<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

                                      -2-
<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

                                      -5-
<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

                                      -9-
<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

                                      -10-
<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

                                      -11-
<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

                                      -12-
<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.

                                      -13-
<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.


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                                      -14-
<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

                                      -15-