling Participating Grantee to receive all or a specified portion of the
Shares, the Participating Grantee shall have all of the rights of a shareholder
of the Company with respect to such Shares, including the right to vote such
Shares and receive the dividends and other distributions paid or made with
respect to such Shares.
VI
DIVIDEND EQUIVALENT PAYMENTS
----------------------------
On each Measurement Date the Company shall pay to the Participating
Grantee, in cash or by certified check, an amount equal to a specified
percentage of the Dividend Equivalent, such percentage (hereinafter, the
"Applicable Percentage") to be as follows:
(a) If the Dividend Equivalent Payment Criteria has been achieved for
calendar year 1997, 30% of the Dividend Equivalent for such calendar
year shall be paid to Participating Grantee on the January 15, 1998
Measurement Date and, in the event the Dividend Equivalent Payment
Criteria is not achieved for a subsequent calendar year, 30% of the
---
Dividend Equivalent for such calendar year shall continue to be paid
to Participating Grantee on each subsequent Measurement Date until (i)
the Dividend Equivalent Payment Criteria is again satisfied or (ii)
the Shares become issuable or Participating Grantee's rights with
respect thereto are terminated in accordance with the terms hereof.
(b) If the Dividend Equivalent Payment Criteria has been achieved for
calendar year 1998, 45% of the Dividend Equivalent for such calendar
year shall be paid to Participating Grantee on the January 15, 1999
Measurement Date and, in the event the Dividend Equivalent Payment
Criteria is not achieved for a subsequent calendar year, 45% of the
---
Dividend Equivalent for such calendar year shall continue to be paid
to Participating Grantee on each subsequent Measurement Date until (i)
the Dividend Equivalent Payment Criteria is again satisfied or (ii)
the Shares become issuable or Participating Grantee's rights with
respect thereto are terminated in accordance with the terms hereof.
(c) If the Dividend Equivalent Payment Criteria has been achieved for
calendar year 1999, 60% of the Dividend Equivalent for such calendar
year shall be paid to Participating Grantee on the January 15, 2000
Measurement Date and, in the event the Dividend Equivalent Payment
Criteria is not achieved in a subsequent calendar year, 60% of the
---
Dividend Equivalent for such calendar year shall continue to be paid
to Participating Grantee on each
-7-
<PAGE>
subsequent Measurement Date until (i) the Dividend Equivalent Payment
Criteria is again satisfied or (ii) the Shares become issuable or
Participating Grantee's rights with respect thereto are terminated in
accordance with the terms hereof.
(d) If the Dividend Equivalent Payment Criteria has been achieved for
calendar year 2000, 75% of the Dividend Equivalent for such calendar
year shall be paid to the Participating Grantee on the January 15,
2001 Measurement Date and, in the event the Dividend Equivalent
Payment Criteria is not achieved in a subsequent calendar year, 75% of
---
the Dividend Equivalent shall continue to be paid to Participating
Grantee on each subsequent Measurement Date until (i) the Dividend
Equivalent Payment Criteria is again satisfied or (ii) the Shares
become issuable or Participating Grantee's rights with respect thereto
are terminated in accordance with the terms hereof.
(e) If the Dividend Equivalent Payment Criteria has been achieved for
calendar year 2001, 100% of the total applicable Dividend Equivalent
for such calendar year shall be paid to Participating Grantee on the
January 15, 2002 Measurement Date.
In addition to the foregoing payments of the Dividend Equivalent, on each
Measurement Date the Company shall pay to Participating Grantee, in cash or by
certified check, an additional amount (the "Interest Component") equal to the
amount of interest which would have been earned if the Shares (or the Applicable
Percentage thereof) had been issued on the date hereof and all dividends which
would have been paid thereon had been invested on each of the Company's dividend
payment dates at a rate equal to Columbus' Cost of Funds. Such Interest
Component shall be calculated for each calendar quarter during the calendar year
immediately preceding the applicable Measurement Date by multiplying (i) the
Applicable Percentage by (ii) the Dividend Equivalent for such calendar quarter
and all previous calendar quarters during the applicable calendar year and by
(iii) Columbus' Cost of Funds for such quarter.
If all the Shares awarded hereunder are to be issued to Participating
Grantee pursuant to the first or second paragraph of Article V hereof, then
Participating Grantee shall be entitled to receive and the Company shall pay to
Participating Grantee, in cash or by certified check, on the date such Shares
are to be issued, an amount equal to the Dividend Equivalent for all calendar
years which was not previously payable to Participating Grantee in accordance
with the requirements of this Article VI, plus an additional amount (the
"Reinvestment Component") equal to the value (based upon the closing price of
the Common Shares on the NYSE on the date the Shares become vested and are to be
issued pursuant to the first or second paragraph of Article V hereof) of the
number of Common Shares which could have been purchased with dividends payable
on the Shares if the Shares had been issued on the date hereof and such
dividends (excluding the amount of any Dividend Equivalent previously paid to
Participating Grantee
-8-
<PAGE>
but including the dividends which would have been payable on all Common Shares
which could have been purchased with the dividends payable on the Shares) had
been invested and reinvested continuously on each dividend payment date in
Common Shares pursuant to the Dividend Reinvestment Plan.
If less than all Shares awarded hereunder are to be issued to Participating
Grantee pursuant to the third paragraph of Article V, then Participating Grantee
shall be entitled to receive and the Company shall pay to Participating Grantee,
in cash or by certified check, on the date such Shares are to be issued, an
amount equal to the excess of (a) the product of (i) the Applicable Percentage
with respect to the Company's most recently completed calendar year preceding
the date of termination and (ii) the aggregate Dividend Equivalent for all
calendar years (or portions thereof) preceding the date of termination, over (b)
the aggregate amount of the Dividend Equivalent paid by the Company to
Participating Grantee for all calendar years prior to the date on which such
Shares become issuable, plus an amount equal to the Reinvestment Component
determined in accordance with the immediately preceding paragraph assuming the
investment and reinvestment continuously in the Dividend Reinvestment Plan of
such excess amount payable to Participating Grantee.
VII
REGISTRATION OF SHARES
----------------------
The Company covenants and agrees with Participating Grantee that, at all
times during which all or any portion of Shares may be issuable to Participating
Grantee hereunder, to (i) cause a sufficient number of Shares to be reserved for
issuance pursuant to the Plan and (ii) cause the Registration Statement to
remain effective with the Commission.
The Company further covenants and agrees with Participating Grantee that it
shall, within thirty (30) days of receipt of the written request of
Participating Grantee delivered to the Secretary of the Company, cause to be
filed with the Commission a registration statement (on Form S-3 or other
appropriate form prescribed by the Commission) in the event such registration
statement is necessary to enable Participating Grantee to freely resell to the
public the Shares issued or issuable hereunder. The Company shall use its best
efforts to cause the Commission to declare such registration statement effective
and shall maintain such effectiveness until the earlier to occur of (i) the
resale by Participating Grantee of all Shares issuable hereunder; (ii) the
forfeiture or termination of all rights of Participating Grantee to receive the
Shares in accordance with the terms of this Award Agreement; or (iii) the
expiration of five (5) years from the date of the effectiveness of such
registration statement.
-9-
<PAGE>
VIII
TERMINATION OF RIGHTS
---------------------
In the event that the Participating Grantee's employment with the
Company is terminated for Cause or the Participating Grantee voluntarily leaves
the employ of the Company (other than with Good Reason) prior to the date on
which the Shares become vested and are to be issued in accordance with Article V
hereof, all rights of Participating Grantee hereunder with respect to the
issuance of Shares, the payment of any portion of the Dividend Equivalent for
any year, or otherwise shall terminate and be of no further effect.
In the event that the Vesting Criteria has not been satisfied on or
before January 15, 2002, all rights of Participating Grantee hereunder with
respect to the issuance of the Shares shall terminate and be of no further force
and effect.
In the event that, as a result of (i) termination of Participating
Grantee's employment with the Company as a result of death or Disability or (ii)
termination by Participating Grantee of his employment with the Company for Good
Reason, a specified percentage (but less than 100%) of the Shares vest and are
to be issued pursuant to Article V hereof, Participating Grantee shall have no
further rights with respect to the issuance of the balance of the Shares or the
payment of any portion of the Dividend Equivalent except as specifically
provided in Article VI.
IX
ADJUSTMENT OF SHARES
--------------------
In the event that, prior to the delivery of all the Shares, there
shall be any change in the outstanding Common Shares of the Company, through
reorganization, recapitalization, reclassification, share dividend, share split,
amendment to the Company's Declaration of Trust, reverse share split, or
otherwise, an appropriate and proportionate adjustment shall be made in the
number of Shares to be issued hereunder. Such adjustments shall be made by the
Committee in good faith.
X
WITHHOLDING OF APPLICABLE TAXES
-------------------------------
The Company shall have the right to withhold from any transfer or
payment made to the Participating Grantee under this Award Agreement, in cash or
in stock, all federal, state, city or other taxes as may be required pursuant to
any statute or governmental regulation or ruling. In connection with such
withholding, the Company may make any arrangement consistent with this Award
Agreement as it may deem appropriate.
-10-
<PAGE>
XI
NO AGREEMENT OF EMPLOYMENT OR SERVICE
-------------------------------------
Nothing in this Award Agreement shall be construed as giving the
Participating Grantee an agreement or understanding, express or implied, that
the Company shall continue the employment or service of such individual.
XII
AMENDMENT OF THE AWARD AGREEMENT
--------------------------------
The Award Agreement may be amended in whole or in part by the
Committee in its sole discretion, provided that no such action shall adversely
affect or alter any right or obligation existing prior to such amendment.
XIII
BENEFIT OF AWARD AGREEMENT
--------------------------
The terms and provisions of this Award Agreement shall be binding
upon, and shall inure to the benefit of, the Participating Grantee and his
executors or administrators, heirs, and personal and legal representatives.
XIV
GOVERNING LAW
-------------
THE LAW OF THE STATE OF TEXAS SHALL BE CONTROLLING IN ALL MATTERS
RELATING TO THIS AWARD AGREEMENT, AND THIS AWARD AGREEMENT AND ALL MATTERS
PERTAINING HERETO SHALL BE DEEMED TO BE PERFORMABLE IN DALLAS COUNTY, TEXAS.
XV
SEVERABILITY
------------
If all or any part of the Award Agreement is declared by any court or
governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not serve to invalidate any portion of the Award Agreement not
declared to be unlawful or invalid. Any article or part of an article so
declared to be unlawful or invalid shall, if possible, be construed in a manner
which will give effect to the terms of such article or part of an article to the
full extent possible while remaining lawful and valid.
-11-
<PAGE>
DATED: November 15, 1996
COLUMBUS REALTY TRUST
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
PARTICIPATING GRANTEE:
----------------------------------------
NAME
Address:
-12-
<PAGE>
EXHIBIT 10.30
THIRD MODIFICATION TO THE
SECOND AMENDED AND RESTATED LOAN AGREEMENT
------------------------------------------
This Third Modification to the Second Amended and Restated Loan Agreement
(this "Modification") is entered into as of November 29, 1996, between COLUMBUS
------------
REALTY TRUST ("Borrower"); BANK ONE, TEXAS, NATIONAL ASSOCIATION ("Bank One"),
-------- -------- -
individually and as agent for Banks; BANK UNITED OF TEXAS FSB ("United"); WELLS
------
FARGO REALTY ADVISORS FUNDING, INCORPORATED ("Wells"); TEXAS COMMERCE BANK
-----
NATIONAL ASSOCIATION ("TCB"); and COMERICA BANK - TEXAS ("Comerica"). Unless
--- --------
otherwise specified, all capitalized terms used herein shall have the meanings
assigned to them in the Second Amended and Restated Loan Agreement dated as of
February 3, 1995, between Borrower, Bank One, United, Wells, TCB, and Comerica,
as subsequently modified (the "Loan Agreement").
--------------
RECITALS:
--------
Borrower has requested that the Loan Agreement be modified to permit the
sale of individual condominium units at the Springstead Condominiums in Dallas,
Texas and the Villas at Valley Ranch in Irving, Texas (collectively, the "Units"
-----
and singularly, a "Unit") and the release of the Liens created by a Deed of
----
Trust encumbering such Units. Banks have agreed to modify the Loan Agreement as
provided herein.
AGREEMENT
---------
For valuable consideration, whose receipt and sufficiency are acknowledged,
Borrower and Banks agree as follows:
1. Release of Liens. Provided (a) no Event of Default then exists or will
----------------
exist after the sale and release of the Unit in question, and (b) Borrower
provides Agent with any requested endorsements to the Title Insurance and
complies with the other conditions set forth in Section 10.1 of the Loan
Agreement, at Borrower's cost, upon written request by Borrower, Agent shall
release the Liens created by a Deed of Trust encumbering a Unit in the
Springstead Condominiums or the Villas at Valley Ranch in accordance with the
terms and provisions of Section 10.1 of the Loan Agreement, provided that no
Release Price shall be due for such release of a Unit unless all the Units of
such Project have been sold.
2. Reduction in Collateral Value. Upon Agent's release of its Liens
-----------------------------
created by a Deed of Trust encumbering a Unit in the Springstead Condominiums or
the Villas at Valley Ranch, the Collateral Value shall be reduced by the
following amounts for each Unit:
1
<PAGE>
Reduction in Collateral
Property Value Per Unit
-------- --------------
Springstead Condominiums $45,000
Villas at Valley Ranch $55,000
3. Working Capital Loan. Section 2.2(a) of the Loan Agreement shall be
--------------------
amended to read as follows:
(a) Working Capital Commitment. The aggregate principal amount of all
--------------------------
Advances at any one time outstanding under this Section 2.2 shall not exceed the
lesser of the following amounts: (1) $8,000,000 and (2) the difference between
(A) the Maximum Balance Limit and (B) the then-outstanding principal balance of
the Project Loan.
4. Validity of Banks' Rights. None of the liens, security interests, or
-------------------------
rights securing the payment of the Loan are released, diminished or affected
hereby and they are recognized to be valid and subsisting. Borrower represents
and warrants to Banks, to the best of its knowledge, that there exists, as of
the date hereof, no default and that all representations and warranties in the
Loan Documents are true and correct in all material respects as of the date
hereof. Borrower acknowledges that there are no offsets, claims, or defenses to
its obligations under the Loan Document and hereby waives all claims, defenses,
and rights of offset that it may have against Banks as of the date hereof (if
any), whether known or unknown, and whether arising under tort, contract, at law
or in equity.
5. Binding Effect; Governing Law; Counterparts. This Modification shall be
-------------------------------------------
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns and shall be governed by Texas law. Except as modified
hereby, the Loan Documents shall remain in effect. This Agreement may be
executed in multiple counterparts, each of which shall constitute an original,
but all of which shall constitute one document.
6. Final Agreement. THIS MODIFICATION AND THE LOAN DOCUMENTS REPRESENT THE
---------------
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
2
<PAGE>
Executed as of the date first above written.
COLUMBUS REALTY TRUST, a Texas real estate
investment trust
By: /s/ J Michael Lewis
-----------------------------------------
Senior Vice President and Treasurer
Address: 15851 N. Dallas Parkway, Suite 855
Dallas, Texas 75248
Attn.: J. Michael Lewis, Senior Vice
President and Treasurer
Telephone: (214) 77O-5182
Fax: (214) 770-5109
BANK ONE, TEXAS, NATIONAL ASSOCIATION, as
Agent and Bank
By: /s/ Dale W. Renner
------------------------------------------
Dale W. Renner, Vice President
Address: 1717 Main Street, Fourth Floor
Dallas, Texas 75201
Attn.: Dale W. Renner
Telephone: (214) 290-2891
Fax: (214) 290-2275
COMERICA BANK - TEXAS, as Bank
BY:__________________________________________
Vice President
Address: 1601 Elm Street, Second Floor
Dallas, Texas 75201
Attn.: Daniel P. Fryman
Telephone: (214) 979-8377
Fax: (214) 979-8383
3
<PAGE>
WELLS FARGO BANK, NATIONAL ASSOCIATION, F/K/A:
WELLS FARGO REALTY ADVISORS FUNDING,
INCORPORATED, as Bank
By:___________________________________________
Vice President
By: N/A
__________________________________________
Assistant Secretary
Address: Wells Fargo Bank, National Association
Attn.: Loan Administration Manager
12377 Merit Drive, Suite 300
Dallas, Texas 75251
Telephone: (214) 661-8980, ext. 607
Fax: (214) 386-4723
and
Address: Wells Fargo Bank, National Association
Attn.: Chief Credit Officer-Real
Estate Group
420 Montgomery Street, Sixth Floor
San Francisco, California 94163
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Bank
By:__________________________________________
Name:________________________________________
Title:_______________________________________
Address: 2200 Ross Avenue, Seventh Floor
Dallas, Texas 75201
Attn.: Barry J. Olson
Telephone: (214) 922-2866
Fax: (214) 922-2290
4
<PAGE>
BANK UNITED OF TEXAS FSB, as Bank
By: /s/ William B. McDonald
------------------------------------------
Vice President
Address: 3200 Southwest Freeway, Suite 1900
Houston, Texas 77027
Attn.: William B. McDonald
Telephone: (713) 965-6721
Fax: (713) 965-6604
5
<PAGE>
EXHIBIT 23.1
We consent to the incorporation by reference in the Registration Statements
pertaining to (i) the Columbus Realty Trust 1993 Share Bonus Plan (Form S-8 No.
33-76774), (ii) the Columbus Realty Trust Bonus Plan (No.2) (Form S-8 No. 33-
90492), (iii) the Columbus Realty Trust 1993 Share Option Plan (Form S-8 No. 33-
95918), (iv) the Columbus Realty Trust Employee Stock Purchase Plan (Form S-8
No. 33-94798), (v) the Columbus Realty Trust Long Term Management Incentive Plan
(Form S-8 No. 333-02276), (vi) the Columbus Realty Trust Employee Incentive Plan
(Form S-8 No. 333-22307), (vii) the registration statement on Form S-3 No. 33-
88672 of Columbus Realty Trust and in the related Prospectus, (viii) the
registration statement on Form S-3 No. 33-90146 of Columbus Realty Trust and in
the related Prospectus, (ix) the registration statement on Form S-3 No. 333-
09775 of Columbus Realty Trust and in the related Prospectus our report dated
January 28, 1997 (except for Note 15, as to which the date is March 7, 1997)
with respect to the consolidated financial statements and schedule of Columbus
Realty Trust included in its Annual Report on Form 10-K for the year ended
December 31, 1996.
ERNST & YOUNG LLP
Dallas, Texas
March 7, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The financial statements of Columbus Realty Trust for the year ended December
31, 1996
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 3,195
<SECURITIES> 0
<RECEIVABLES> 815
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,010
<PP&E> 359,321
<DEPRECIATION> 40,492
<TOTAL-ASSETS> 374,576
<CURRENT-LIABILITIES> 12,580
<BONDS> 0
0
0
<COMMON> 131
<OTHER-SE> 179,947
<TOTAL-LIABILITY-AND-EQUITY> 374,576
<SALES> 45,910
<TOTAL-REVENUES> 48,530
<CGS> 0
<TOTAL-COSTS> 11,212
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,277
<INCOME-PRETAX> 11,458
<INCOME-TAX> 11,458
<INCOME-CONTINUING> 11,458
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,458
<EPS-PRIMARY> 0.94
<EPS-DILUTED> 0.94
</TABLE>
