8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 21, 2005

BRANDYWINE REALTY TRUST
(Exact name of issuer as specified in charter)

MARYLAND
(State or Other Jurisdiction
of Incorporation or
Organization) 001-9106
(Commission
file
number) 23-2413352
(I.R.S. Employer
Identification
Number)

401 Plymouth Road, Suite 500
Plymouth Meeting, Pennsylvania 19462
(Address of principal executive offices)

(610) 325-5600
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02    Results of Operations and Financial Condition

     Furnished pursuant to Exhibit 99.1 of this Form 8-K is a press release of the Company dated April 21, 2005.

     The press release includes a “non-GAAP financial measure” within the meaning of the Securities and Exchange Commission’s Regulation G. With respect to such non-GAAP financial measure, the Company has disclosed in the press release the most directly comparable financial measure calculated and presented in accordance with generally accepted accounting principles (“GAAP”) and has provided a reconciliation of such non-GAAP financial measure to the most directly comparable GAAP financial measure.

Item 8.01    Other Events

     On April 22, 2005, we adopted revisions to our policy on executive severace, the full text of which is attached to this Current Report as Exhibit 99.2.

Item 9.01   Financial Statements and Exhibits

Exhibits
99.1	Press Release dated April 21, 2005
99.2	Policy Regarding Severance Agreements with Senior Executives

Signatures

     Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	BRANDYWINE REALTY TRUST
Date: April 22, 2005	By:	/s/ Gerard H. Sweeney
		Gerard H. Sweeney
		President and Chief Executive Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release dated April 21, 2005
99.2	Policy Regarding Severance Agreements with Senior Executives

EX-99.1

FOR IMMEDIATE RELEASE

Contact:
Press Contact: Michael Beckerman Beckerman Public Relations 908-781-6420 michael@beckermanpr.com	Investor Contact: Gerard H. Sweeney Christopher P. Marr Brandywine Realty Trust 610-325-5600 info@brandywinerealty.com

Brandywine Realty Trust Announces First Quarter 2005 Earnings
Cira Centre Office Pre-Leasing reaches 87%

PLYMOUTH MEETING, PA, April 21, 2005– Brandywine Realty Trust (NYSE:BDN) announced today that diluted earnings per share (EPS) was $0.13 for the first quarter of 2005, a decrease of $0.21 per share as compared to $0.34 for the first quarter of 2004. Net income was $9.4 million for the first quarter, a decrease of $3.1 million, as compared to $12.5 million for the first quarter of 2004. The decrease in net income for the first quarter of 2005 as compared to the similar period in 2004 was primarily attributable to an increase of $5.7 million in interest expense offset by an increase in operating income of $1.3 million (net of an increase in depreciation expense of $12.6 million) resulting from the properties acquired from The Rubenstein Company, L.P. in September 2004, and a decrease in minority interest of $1.0 million.

Diluted funds from operations (FFO) was $36.3 million or $0.63 per share for the first quarter of 2005 compared to $28.6 million or $0.59 per share for the first quarter of 2004. FFO for the first quarter of 2004 excludes a $4.5 million gain related to the February 2004 Series B Preferred Unit redemption.

FFO represents a non-generally accepted accounting principle (GAAP) financial measure. A table reconciling FFO to net income, the GAAP measure that the Company believes to be most directly comparable, is within the consolidated financial statements included in this release.

Brandywine President and Chief Executive Officer, Gerard H. Sweeney, commented, “We are delighted with the continuation of successful leasing activity at Cira Centre. We recently signed leases with six tenants totaling 152,000 square feet, bringing our pre-leasing to 87% of the square feet available for office use. These tenants, in the investment management, legal, consulting, and private equity professions, will take occupancy at various times during 2006. We are pleased that the quality, location and economic value of this project have attracted over 700 new jobs to the City of Philadelphia. Construction continues on budget and on schedule for a fourth quarter 2005 completion. This activity, when combined with the continued strength of our core portfolio operations, puts us in excellent position to accelerate our growth into 2006.”

Brandywine Realty Trust Summary Portfolio Performance

• FFO payout ratio was 70.1% for the quarter

• Quarterly rental rate growth on new leases declined 9.6% on a straight-line basis

• Quarterly rental rate growth on renewals increased 0.6% on a straight-line basis

• Quarterly retention rate was 69.3%

401 Plymouth Road, Suite 500 • Plymouth Meeting, PA 19462 Phone: (610) 325-5600 • Fax: (610) 325-5622 • www.brandywinerealty.com

• Portfolio was 91.3% occupied and 92.1% leased as of March 31, 2005

• Leases expired or were terminated for approximately 1,221,000 square feet during the quarter

• Leases were renewed for approximately 846,000 square feet during the quarter

• New leases were signed for approximately 273,000 square feet during the quarter

“Our portfolio performance in the first quarter was in-line with our expectations. Average rental rates on renewals remain flat, we have seen the expected downward pressure on new lease rates, and our tenant retention rate was slightly higher than our forecast. The market remains challenging, but we are encouraged by the activity we have generated thus far in 2005”, Mr. Sweeney said.

Distributions

On March 16, 2005, the Board of Trustees declared a regular quarterly dividend distribution of $0.44 per common share that was paid April 15, 2005 to shareholders of record as of April 6, 2005. The Company also declared its dividend for the first quarter of $0.46875 per 7.50% Series C Cumulative Redeemable Preferred Share and $0.46094 per 7.375% Series D Cumulative Redeemable Preferred Share that was paid on April 15, 2005 to holders of record of the Series C and Series D Preferred Shares as of March 30, 2005.

2005 Financial Outlook

The Company’s 2005 financial outlook continues to be predicated upon the following key and variable assumptions:

• The same-store portfolio (which represents approximately 79% of total square footage and 77% of projected 2005 net operating income) to achieve the following percentage changes from 2004 results:

o GAAP rents and reimbursements (not including termination fees) to decline 0.50% to 1.50%

o Net operating income to range from unchanged to a decline of 2.0%

o Average occupancy to range from an increase of 0.50% to a decrease of 0.50%

• The completion of all development projects in accordance with the estimates identified in our supplemental disclosure as of December 31, 2004.

• While targeted acquisitions are a component of the Company’s 2005 strategy, there are no acquisitions factored into the 2005 financial outlook.

Based on these key assumptions, we affirm our guidance from our February 24, 2005 press release and expect our full year 2005 EPS to be $0.41 to $0.48 and FFO per share to be $2.48 to $2.55.

We are introducing second quarter 2005 guidance and expect FFO per share to be $0.58 to $0.59 and EPS to be $0.07 to $0.08. These estimates may be positively or negatively impacted primarily by the timing and terms of property leases, and actual operating expenses and interest rates as compared to our forecast.

Forward-Looking Statements

Estimates of future earnings per share and FFO per share and certain other statements in this release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance, achievements or transactions of the Company and its affiliates to be materially different from any future results, performance, achievements or transactions expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors relate to, among others: the Company’s ability to lease vacant space and to renew or relet space under expiring leases at expected levels, competition with other real estate companies for tenants, the potential loss or bankruptcy of major tenants, interest rate levels, the availability of debt and equity financing, competition for real estate acquisitions and risks of acquisitions, dispositions and developments, including the cost of construction delays and cost overruns, unanticipated operating and capital costs, the Company’s ability to obtain adequate insurance, including coverage for terrorist acts, dependence upon certain geographic markets, and general and local economic and real estate conditions, including the extent and duration of adverse changes that affect the industries in which the Company’s tenants compete.

Additional information on factors which could impact the Company and the forward-looking statements contained herein are included in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report for the year ended December 31, 2004. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

Non-GAAP Supplemental Financial Measures

Funds from Operations (FFO)
FFO is a widely recognized measure of REIT performance. Although FFO is a non-GAAP financial measure, the Company believes that information regarding FFO is helpful to shareholders and potential investors. The Company computes FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (NAREIT), which may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with the NAREIT definition, or that interpret the NAREIT definition differently than the Company. NAREIT defines FFO as net income (loss) before minority interest of unit holders (preferred and common) and excluding gains (losses) on sales of depreciable operating property and extraordinary items (computed in accordance with GAAP); plus real estate related depreciation and amortization (excluding amortization of deferred financing costs), and after adjustment for unconsolidated joint ventures. The GAAP measure that the Company believes to be most directly comparable to FFO, net income, includes depreciation and amortization expenses, gains or losses on property sales and minority interest. In computing FFO, the Company eliminates substantially all of these items because, in the Company’s view, they are not indicative of the results from the Company’s property operations. To facilitate a clear understanding of the Company’s historical operating results, FFO should be examined in conjunction with net income (determined in accordance with GAAP) as presented in the financial statements included elsewhere in this release. FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income (loss) (determined in accordance with GAAP) as an indication of the Company’s financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company’s liquidity, nor is it indicative of funds available for the Company’s cash needs, including its ability to make cash distributions to shareholders.

Cash Available for Distribution (CAD)
Cash available for distribution, CAD, is a non-GAAP financial measure that is not intended to represent cash flow for the period and is not indicative of cash flow provided by operating activities as determined under GAAP. CAD is presented solely as a supplemental disclosure with respect to liquidity because the Company believes it provides useful information regarding the Company’s ability to fund its dividends. Because all companies do not calculate CAD the same way, the presentation of CAD may not be comparable to similarly titled measures of other companies.

First Quarter Earnings Call and Supplemental Information Package

Brandywine President and CEO, Gerard H. Sweeney, will be hosting a conference call on Friday, April 22, 2005 at 11:00 a.m. EST. Call 1-888-889-5602. After the conference, a taped replay of the call can be accessed 24 hours a day through Friday, May 6, 2005 by calling– 1-877-519-4471 – access code 5947324. In addition, the conference call can be accessed via a webcast located on the Company’s website @ www.brandywinerealty.com.

The Company has prepared a Supplemental Information package that includes financial results and operational statistics to support the announcement of first quarter earnings. The Supplemental Information package is available through the Company’s website @ www.brandywinerealty.com.

The Supplemental Information package can be found in the “Investor Relations – Financial Reports” section of the web page.

About Brandywine Realty Trust
Brandywine Realty Trust, with headquarters in Plymouth Meeting, PA and regional offices in Mt. Laurel, NJ, Philadelphia, PA and Richmond, VA, is one of the Mid-Atlantic region’s largest full service real estate companies. Brandywine owns, manages or has an ownership interest in 294 office and industrial properties, aggregating 24.1 million square feet.

For more information, visit Brandywine’s website at www.brandywinerealty.com.

# # #

Note: Certain statements in this release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance, achievements or transactions of the Company and its affiliates or industry results to be materially different from any future results, performance, achievements or transactions expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors relate to, among others, the Company’s ability to lease vacant space and to renew or relet space under expiring leases at expected levels, the potential loss of major tenants, interest rate levels, the availability and terms of debt and equity financing, competition with other real estate companies for tenants and acquisitions, risks of real estate acquisitions, dispositions and developments, including cost overruns and construction delays, unanticipated operating costs and the effects of general and local economic and real estate conditions. Additional information or factors, which could impact the Company and the forward-looking statements contained herein, are included in the Company’s filings with the Securities and Exchange Commission. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

# # #

BRANDYWINE REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)

	March 31, 2005			December 31, 2004
ASSETS
Real estate investments:
Operating properties	$	2,484,932		$	2,483,134
Accumulated depreciation		(339,709	)		(325,802	)
		2,145,223			2,157,332
Construction-in-progress		172,585			145,016
Land held for development		74,051			61,517
		2,391,859			2,363,865
Cash and cash equivalents		15,473			15,346
Escrowed cash		18,791			17,980
Accounts receivable, net		12,575			11,999
Accrued rent receivable		35,668			32,641
Investment in marketable securities		615			423
Investment in real estate ventures		12,741			12,754
Deferred costs, net		34,696			34,449
Intangible assets, net		91,004			101,056
Other assets		47,661			43,471
Total assets	$	2,661,083		$	2,633,984
LIABILITIES AND BENEFICIARIES’ EQUITY
Mortgage notes payable	$	513,329		$	518,234
Borrowings under credit facilities		200,000			152,000
Unsecured senior notes, net of discounts		636,485			636,435
Accounts payable and accrued expenses		44,011			49,242
Distributions payable		27,517			27,363
Tenant security deposits and deferred rents		19,630			20,046
Acquired lease intangibles, net		37,806			39,271
Other liabilities		1,525			1,525
Total liabilities		1,480,303			1,444,116
Minority interest		42,022			42,866
Beneficiaries’ equity:
Preferred shares – Series C		20			20
Preferred shares – Series D		23			23
Common shares		557			553
Additional paid-in capital		1,355,297			1,346,651
Cumulative earnings		379,930			370,515
Accumulated other comprehensive loss		(2,825	)		(3,130	)
Cumulative distributions		(594,244	)		(567,630	)
Total beneficiaries’ equity		1,138,758			1,147,002
		1,180,780			1,189,868
Total liabilities and beneficiaries’ equity	$	2,661,083		$	2,633,984

BRANDYWINE REALTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share data)

	Three Months Ended
	March 31, 2005			March 31, 2004
Revenue
Rents	$	81,228		$	63,680
Tenant reimbursements		12,082			7,993
Other		5,614			1,526
Total revenue		98,924			73,199
Operating Expenses
Property operating expenses		29,879			22,150
Real estate taxes		9,657			6,881
Depreciation and amortization		28,435			15,804
Administrative expenses		4,752			3,489
Total operating expenses		72,723			48,324
Operating income		26,201			24,875
Other income (expense)
Interest income		780			511
Interest expense		(17,797	)		(12,104	)
Equity in income of real estate ventures		558			234
Income before minority interest		9,742			13,516
Minority interest attributable to continuing operations		(327	)		(1,261	)
Income from continuing operations		9,415			12,255
Discontinued operations:
(Loss) income from discontinued operations		—			(1	)
Net gain on disposition of discontinued operations		—			204
Minority interest		—			(8	)
		—			195
Net income		9,415			12,450
Income allocated to Preferred Shares		(1,998	)		(2,018	)
Preferred Share redemption gain (charge)		—			4,500
Income allocated to Common Shares	$	7,417		$	14,932
PER SHARE DATA
Basic income per Common Share	$	0.13		$	0.34
Basic weighted-average shares outstanding		55,441,773			44,036,842
Diluted income per Common Share	$	0.13		$	0.34
Diluted weighted-average shares outstanding		55,682,792			44,324,050

BRANDYWINE REALTY TRUST
FUNDS FROM OPERATIONS AND CASH AVAILABLE FOR DISTRIBUTION
(unaudited, in thousands, except share and per share data)

	Three Months Ended
	3/31/05			3/31/04
Reconciliation of Net Income to Funds from Operations (FFO):
Net income	$	9,415		$	12,450
Add (deduct):
Minority interest attributable to continuing operations		327			1,261
Minority interest attributable to discontinued operations		—			8
Net gains on disposition of discontinued operations		—			(204	)
Income before net gains on sale of interests in real estate and minority interest		9,742			13,515
Add:
Depreciation:
Real property		20,924			13,337
Real estate ventures		354			749
Amortization of leasing costs		7,232			2,301
Perpetual Preferred Share distributions		(1,998	)		(1,338	)
Preferred Share redemption gain (charge)		—			4,500
Funds from operations (FFO)	$	36,254		$	33,064
FFO, excluding non-recurring items (1)	$	36,254		$	28,564
FFO per share – fully diluted	$	0.63		$	0.68
FFO per share – fully diluted, excluding non-recurring items (1)	$	0.63		$	0.59
Weighted-average shares/units outstanding – fully diluted		57,743,873			48,763,372
EPS – diluted	$	0.13		$	0.34
Weighted-average shares outstanding – fully diluted		55,682,792			44,324,050
Dividend per Common Share	$	0.44		$	0.44
Payout ratio of FFO (Dividend per Common Share divided by FFO per Common Share)		70.1	%		64.9	%
Payout ratio of FFO, excluding non recurring items (1)		70.1	%		75.1	%
CASH AVAILABLE FOR DISTRIBUTION (CAD):
FFO, excluding non-recurring items (1)	$	36,254		$	28,564
Add (deduct):
Rental income from straight-line rents		(3,275	)		(1,925	)
Deferred market rental income		(505	)		24
Amortization:
Deferred financing costs		481			483
Deferred compensation costs		691			553
Second generation capital expenditures (2):
Building and tenant improvements		(6,637	)		(6,685	)
Lease commissions		(916	)		(884	)
Cash available for distribution	$	26,093		$	20,130
Weighted-average shares/units outstanding – fully diluted		57,743,873			48,763,372
Dividend per Common Share	$	0.44		$	0.44
Cash flows from:
Operating activities	$	26,621		$	33,068
Investing activities		(48,873	)		(18,642	)
Financing activities		22,379			(15,421	)

(1)

Represents FFO excluding a gain of $4.5 million related to the Series B Preferred Unit redemption in February 2004.

(2)

Represents expenditures incurred during the period (regardless if lease commencement is after quarter end). Excludes first generation costs, which consist of capital expenditures, tenant improvements and leasing commissions associated with development and purchase price adjustments relating to acquisitions (including seller escrows, purchase price reduction or costs anticipated to initially lease-up acquired properties).

BRANDYWINE REALTY TRUST
SAME STORE OPERATIONS – QUARTER
(unaudited and in thousands)

Of the 247 Properties owned by the Company as of March 31, 2005, a total of 227 Properties (“Same Store Properties”) containing an aggregate of 15.1 million net rentable square feet were owned for the entire three-month periods ended March 31, 2005 and 2004. Average occupancy for the Same Store Properties was 92.0% during 2005 and 91.3% during 2004. The following table sets forth revenue and expense information for the Same Store Properties:

	Quarter Ended March 31,
	2005		2004
Revenue
Rents (a)	$	62,208	$	62,930
Tenant reimbursements		9,316		7,971
Other (b)		3,913		278
		75,437		71,179
Operating expenses
Property operating expenses		24,275		23,800
Real estate taxes		7,099		6,663
		31,374		30,463
Net operating income	$	44,063	$	40,716

(a)	Includes straight-line rental income of $1,870 for 2005 and $1,806 for 2004
(b)	Includes net termination fee income of $3,721 for 2005 and $105 for 2004

The following table is a reconciliation of Net Income to Same Store net operating income:

	Quarter Ended March 31,
	2005			2004
Net Income	$	9,415		$	12,450
Add/(deduct):
Interest income		(780	)		(511	)
Interest expense		17,797			12,104
Administrative expenses		4,752			3,489
Equity in income of real estate ventures		(558	)		(234	)
Depreciation and amortization – continuing operations		28,435			15,804
Depreciation and amortization – discontinued operations		—			103
Net gain on sale of interests in real estate – discontinued operations		—			(204	)
Minority interest attributable to continuing operations		327			1,261
Minority interest attributable to discontinued operations		—			8
Consolidated net operating income		59,388			44,270
Less: Net operating income of non same store properties		(11,374	)		(9	)
Less: Eliminations and non-property specific net operating income		(3,951	)		(3,545	)
Same Store net operating income	$	44,063		$	40,716

EX-99.2

POLICY REGARDING SEVERANCE AGREEMENTS WITH SENIOR EXECUTIVES

BRANDYWINE REALTY TRUST

Overview

The Board of Trustees (the “Board”) of Brandywine Realty Trust (the “Company”) desires to attract, retain and motivate qualified executives to lead the Company and promote the interests of the Company’s shareholders. In furtherance of this objective, the Board has delegated to its Compensation Committee the authority to determine the compensation of the Company’s senior executives. The Compensation Committee is comprised solely of independent non-employee members of the Board.

The Compensation Committee seeks to set executive compensation at levels that are sufficiently competitive so that the Company may attract, retain and motivate high quality executives to contribute to the Company’s success. The Compensation Committee believes that severance arrangements can form a key component of the compensation packages for the Company’s senior executives, protecting them from an unexpected change in circumstances and allowing them to assess objectively transactions that could potentially impact their job security.

Recognizing the importance of severance arrangements to the Company and its shareholders, the Compensation Committee and the non-management Trustees adopted the following policy for shareholder approval of certain severance arrangements.

Policy

The Company will submit for approval by holders of its common shares any Future Severance Arrangement with a Senior Executive Officer of the Company that would provide for Severance Benefits that exceed 2.99 times the sum of the Senior Executive Officer’s Salary and Bonus (the “Policy”). The Company may, however, agree to provide Severance Benefits conditioned on a subsequent favorable shareholder vote of such agreement.

Policy Effective Date

The Policy shall become effective on February 15, 2005 (the “Effective Date”).

Senior Executive Officers

The Senior Executive Officers subject to the Policy shall be employees of the Company holding the office of Chief Executive Officer, President, Chief Financial Officer or Senior Vice President.

Severance Agreements

For the purposes of the Policy, a “Future Severance Arrangement” shall mean an employment agreement, a retirement agreement or a change in control agreement containing severance provisions with a Senior Executive Officer entered into with the Senior Executive Officer after the Effective Date; provided, however that a “Future Severance Arrangement” shall not include any agreement entered into with an individual who at the time of the effectiveness of such agreement was not a Senior Executive Officer, even if that individual later becomes a Senior Executive Officer. Any agreement entered into with a Senior Executive Officer prior to the Effective Date is not a Future Severance Agreement even if the agreement is renewed or amended after the Effective Date (provided that if an amendment to the agreement increases the numerical multiplier set forth therein above 2.99, or otherwise materially modifies the formula for calculating severance thereunder, then the agreement will at such time become a Future Severance Agreement and, therefore, subject to the Policy).

Salary and Bonus

“Salary and Bonus” subject to the Policy means the sum of (i) the greater of a Senior Executive Officer’s base annual salary in effect (a) on the date of the termination of employment of the Senior Executive Officer or (b) for the fiscal year immediately preceding the fiscal year in which such employment termination occurs plus (ii) the greater of the Senior Executive Officer’s (x) targeted annual bonus for the year in which the Senior Executive Officer’s employment terminates or (y) the annual bonus paid or payable to the Senior Executive Officer for the fiscal year immediately preceding the fiscal year in which such employment termination occurs.

Severance Benefits

“Severance Benefits” subject to the Policy mean cash separation benefits that directly relate to salary and bonus and extraordinary benefits that are not of a type available to groups of employees other than Senior Executive Officers upon termination of employment. Notwithstanding the foregoing, the following are not “Severance Benefits” and are not limited by the Policy:

• Amounts earned or accrued for services prior to termination (such as earned but unpaid salary, pro rata bonus or unused vacation pay).

• Retirement benefits earned or accrued under qualified and non-qualified retirement plans or deferred compensation plans.

• Amounts payable for the uncompleted term of an employment agreement.

• The value of benefits provided under programs generally applicable to Company’s employees.

• Accelerated vesting of restricted shares, options to acquire shares, share appreciation rights or other long term equity or cash incentives, or the value or payment on account of any shares, options, rights or other incentives awarded prior to the executive’s termination of employment.

• The value of the continued use of a corporate office or administrative support.

• Any benefit or payment required by law.

• Amounts paid for post-termination covenants (such as a covenant not to compete).

• Tax “gross-up” payments made in connection with severance benefits, including “gross-up” payments under Internal Revenue Code Section 280G.

Vote Required

A Future Severance Agreement subject to shareholder approval under the Policy will be deemed to have been approved if it receives the affirmative vote of a majority of all votes cast on the matter by holders of common shares.

Reservation of Rights

The Board reserves the right to modify, terminate or waive the Policy at any time in its discretion; provided, however, that any modification or termination of the Policy shall be effective only upon approval of such modification or termination by the affirmative vote of a majority of all votes cast on the matter by holders of common shares, and any waiver of the Policy shall be conditioned on the approval of the waiver within twelve (12) months following the waiver by the affirmative vote of a majority of all votes cast on the matter by holders of common shares (and the matter subject to the waiver shall be rescinded in the event that such approval has not been received within the foregoing time period). All interpretations of the policy by the Board or the Compensation Committee shall be final.