-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U6D7UtMZfXYlrVezYMVIBsMVBbn3z+28lx42UyDqpDDT4MM7pDvkL22I8fnPOoaA yq++pPwwXQrIO/MRPVk6Vg== /in/edgar/work/0000892626-00-000371/0000892626-00-000371.txt : 20001115 0000892626-00-000371.hdr.sgml : 20001115 ACCESSION NUMBER: 0000892626-00-000371 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANYAN STRATEGIC REALTY TRUST CENTRAL INDEX KEY: 0000790817 STANDARD INDUSTRIAL CLASSIFICATION: [6798 ] IRS NUMBER: 363375345 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-15465 FILM NUMBER: 762478 BUSINESS ADDRESS: STREET 1: 150 S WACKER DR STE 2900 STREET 2: SUITE 2900 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3125539800 FORMER COMPANY: FORMER CONFORMED NAME: BANYAN STRATEGIC LAND TRUST DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: VMS STRATEGIC LAND TRUST DATE OF NAME CHANGE: 19910325 10-Q 1 0001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000. OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number 0-15465 BANYAN STRATEGIC REALTY TRUST ------------------------------------------------------ (Exact name of Registrant as specified in its charter) Massachusetts 36-3375345 - ----------------------------- ------------------- (State or other jurisdiction (I.R.S. Employer incorporation or organization) Identification No.) 150 South Wacker Drive, Chicago, IL 60606 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code (312) 553-9800 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 [ ]. Shares of beneficial interest outstanding as of November 10, 2000: 14,245,649 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS BANYAN STRATEGIC REALTY TRUST Consolidated Balance Sheets (Unaudited) (Dollars in thousands) SEPTEMBER 30, DECEMBER 31, 2000 1999 ------------- ----------- ASSETS - ------ Investment in Real Estate, at cost: Land . . . . . . . . . . . . . . . $ 36,445 $ 36,445 Building . . . . . . . . . . . . . 148,608 148,608 Building Improvements. . . . . . . 18,632 14,211 ---------- ---------- 203,685 199,264 Less: Accumulated Depreciation . . (19,898) (15,420) ---------- ---------- 183,787 183,844 ---------- ---------- Cash and Cash Equivalents. . . . . . 3,209 13,097 Restricted Cash - Capital Improvements . . . . . . . 1,101 1,497 Restricted Cash - Other. . . . . . . 1,757 1,171 Interest and Accounts Receivable . . 1,377 1,186 Deferred Financing Costs (Net of Accumulated Amortization of $1,554 and $1,512, respectively). . . . . . . . . . . 1,285 1,568 Other Assets . . . . . . . . . . . . 4,523 4,284 ---------- ---------- Total Assets . . . . . . . . . . . . $ 197,039 $ 206,647 ========== ========== BANYAN STRATEGIC REALTY TRUST Consolidated Balance Sheets - CONTINUED SEPTEMBER 30, DECEMBER 31, 2000 1999 ------------- ----------- LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Liabilities Mortgage Loans Payable . . . . . . . $ 113,841 $ 120,781 Bonds Payable. . . . . . . . . . . . 4,500 4,500 Unsecured Loan Payable . . . . . . . -- 7,400 Accounts Payable and Accrued Expenses . . . . . . . . . 3,514 2,767 Accrued Real Estate Taxes Payable. . 1,726 908 Accrued Interest Payable . . . . . . 656 615 Unearned Revenue . . . . . . . . . . 923 922 Security Deposits. . . . . . . . . . 1,370 1,203 ---------- ---------- Total Liabilities. . . . . . . . . . 126,530 139,096 ---------- ---------- Minority Interest in Consolidated Partnerships. . . . . 2,371 2,256 Shareholders' Equity Series A Convertible Preferred Shares, No Par Value, 200,000 Shares Authorized, 61,572 Shares Issued and Outstanding. . . . . . . . . . . . 6,157 -- Shares of Beneficial Interest, No Par Value, Unlimited Authorization; 15,760,810 and 15,073,917 Shares Issued, respectively . . . . . . . . . . . 124,332 120,707 Accumulated Deficit. . . . . . . . . (51,826) (48,046) Employees' Notes . . . . . . . . . . (3,159) -- Treasury Shares at Cost, 1,522,649 Shares . . . . . . . . . (7,366) (7,366) ---------- ---------- Total Shareholders' Equity . . . . . 68,138 65,295 ---------- ---------- Total Liabilities and Shareholders' Equity . . . . . . . $ 197,039 $ 206,647 ========== ========== The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST Consolidated Statements of Operations For the Nine Months Ended September 30, 2000 and 1999 (Unaudited) (Dollars in thousands, except per share data) 2000 1999 -------- -------- REVENUE Rental Income. . . . . . . . . . . . . . . . . . $ 24,438 $ 27,611 Operating Cost Reimbursement . . . . . . . . . . 2,849 2,831 Miscellaneous Tenant Income. . . . . . . . . . . 263 865 Income on Investments and Other Income . . . . . 545 113 -------- -------- Total Revenue. . . . . . . . . . . . . . . . . . . 28,095 31,420 -------- -------- EXPENSES Property Operating . . . . . . . . . . . . . . . 3,400 4,043 Repairs and Maintenance. . . . . . . . . . . . . 2,762 3,327 Real Estate Taxes. . . . . . . . . . . . . . . . 2,087 2,237 Interest . . . . . . . . . . . . . . . . . . . . 6,889 8,719 Ground Lease . . . . . . . . . . . . . . . . . . 694 704 Depreciation and Amortization. . . . . . . . . . 5,092 4,916 General and Administrative . . . . . . . . . . . 3,193 3,229 Amortization of Deferred Financing Costs . . . . 226 196 Severance and Termination Costs. . . . . . . . . 1,557 -- -------- -------- Total Expenses . . . . . . . . . . . . . . . . . . 25,900 27,371 Income Before Minority Interest and Extraordinary Item . . . . . . . . . . . . . . . 2,195 4,049 Minority Interest in Consolidated Partnerships . . . . . . . . . . . . . . . . . . (403) (381) -------- -------- Income Before Extraordinary Item . . . . . . . . . 1,792 3,668 Extraordinary Item . . . . . . . . . . . . . . . . (42) -- -------- ------- Net Income . . . . . . . . . . . . . . . . . . . . 1,750 3,668 Less Income Attributable to Preferred Shares . . . (431) -- -------- -------- Net Income Available to Common Shares. . . . . . . $ 1,319 $ 3,668 ======== ======== Basic and Diluted Earnings Available to Common Shares per weighted-average Common Share: Income Before Extraordinary Item . . . . . . . . $ 0.09 $ 0.27 ======== ======== Net Income . . . . . . . . . . . . . . . . . . . $ 0.09 $ 0.27 ======== ======== The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST Consolidated Statements of Operations For the Three Months Ended September 30, 2000 and 1999 (Unaudited) (Dollars in thousands, except per share data) 2000 1999 -------- -------- REVENUE Rental Income. . . . . . . . . . . . . . . . . . $ 8,159 $ 9,277 Operating Cost Reimbursement . . . . . . . . . . 900 910 Miscellaneous Tenant Income. . . . . . . . . . . 99 295 Income on Investments and Other Income . . . . . 127 27 -------- -------- Total Revenue. . . . . . . . . . . . . . . . . . . 9,285 10,509 -------- -------- EXPENSES Property Operating . . . . . . . . . . . . . . . 1,211 1,400 Repairs and Maintenance. . . . . . . . . . . . . 928 1,055 Real Estate Taxes. . . . . . . . . . . . . . . . 664 764 Interest . . . . . . . . . . . . . . . . . . . . 2,274 2,940 Ground Lease . . . . . . . . . . . . . . . . . . 232 239 Depreciation and Amortization. . . . . . . . . . 1,760 1,682 General and Administrative . . . . . . . . . . . 1,049 1,035 Amortization of Deferred Financing Costs . . . . 67 65 Severance and Termination Costs. . . . . . . . . 1,557 -- -------- -------- Total Expenses . . . . . . . . . . . . . . . . . . 9,742 9,180 Income (Loss) Before Minority Interest . . . . . . (457) 1,329 Minority Interest in Consolidated Partnerships . . . . . . . . . . . . . . . . . . (130) (126) -------- -------- Net Income (Loss). . . . . . . . . . . . . . . . . (587) 1,203 Less Income Attributable to Preferred Shares . . . (155) -- -------- -------- Net Income (Loss) Available to Common Shares . . . $ (742) $ 1,203 ======== ======== Basic and Diluted Earnings Available to Common Shares per weighted-average Common Share: Net Income (Loss). . . . . . . . . . . . . . . . $ (0.05) $ 0.09 ======== ======== The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST Consolidated Statement of Shareholders' Equity For the Nine Months Ended September 30, 2000 (Unaudited) (Dollars in thousands)
Series A Convertible Shares of Preferred Shares Beneficial Interest Accumu- --------------------- --------------------- lated Employees' Treasury Shares Amount Shares Amount Deficit Notes Shares Total ---------- -------- ---------- --------- --------- ---------- -------- -------- Shareholders' Equity, January 1, 2000. . . . . . . . -- $ -- 15,073,917 $120,707 $(48,046) $ -- $(7,366) $65,295 Issuance of Shares, net of issuance costs . . . . . . . 61,572 6,157 686,893 3,625 -- -- -- 9,782 Employees' Notes, net of repay- ments . . . . . . . -- -- -- -- -- (3,159) -- (3,159) Net Income . . . . . -- -- -- -- 1,750 -- -- 1,750 Common Distri- butions Paid. . . . -- -- -- -- (5,099) -- -- (5,099) Preferred Distri- bution Paid . . . . -- -- -- -- (431) -- -- (431) ------ -------- ---------- -------- -------- -------- -------- -------- Shareholders' Equity, September 30, 2000. . . . . . . . 61,572 $ 6,157 15,760,810 $124,332 $(51,826) $(3,159) $ (7,366) $ 68,138 ====== ======== ========== ======== ======== ======== ======== ======== The accompanying notes are an integral part of the consolidated financial statements.
BANYAN STRATEGIC REALTY TRUST Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2000 and 1999 (Unaudited) (Dollars in thousands) 2000 1999 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income . . . . . . . . . . . . . . . . . . . . $ 1,750 $ 3,668 Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities: Extraordinary Item . . . . . . . . . . . . . . . 42 -- Depreciation and Amortization. . . . . . . . . . 5,318 5,112 Minority Interest in Consolidated Partnerships. . . . . . . . . . . . . . . . . . 403 381 Net Change In: Restricted Cash - Other. . . . . . . . . . . . (586) (837) Interest and Accounts Receivable . . . . . . . (191) 389 Other Assets . . . . . . . . . . . . . . . . . (853) (1,209) Accounts Payable and Accrued Expenses. . . . . 747 (150) Accrued Interest Payable . . . . . . . . . . . 41 106 Accrued Real Estate Taxes Payable. . . . . . . 818 1,033 Unearned Revenue . . . . . . . . . . . . . . . 1 289 Security Deposits. . . . . . . . . . . . . . . 167 19 -------- -------- Net Cash Provided By Operating Activities. . . . . 7,657 8,801 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to Investment in Real Estate . . . . (4,421) (3,580) Restricted Cash - Capital Improvements . . . . 396 (541) -------- -------- Net Cash Used In Investing Activities . . . . . . (4,025) (4,121) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from Loans Payable. . . . . . . . . . . 8,500 -- Distributions to Minority Partners . . . . . . . (288) (350) Deferred Financing Costs . . . . . . . . . . . . (159) (7) Payment of Preferred Shares Issuance Costs . . . (30) -- Repayment of Employees' Notes. . . . . . . . . . 79 -- Principal Payments on Mortgage Loans, Bonds Payable and Unsecured Loan Payable . . . (16,683) (1,253) Distributions Paid to Shareholders . . . . . . . (5,099) (4,839) Payment of Preferred Distributions . . . . . . . (431) -- Prepayment Penalties on Early Extinguishment of Debt. . . . . . . . . . . . . . . . . . . . (6) -- Shares Issued, Net of Issuance Costs . . . . . . 597 625 -------- -------- Net Cash Used In Financing Activities. . . . . . . (13,520) (5,824) -------- -------- Net Decrease In Cash and Cash Equivalents. . . . . (9,888) (1,144) Cash and Cash Equivalents at Beginning of Period. . . . . . . . . . . . . . . 13,097 3,731 -------- -------- Cash and Cash Equivalents at End of Period . . . . $ 3,209 $ 2,587 ======== ======== Supplemental Information: Interest Paid During the Period. . . . . . . . . $ 6,848 $ 8,613 ======== ======== Non-Cash Financing Activities: Preferred Share Debt Conversion. . . . . . . . . $ 6,157 $ -- ======== ======== Employees' Notes . . . . . . . . . . . . . . . . $ 3,238 $ -- ======== ======== The accompanying notes are an integral part of the consolidated financial statements. BANYAN STRATEGIC REALTY TRUST Notes to Consolidated Financial Statements September 30, 2000 (Unaudited) (Dollars in thousands, except per share data) 1. FINANCIAL STATEMENT PRESENTATION Readers of this quarterly report should refer to Banyan Strategic Realty Trust's (the "Trust") audited consolidated financial statements for the year ended December 31, 1999 which are included in the Trust's 1999 Form 10-K, as certain footnote disclosures which would substantially duplicate those contained in such audited statements have been omitted from this report. In the opinion of management, all adjustments necessary for a fair presentation have been made to the accompanying consolidated financial statements as of September 30, 2000. All adjustments made to the financial statements, as presented, are of a normal recurring nature to the Trust. RECLASSIFICATIONS Certain reclassifications have been made to the previously reported 1999 consolidated financial statements in order to provide comparability with the 2000 consolidated financial statements. These reclassifications have not changed the 1999 results. 2. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share for the nine months ended September 30, 2000 and 1999: Nine Months Ended ------------------------ 9/30/00 9/30/99 ---------- ---------- Numerator: Income Available to Common Shares Before Extraordinary Item . . . . . . . . . . . . . . . . . . $ 1,361 $ 3,668 Extraordinary Item . . . . . . . . . . . . (42) -- ---------- ---------- Net Income Available to Common Shares . . . . . . . . . . . $ 1,319 $ 3,668 ========== ========== Denominator: Denominator for basic earnings per weighted-average shares. . . . . . . . . 14,157,824 13,448,713 Effect of dilutive securities - Employee stock options . . . . . . . . . 7,370 6,769 ---------- ---------- Denominator for diluted earnings per share-adjusted weighted-average shares and assumed conversions . . . . 14,165,194 13,455,482 ========== ========== Basic and Diluted Earnings Available to Common Shares Per weighted- average Common Share: Income Before Extraordinary Item . . . . . $ 0.09 $ 0.27 Extraordinary Item . . . . . . . . . . . . -- -- ---------- ---------- Net Income . . . . . . . . . . . . . . $ 0.09 $ 0.27 ========== ========== The following table sets forth the computation of basic and diluted earnings per share for the three months ended September 30, 2000 and 1999: Three Months Ended ------------------------ 9/30/00 9/30/99 ---------- ---------- Numerator: Net Income (Loss) Available to Common Shares . . . . . . . . . . . $ (742) $ 1,203 ========== ========== Denominator: Denominator for basic earnings per weighted-average shares. . . . . . . . . 14,217,926 13,488,570 Effect of dilutive securities - Employee stock options . . . . . . . . . 6,026 8,370 ---------- ---------- Denominator for diluted earnings per share-adjusted weighted-average shares and assumed conversions . . . . 14,223,952 13,496,940 ========== ========== Basic and Diluted Earnings Available to Common Shares Per weighted- average Common Share: Net Income (Loss). . . . . . . . . . . $ (0.05) $ 0.09 ========== ========== 3. LONG-TERM DEBT FINANCING On May 1, 2000, the Trust entered into a loan agreement which provided for a loan in the amount of $12,100, which can be drawn in four installments. The amount of $8,500 was drawn on May 1, 2000. The loan, which is collateralized by the Trust's Johns Creek Office and Industrial Park and Technology Park properties, bears interest at a variable rate equal to LIBOR plus 2.2% and is payable monthly. The loan principal is pre-payable without penalty and matures in one year. The proceeds from the first draw were utilized primarily to repay the amounts outstanding on a line of credit which came due on May 1, 2000 and which was previously collateralized by Johns Creek Office and Industrial Park and Technology Park, and secondarily for transaction costs. On October 8, 1999, the Trust entered into a loan agreement in the amount of $7,800. The loan, which is collateralized by the Trust's Lexington Business Center property, bears interest at a variable rate equal to LIBOR plus 2% and is payable monthly. The loan principal is pre-payable without penalty and had an initial maturity date of May 31, 2000. The Trust had two options to extend the term of the loan for one year each at the same interest rate by paying a fee of $19.5 for each extension. The Trust exercised its first option to extend the term of the loan until May 31, 2001. CONVERSION OF UNSECURED LOAN During 1998, the Trust borrowed $7,400 pursuant to its $20,000 1997 Convertible Term Loan Agreement for an unsecured convertible term loan (the "Unsecured Loan"). The amounts outstanding on the Unsecured Loan were convertible into Series A convertible preferred shares at a conversion price of $100 per share or into common shares at a conversion price of $5.15 per share. On January 20, 2000, the Trust repaid $1,243 of the Unsecured Loan and the remaining balance of $6,157 was converted into 61,572 Series A convertible preferred shares. 4. BUSINESS SEGMENTS The Trust owns and operates real estate properties located principally in the Midwest and Southeast United States. The Trust has three operating segments corresponding to the three property types comprising its real estate assets: flex/industrial, office and retail. As of September 30, 2000, the flex/industrial segment was comprised of twelve complexes with long-term leases to approximately 170 tenants; the office segment was comprised of fourteen office sites with long-term leases to approximately 260 tenants; and the retail segment was comprised of one retail center with long-term leases to approximately 50 tenants. As of September 30, 1999, the flex/industrial segment was comprised of thirteen complexes, the office segment was comprised of fourteen office sites and the retail segment was comprised of one retail center. Prior to the sale of the Oklahoma Apartment Portfolio in December 1999, a fourth segment - the residential segment - was comprised of four apartment complexes with 864 units. The Trust's long-term tenants are in a variety of businesses and no individual tenant is significant to the Trust's business when considered as a whole. Information by business segments is set forth below: Three Months Ended Nine Months Ended September 30, September 30, -------------------- ------------------- 2000 1999 2000 1999 -------- -------- -------- -------- Revenue Flex/Industrial. . . . . . $ 2,769 $ 2,988 $ 8,461 $ 8,576 Office . . . . . . . . . . 5,224 5,241 15,683 15,937 Residential. . . . . . . . -- 1,116 -- 3,274 Retail . . . . . . . . . . 1,191 1,157 3,462 3,580 Corporate/Other. . . . . . 101 7 489 53 -------- -------- -------- -------- $ 9,285 $ 10,509 $ 28,095 $ 31,420 ======== ======== ======== ======== Income (Loss) Before Extraordinary Item Flex/Industrial. . . . . . $ 759 $ 714 $ 2,318 $ 1,882 Office . . . . . . . . . . 1,040 1,217 3,384 3,913 Residential. . . . . . . . -- 213 -- 634 Retail . . . . . . . . . . 149 116 419 503 Corporate/Other. . . . . . (2,535) (1,057) (4,329) (3,264) -------- -------- -------- -------- $ (587) $ 1,203 $ 1,792 $ 3,668 ======== ======== ======== ======== As of As of Septem- Decem- ber 30, ber 31, 2000 1999 -------- -------- Total Assets Flex/Industrial. . . . . . $ 68,803 $ 69,279 Office . . . . . . . . . . 107,844 105,756 Retail . . . . . . . . . . 17,536 18,125 Corporate/Other. . . . . . 2,856 13,487 -------- -------- $197,039 $206,647 ======== ======== Three Months Ended Nine Months Ended September 30, September 30, -------------------- ------------------- 2000 1999 2000 1999 -------- -------- -------- -------- Depreciation and Amortization Flex/Industrial. . . . . . $ 585 $ 576 $ 1,753 $ 1,669 Office . . . . . . . . . . 1,031 826 2,910 2,415 Residential. . . . . . . . -- 146 -- 430 Retail . . . . . . . . . . 144 134 429 402 -------- -------- -------- -------- $ 1,760 $ 1,682 $ 5,092 $ 4,916 ======== ======== ======== ======== Interest Expense Flex/Industrial. . . . . . $ 738 $ 931 $ 2,212 $ 2,705 Office . . . . . . . . . . 1,209 1,382 3,692 4,128 Residential. . . . . . . . -- 296 -- 890 Retail . . . . . . . . . . 327 331 985 996 -------- -------- -------- -------- $ 2,274 $ 2,940 $ 6,889 $ 8,719 ======== ======== ======== ======== Additions to Investment in Real Estate Flex/Industrial. . . . . . $ 500 $ 473 $ 1,154 $ 1,399 Office . . . . . . . . . . 1,342 462 3,210 1,922 Residential. . . . . . . . -- 53 -- 220 Retail . . . . . . . . . . 26 -- 57 39 -------- -------- -------- -------- $ 1,868 $ 988 $ 4,421 $ 3,580 ======== ======== ======== ======== 5. SEVERANCE AND TERMINATION COSTS In September 2000, in view of the Trust's strategic direction, the Trust adopted an employee severance and retention program. The Trust has since terminated certain employees and will continue to review its staffing needs in the future. The accompanying consolidated financial statements include a charge of approximately $1,600 related to the severance and retention program. The severance and termination costs described above include a charge of approximately $300 related to base compensation payable to Mr. Leonard Levine through December 31, 2001 under the terms of his employment agreement. 6. EMPLOYEE NOTES On May 14, 1997, the Board of Trustees adopted and on July 8, 1997, the shareholders of the Trust approved, the 1997 Omnibus Stock and Incentive Plan (the "Plan") which allows the Trust to make stock-based awards as part of its employee and trustee compensation program. Under the Plan, the Trust is authorized to issue options to purchase up to one million shares of beneficial interest in the form of incentive stock options, non-statutory stock options, stock appreciation rights, performance shares and units. On December 31, 1999, the outstanding options issued under the Plan totaled 463,676. When the shareholders elected three new trustees on December 13, 1999, the members of the board of trustees as of October 1, 1997 no longer constituted a majority of the members of the board. By definition, this reconstitution of the board was a "Change of Control" within the meaning of the Employee Stock Option Agreements. As a result, all outstanding employee options became immediately exercisable in accordance with the terms of the option agreements. At that time, the Board of Trustees offered all of the Trust's current employees and advisors who held options, the opportunity to exercise all their vested but unexercised options with the proceeds of a loan from the Trust. Each loan is non-recourse and bears interest at an annual rate of 6.5%. Each person was required to pledge all shares purchased with the proceeds of the loan to secure the payment of principal and interest on the loan. The loan program was available until January 12, 2000. On that date, employees borrowed approximately $3.2 million to purchase 575,337 shares. The loans were originally scheduled to mature on the earlier of January 11, 2005 or one month after the date that an individual's employment is terminated. At that time, the employee would be required to repay the loan and all accrued interest, or forfeit the shares held as security for the loan. Under the employee severance and retention program, the Trust extended the maturity date of the loans for terminated employees to the date the last of the notes becomes due. 7. SUBSEQUENT EVENTS DISTRIBUTIONS On October 16, 2000, the Trust declared a cash distribution for the quarter ended September 30, 2000 of $0.12 per share payable November 28, 2000 to shareholders of record on October 27, 2000. LITIGATION On August 14, 2000, the Trust exercised its rights under the employment agreement with Mr. Leonard Levine by suspending him and placing him on leave from his position as president. The Trust also initiated an arbitration proceeding in which it contends that certain actions taken by Mr. Levine constitute "just cause" for terminating his employment agreement. On or about October 5, 2000, Mr. Levine filed a lawsuit in the Circuit Court of Cook County, Illinois. Mr. Levine's lawsuit seeks a declaratory judgement which would halt the arbitration proceedings because he alleges it is an improper forum. On October 18, 2000 the Trust filed a lawsuit against Mr. Levine in the Circuit Court of Cook County, Illinois. The Trust's complaint alleges violations of Mr. Levine's fiduciary duty of loyalty owed to the Trust. Pending the final ruling by an arbitrator or a court, the Trust intends to comply with the employment agreement, including its compensation provisions. The maximum potential liability in connection with Mr. Levine's contract (inclusive of incentives but exclusive of base salary) is estimated to be $1,800. OTHER During the first quarter of 2000, the Trust's Board of Trustees formed a Financial Advisory Committee, comprised entirely of its independent trustees, to evaluate strategic alternatives. The committee retained CFC Advisory Services Limited Partnership, an affiliate of Chicago-based Cohen Financial ("Cohen") to value the Trust's real estate assets and assist the Committee in identifying and executing strategies that the Trust believes will maximize value while enhancing shareholder liquidity. On July 28, 2000, the Financial Advisory Committee announced that as part of its review of the strategic alternatives, it had authorized Cohen to initiate a marketing effort designed to solicit bids for the Trust or the Trust's properties in whole, bulk sales or individually. Cohen completed its strategic analysis of the portfolio and was subsequently authorized by the Committee to market the Trust or the Trust's real estate portfolio to persons or entities interested primarily in buying the Trust or the Trust's properties in whole or in part. The Trust received and evaluated a number of proposals from prospective purchasers. After further discussions with Cohen, and upon Cohen's recommendation, the Committee concluded that shareholder value and liquidity could be best maximized and enhanced by selling all of the Trust's real estate assets in a bulk transaction to a single buyer, rather than individually or in discreet groups over an extended period of time. In late October of 2000, the Trust's Board of Trustees authorized the negotiation of a contract for the purchase of all of the Trust's real estate assets. If the Trust is successful in negotiating and completing a sale of its real estate assets, the Trust expects to distribute the net proceeds to its shareholders and to ultimately terminate the Trust pursuant to a plan of liquidation. At that time, or sooner if appropriate, the Trust also anticipates adopting liquidation accounting. Although the Trust is in the process of negotiating a contract, there is no assurance that a contract or a transaction will be concluded. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Certain statements in this quarterly report that are not historical in fact constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on our current expectations, estimates and projections. These statements are not a guaranty of future performance. Without limiting the foregoing, words such as "believes," "intends," "anticipates," "expects," and similar expressions are intended to identify forward-looking statements which are subject to a number of risks and uncertainties, including, among other things: . general real estate investment risks; . the status of negotiations to sell the real estate assets; . potential inability to repay or refinance indebtedness at maturity; . increases in interest rates; . adverse consequences of failure to qualify as a REIT; . possible environmental liabilities; and . the terms of a plan of liquidation, if adopted by the Board of Trustees. Actual results could differ materially from those projected in these forward-looking statements. See "Managements's Discussion and Analysis of Financial Condition and Results of Operations - Risk Factors" in the annual report on Form 10-K for the year ended December 31, 1999 for a more complete discussion. We are a self-administered infinite life real estate investment trust ("REIT"), organized as a Massachusetts business trust, which owns and operates primarily office and flex/industrial properties. We operate principally through BSRT UPREIT Limited Partnership, referred to as the Operating Partnership, and its subsidiaries. BSRT UPREIT Corp., a wholly- owned subsidiary, is the General Partner of the Operating Partnership. As of September 30, 2000, we were the sole limited partner of BSRT UPREIT Limited Partnership. During the first quarter of 2000, our Board of Trustees formed a Financial Advisory Committee, comprised entirely of our independent trustees, to evaluate strategic alternatives. The Committee retained CFC Advisory Services Limited Partnership, an affiliate of Chicago-based Cohen Financial ("Cohen") to value our real estate assets and assist the Committee in identifying and executing strategies that the Trust believes will maximize value while enhancing shareholder liquidity. Cohen completed its strategic analysis of the portfolio and on July 28, 2000, the Financial Advisory Committee announced that as part of its review of the strategic alternatives, it had authorized Cohen to initiate a marketing effort designed to solicit bids for the Trust's properties in whole, bulk sales or individually. We received and evaluated a number of proposals from prospective purchasers. After further discussions with Cohen, and upon Cohen's recommendation, the Committee concluded that shareholder value and liquidity could be best maximized and enhanced by selling all of our real estate assets in a bulk transaction to a single buyer, rather than individually or in discreet groups over an extended period of time. Our Board of Trustees then authorized the negotiation of a contract with a specific potential purchaser for the purchase and sale of all of our real estate assets. If we are successful in negotiating and completing a sale of our assets, which we hope to achieve by the end of the first calendar quarter of 2001, we expect to distribute the net proceeds to the shareholders and to ultimately terminate our business pursuant to a plan of liquidation. The Committee estimates that based on the price indicated in the proposal it has elected to pursue, and after paying or reserving for all known liabilities and the projected costs of winding up our business, the net proceeds available to shareholders would be approximately $6.20 per share. Although we are in the process of negotiating a contract, there is no assurance that a contract or a transaction will be concluded or that we will realize the net proceeds per share estimated above. The Committee noted that a sale of our real estate assets in bulk will, in its view, reflect a discount that it believes is reasonable from that which may be achieved by selling the assets individually in a series of transactions after taking into account the risks and costs inherent in marketing the properties over an extended period of time. The net proceeds that would be available for distribution to shareholders after paying or providing for all of our liabilities, including the cost of terminating the Trust, the tax treatment of these distributions and our future financial statement presentation, will depend on a number of factors. These factors include the gross selling price of the assets, the timing of the adoption of a plan of liquidation, the time it takes to close a sale and the costs associated with a sale and winding up of the Trust. As a part of the process, we intend to evaluate and determine the amount and frequency of shareholder distributions during the coming months. RESULTS OF OPERATIONS As of September 30, 2000, we owned individually, or, in some cases through joint ventures, twenty-seven properties consisting of: . fourteen office properties totaling 1.5 million rentable square feet; . twelve flex/industrial properties totaling 1.7 million rentable square feet; . one retail property which contains 321,600 rentable square feet. COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 2000 TO NINE MONTHS ENDED SEPTEMBER 30, 1999 During the nine months ended September 30, 2000 and 1999 our income before minority interest and extraordinary item totaled approximately $2.2 million and approximately $4.0 million, respectively. Our total revenue decreased by approximately $3.3 million or 10.5% to approximately $28.1 million from approximately $31.4 million, due to a decrease in the number of properties that we own and a decrease in total occupancy. This decrease in total revenues was partially offset by a decrease in total operating expenses, which include property operating, repairs and maintenance, real estate taxes, and ground lease expenses. However, the decrease in total operating expenses in 2000 was partially negated by severance and termination costs in the amount of approximately $1.6 million related to an employee severance and retention policy (see Severance and Termination Costs below). On a "same-store" basis (comparing the results of operations of the properties owned during the entire nine months ended September 30, 2000 with the results of the same properties owned during the entire nine months ended September 30, 1999), total revenue increased by approximately $0.1 million due to an increase in rental rates. As of September 30, 2000, 16% of our leasable square footage is vacant and during the final three months of 2000, leases for approximately three percent (3%) of our leasable square footage will expire. Although vacancy may increase temporarily, at most of our properties we believe that this lease "roll-over" is routine and the underlying space will be released at market rental rates to either the existing or a new tenant. Our most significant lease expiration occurred at 6901 Riverport Drive where a tenant occupying approximately 145,000 square feet vacated on July 31, 2000. We are in the process of marketing this space but have not located a new tenant. Our total revenues may be adversely affected if the space remains vacant for an extended period of time. Out of approximately 560,000 square feet that were vacant at September 30, 2000, approximately 100,000 square feet are leased to tenants that will take occupancy in the fourth quarter of 2000 or the first quarter of 2001. Our total expenses decreased by approximately $1.5 million to approximately $25.9 million from approximately $27.4 million in 1999. This decrease is due to a decrease in a number of properties that we own, partially offset by approximately $1.6 million in severance and termination costs that we incurred in 2000. Our total operating expenses decreased by approximately $1.4 million to approximately $8.9 million from approximately $10.3 million in 1999. On the "same-store" basis, our total operating expenses increased by approximately $0.2 million. Interest expense decreased by approximately $1.8 million to approximately $6.9 million from approximately $8.7 million primarily due to a reduction in the amounts borrowed as a result of the 1999 property dispositions and the conversion of our unsecured loan to Series A convertible preferred shares in January 2000. COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 2000 TO THREE MONTHS ENDED SEPTEMBER 30, 1999 During the three months ended September 30, 2000 and 1999 our income (loss) before minority interest decreased by approximately $1.8 million to approximately $0.5 million loss from approximately $1.3 million income. This decrease is primarily due to approximately $1.6 million of severance and termination costs that we incurred in 2000. Our total revenue decreased by approximately $1.2 million, or 11.4% to approximately $9.3 million from approximately $10.5 million due to a decrease in the number of properties that we own. On a "same-store" basis (comparing the results of operations of the properties owned during the entire three months ended September 30, 2000 with the results of the same properties owned during the entire three months ended September 30, 1999), total revenue remained unchanged. Our total operating expenses, which include property operating, repairs and maintenance, real estate taxes, and ground lease decreased by approximately $0.5 million to approximately $3.0 million from approximately $3.5 million in 1999 due to a decrease in the number of properties that we own. Interest expense decreased by approximately $0.6 million to approximately $2.3 million from approximately $2.9 million primarily due to a reduction in the amounts borrowed as a result of the 1999 property dispositions and the conversion of our unsecured loan to Series A convertible preferred shares in January 2000. SEVERANCE AND TERMINATION COSTS In September 2000, in view of our strategic direction, we adopted an employee severance and retention program. We have since terminated certain employees and will continue to review our staffing needs in the future. The total expenses for the nine and three months ended September 30, 2000 include a charge of approximately $1.6 million related to the severance and retention program. The severance and termination costs described above include a charge of approximately $0.3 million related to base compensation payable to Mr. Leonard G. Levine through December 31, 2001 under the terms of his employment agreement. Subsequent to September 30, 2000, we have entered into employment agreements with Messrs. Schafran, Higgins and Teglia, and into separation agreements with Messrs. Hansen and Schmidt. Pursuant to these separation agreements and Mr. Teglia's new employment agreement, we paid the total of approximately $0.8 million in the fourth quarter of 2000. These costs are included in the $1.6 million severance and termination costs discussed above. LIQUIDITY AND CAPITAL RESOURCES We expect to fund our short-term liquidity needs, including recurring capital expenditures, from our working capital (including the restricted cash which is available for capital expenditures, real estate taxes and insurance), and from income derived primarily from our property operations. We anticipate using these monies to fund periodic tenant-related capital expenditures and other capital improvements. We expect to fund our long-term liquidity needs, including funds necessary for non-recurring capital improvements and severance and termination costs from long-term and short-term secured debt or the proceeds from the sale of assets. If we require additional liquidity to fund a portion of the cost of improving properties in the future, we expect to borrow under our credit facility which is secured by our Johns Creek Office and Industrial Park and Technology Park or to mortgage our Avalon Ridge Business Park which is our only unencumbered property. In pursuit of our strategic alternatives and in our attempt to enhance shareholder value and liquidity, we have begun negotiating the sale of our real estate assets to a single buyer in a bulk transaction, as discussed above. If these negotiations are successful and a sale of our assets becomes imminent, it will likely be appropriate for our Board to consider the adoption of a formal plan of liquidation. The adoption of a plan of liquidation affords the Trust and its shareholders certain tax benefits for a limited period of time. At that time, we also anticipate adopting liquidation accounting. We cannot predict if or when we will ultimately be successful in consummating the aforementioned transaction or an alternative transaction, should the current one terminate. Therefore, the timing of these decisions related to the adoption of a formal plan of liquidation and liquidation accounting cannot, in this instance, be certain. Until we begin disposing of our assets, we believe the Funds Available for Distributions will continue to support our quarterly distribution of $0.12 per share. We intend to make this quarterly distribution as long as our Funds Available for Distributions support it. If and when we begin to sell assets and have adopted a plan of liquidation, in appreciation of the fact that shareholders have come to rely upon our quarterly distributions, we will endeavor to make quarterly distributions of sale proceeds. There can be no assurance that these distributions can be made with regularity or that, if made, they will equal or exceed the $0.12 per share that we currently distribute. At September 30, 2000, our assets totaled approximately $197.0 million, a decrease of approximately $9.6 million from total assets at December 31, 1999 of approximately $206.6 million. Our liabilities totaled approximately $126.5 million at September 30, 2000, a decrease of approximately $12.6 million from a total of approximately $139.1 million at December 31, 1999. Our shareholders equity increased by approximately $2.8 million to approximately $68.1 million at September 30, 2000 from approximately $65.3 million at December 31, 1999. Cash and cash equivalents consist of cash and short-term investments. Our cash and cash equivalents balance was approximately $3.2 million at September 30, 2000 and approximately $13.1 million at December 31, 1999. The decrease in total cash and cash equivalents resulted from using approximately $4.0 million in investing activities and approximately $13.5 million in financing activities, while receiving approximately $7.6 million from operating activities. Cash Flows From Operating Activities: Net cash provided by operating activities decreased by approximately $1.2 million for the nine months ended September 30, 2000 to approximately $7.6 million from approximately $8.8 million in 1999. This decrease is primarily due to a reduction in the number of properties that we own. See Results of Operations above for further discussion of the operations of our real estate assets. Due to certain unique operating characteristics of real estate companies, the National Association of Real Estate Investment Trusts ("NAREIT"), an industry trade group, has promulgated a standard known as "Funds from Operations", or "FFO" for short, which it believes more accurately reflects the operating property performance of a REIT such as our company. As defined by NAREIT, FFO means net income computed in accordance with generally accepted accounting principles ("GAAP"), less extraordinary items, excluding gains (or losses) from debt restructuring and sales of property plus depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. We have adopted the NAREIT definition for computing FFO because we believe that, subject to the following limitations, FFO provides a basis for comparing the performance and operations of a REIT such as our company. The calculation of FFO may vary from entity to entity in that capitalization and expense policies may vary from entity to entity. Items which are capitalized do not decrease FFO whereas items that are expensed decrease FFO. As such, our presentation of FFO may not be comparable to other similarly titled measures presented by other REIT's. We do not intend for FFO to be an alternative to Net Income as an indication of our performance nor an alternative to Cash Flows from Operating Activities (as calculated in accordance with GAAP) as a measure of our capacity to pay distributions. For the nine months ended September 30, 2000 and 1999, our properties generated FFO of approximately $6.2 million and $8.4 million, respectively and Funds Available for Distribution (see below) of approximately $4.9 million and $6.8 million, respectively. FFO and Funds Available for Distribution decreased on a year to year basis due primarily to the recognition of severance and termination costs in the amount of approximately $1.6 million in the quarter ended September 30, 2000 and to a decrease in the number of properties owned from period-to-period. FFO for the nine months ended September 30, 2000 and 1999 is calculated as follows: 2000 1999 ------- ------- (Dollars in thousands) Net Income Available to Common Shares. . . . $ 1,319 $ 3,668 Plus: Depreciation and Amortization Expense . . . 5,092 4,916 Less: Minority Interest Share of Depreciation and Amortization Expense . . . . . . . . . . . . . . . . . (265) (226) Extraordinary Item . . . . . . . . . . . . 42 -- -------- ------- Funds From Operations. . . . . . . . . . . . $ 6,188 $ 8,358 ======== ======= Cash Flows Provided By (Used For): Operating Activities . . . . . . . . . . . $ 7,657 $ 8,801 Investing Activities . . . . . . . . . . . $ (4,025) $(4,121) Financing Activities . . . . . . . . . . . $(13,520) $(5,824) As discussed above, our decision and ability to pay any distribution in the future, in part, will be influenced by the amount of money that we have available to distribute known as Funds Available for Distribution or "FAD" for short. FAD is calculated by increasing or decreasing FFO to give effect to items such as the impact of straight-lining rents, lease commissions paid and normalized reserves for capital improvements. We reserve approximately $0.075 per square foot for flex/industrial properties, $0.10 per square foot for office properties, $0.15 per square foot for retail property and historically $200 per residential unit. FAD for the nine months ended September 30, 2000 and 1999 is calculated as follows: 2000 1999 ------- ------- (Dollars in thousands) Funds From Operations. . . . . . . . . . . . $ 6,188 $ 8,358 Straight-line Rents. . . . . . . . . . . . . (74) (187) Lease Commissions. . . . . . . . . . . . . . (927) (944) Capital Reserve. . . . . . . . . . . . . . . (245) (386) ------- ------- Funds Available for Distribution . . . . . . $ 4,942 $ 6,841 ======= ======= Cash Flows From Investing Activities: During the nine months ended September 30, 2000, we used approximately $4.0 million in investing activities compared to approximately $4.1 in the same period in 1999. Cash flow was primarily used to make capital improvements at our various properties in the amount of approximately $4.4 million during the nine months ended September 30, 2000 and approximately $3.6 million during the nine months ended September 30, 1999. Cash Flows From Financing Activities: During the nine months ended September 30, 2000 financing activities used approximately $13.5 million compared to approximately $5.8 million in the same period in 1999. During the nine months ended September 30, 2000, we used cash primarily to make net payments on mortgage loans, and on an unsecured loan payable of approximately $8.2 million and to pay distributions to shareholders of approximately $5.5 million. The cash flows used by financing activities for the nine months ended September 30, 1999 resulted primarily from distributions paid to shareholders of approximately $4.8 million and principal payments on mortgage loans and bonds payable of approximately $1.3 million. FINANCINGS: On May 1, 2000, we entered into a loan agreement with LaSalle Bank National Association which provided for a loan in the amount of $12.1 million, which we can draw in four installments. The amount of $8.5 million was drawn on May 1, 2000. The loan which is collateralized by the Trust's Johns Creek Office and Industrial Park and Technology Park properties, bears interest at a variable rate equal to LIBOR plus 2.2% and is payable monthly. The loan principal is pre-payable without penalty and matures in one year. We utilized the proceeds from the first draw primarily to repay the amounts outstanding on a line of credit which was due on May 1, 2000 and which was previously collateralized by Johns Creek Office and Industrial Park and Technology Park, and secondarily for transaction costs. On October 8, 1999, we entered into a loan agreement in the amount of $7.8 million. The loan, which is collateralized by our Lexington Business Center property, bears interest at a variable rate equal to LIBOR plus 2% and is payable monthly. The loan principal is pre-payable without penalty and had an initial maturity date of May 31, 2000. We had two options to extend the term of the loan for one year each at the same interest rate by paying a fee of $19,500 for each extension. We exercised our first option to extend the term of the loan until May 31, 2001. OTHER INFORMATION As of September 30, 2000, we owned interests, directly or indirectly through our wholly owned subsidiaries, in the properties set forth in the table below: BANYAN STRATEGIC REALTY TRUST Portfolio Summary September 30, 2000
Scheduled Lease Expirations Occu- ------------------------------- Date Square pancy After Acquired Footage % 2000 2001 2002 2002 -------- ------- -------- ---- ---- ---- ----- FLEX/INDUSTRIAL - --------------- Milwaukee Industrial Properties Milwaukee, WI. . . . . . . . . 4/30/93 235,800 90% 5% 16% 36% 33% Elmhurst Metro Court Elmhurst, IL . . . . . . . . . 11/30/93 140,800 76% 0% 39% 12% 25% Willowbrook Industrial Court Willowbrook, IL. . . . . . . . 6/16/95 84,300 99% 10% 26% 31% 32% Lexington Business Center Lexington, KY. . . . . . . . . 12/05/95 308,800 69% 0% 9% 5% 55% Newtown Business Center Lexington, KY. . . . . . . . . 12/05/95 87,100 99% 2% 39% 16% 42% 6901 Riverport Drive Louisville, KY . . . . . . . . 11/19/96 322,100 55% 0% 0% 0% 55% Avalon Ridge Business Park Norcross, GA . . . . . . . . . 4/24/98 57,400 100% 0% 0% 0% 100% Tower Lane Business Park Bensenville, IL. . . . . . . . 4/27/98 95,900 84% 5% 21% 30% 28% Metric Plaza Winter Park, FL. . . . . . . . 4/30/98 32,000 100% 0% 0% 69% 31% Park Center Orlando, FL. . . . . . . . . . 4/30/98 47,400 90% 9% 25% 31% 25% Scheduled Lease Expirations Occu- ------------------------------- Date Square pancy After Acquired Footage % 2000 2001 2002 2002 -------- ------- -------- ---- ---- ---- ----- University Corporate Center Winter Park, FL. . . . . . . . 4/30/98 127,800 76% 7% 33% 22% 14% Johns Creek Office and Industrial Park Duluth and Suwanee, GA . . . . 8/14/98 119,300 100% 0% 0% 50% 50% ---------- ----- ----- ----- ----- ----- Sub-total. . . . . . . . . . 1,658,700 79% 2% 15% 19% 43% ---------- ----- ----- ----- ----- ----- OFFICE - ------ Colonial Penn Building Tampa, FL. . . . . . . . . . . 3/22/94 79,200 72% 0% 0% 0% 72% Commerce Center Sarasota, FL . . . . . . . . . 3/22/94 81,100 100% 0% 11% 5% 84% Woodcrest Office Park Tallahassee, FL. . . . . . . . 12/19/95 264,900 91% 6% 20% 20% 45% Midwest Office Center Oakbrook Terrace, IL . . . . . 4/18/96 77,000 97% 14% 23% 32% 28% Phoenix Business Park Atlanta, GA. . . . . . . . . . 1/15/97 110,600 100% 0% 4% 18% 78% Butterfield Office Plaza Oak Brook, IL. . . . . . . . . 4/30/97 200,800 89% 2% 21% 39% 27% Southlake Corporate Center Morrow, GA . . . . . . . . . . 7/30/97 56,200 97% 0% 32% 38% 27% University Square Business Center Huntsville, AL . . . . . . . . 8/26/97 184,700 89% 7% 26% 24% 32% Technology Center Huntsville, AL . . . . . . . . 8/26/97 48,500 100% 0% 0% 0% 100% Airways Plaza Office Center Memphis, TN. . . . . . . . . . 12/10/97 87,800 17% 0% 4% 3% 10% Scheduled Lease Expirations Occu- ------------------------------- Date Square pancy After Acquired Footage % 2000 2001 2001 -------- ------- -------- ---- ---- ---- ----- Peachtree Pointe Office Park Norcross, GA . . . . . . . . . 1/20/98 71,700 77% 13% 13% 9% 42% Avalon Center Office Park Norcross, GA . . . . . . . . . 3/20/98 53,300 87% 0% 0% 0% 87% Sand Lake Tech Center Orlando, FL. . . . . . . . . . 4/30/98 84,100 100% 0% 0% 3% 97% Technology Park Norcross, GA . . . . . . . . . 8/14/98 145,700 100% 13% 28% 4% 55% ---------- ----- ----- ----- ----- ----- Sub-total. . . . . . . . . 1,545,600 88% 5% 16% 17% 50% ---------- ----- ----- ----- ----- ----- RETAIL - ------ Northlake Tower Shopping Center Atlanta, GA. . . . . . . . . . 7/28/95 321,600 97% 1% 2% 7% 87% ---------- ----- ----- ----- ----- ----- Total. . . . . . . . . . . . . 3,525,900 84% 3% 14% 17% 50% ---------- ----- ----- ----- ----- -----
BANYAN STRATEGIC REALTY TRUST Comparison of Average Rents Average Average "In Place" Market Square Net Rents Net Rents Property Type Footage (1) (2) - ------------- --------- ---------- --------- Flex/Industrial. . . . . . 1,658,700 $5.55 $5.59 Office . . . . . . . . . . 1,545,600 9.18 10.27 Retail . . . . . . . . . . 321,600 11.81 12.00 ---------- ------ ------ Total. . . . . . . . . 3,525,900 $ 7.71 $ 8.23 ========== ====== ====== - -------------------- (1) Average "In Place" Net Rents represent net operating income per square foot. (2) Average Market Net Rents represent our good faith estimate of current market rents, assuming standard tenant improvements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK We do not engage in any hedge transactions nor in the ownership of any derivative financial instruments. To mitigate the impact of fluctuations in interest rates, we generally have maintained over 70% of our debt as fixed rate in nature by borrowing on a long-term basis. As of September 30, 2000, we had approximately $118.3 million of outstanding long-term debt, of which $20.8 million bears interest at variable rates that are adjusted on a monthly basis. As of September 30, 2000, the weighted-average interest rate on this variable rate debt was 8.14%. If interest rates on this variable rate debt increased by one percentage point (1%), interest expense would increase by $208,000 on an annual basis. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS LITIGATION In the process of exploring and evaluating strategic alternatives designed to maximize shareholder value, our Financial Advisory Committee and Cohen held preliminary discussions with our president Leonard Levine in response to inquiries made by Mr. Levine regarding a potential acquisition of the Trust's assets by an entity controlled by Mr. Levine. The Financial Advisory Committee later concluded that, in its view, Mr. Levine engaged in conduct which constitutes a breach of his duty of loyalty to the Trust and its shareholders and a breach of his employment contract. On August 14, 2000, we exercised our rights under the employment agreement with Mr. Levine, by suspending him and placing him on leave from his position as president. On the same date, we also initiated an arbitration proceeding in accordance with the provisions of the employment agreement in which we contend that certain actions taken by Mr. Levine constitute "just cause" for terminating his employment agreement. In response to the arbitration, on or about October 5, 2000, Mr. Levine filed a lawsuit in the Circuit Court of Cook County (Case #00CH14510). Mr. Levine's lawsuit seeks a declaratory judgment which would halt the arbitration proceedings because he alleges it is an improper forum. We accepted service of this complaint on October 30, 2000 and have instructed our counsel to attempt to resolve this issue of the correct forum with Mr. Levine's counsel by stipulation, if possible, so that there will be no further delay in the proceedings. On October 18, 2000, we filed suit in the Circuit Court of Cook County, Illinois (Case #00CH15154) against Mr. Levine. Our complaint alleges violations of Mr. Levine's fiduciary duty of loyalty owed to us. The lawsuit we have filed seeks a declaratory judgment that we have and had "just cause" to terminate the employment agreement and/or Mr. Levine's employment. The complaint also seeks an accounting and disgorgement of all benefits received by Mr. Levine while in breach of his fiduciary obligations to us, including salary, insurance and other benefits. Pursuant to the terms of the employment agreement, we continue to pay Mr. Levine all salary, benefits and reasonable, ordinary and necessary business expenses during his suspension. We estimate our maximum potential liability in connection with Mr. Levine's contract to be approximately $1.8 million, exclusive of base salary. We intend to vigorously contest Mr. Levine's attempts to retain or collect all disputed amounts under this contract. We obtained service of our complaint on Mr. Levine on October 30, 2000. We have not received a response. Mr. Levine's response is currently due in late November. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (see Exhibit Index included elsewhere herein). (b) None SIGNATURES PURSUANT to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on our behalf and in the capacities and on the dates indicated. BANYAN STRATEGIC REALTY TRUST By: /s/ L.G. Schafran Date: November 14, 2000 L.G. Schafran, Interim President By: /s/ Joel L. Teglia Date: November 14, 2000 Joel L. Teglia, Vice President and Chief Financial Officer EXHIBIT INDEX - ------- 3.1 Third Amended and Restated Declaration of Trust dated as of August 8, 1986, as amended on March 8, 1991, May 1, 1993, August 12, 1998 and December 13, 1999, including Certificate of designations, preferences and rights of Series A convertible preferred shares. (1) 3.2 First Amendment of Third Amended and Restated Declaration of Trust effective December 13, 1999. (2) 3.3 By-Laws dated March 13, 1996. (3) 3.4 BSRT UPREIT Limited Partnership Limited Partnership Agreement (4) 4.1 Convertible Term Loan Agreement dated as of October 10, 1997 among Banyan Strategic Realty Trust, as Borrower, and the Entities listed therein, as Lenders. (5) 4.2 First Amendment to Convertible Term Loan Agreement dated as of March 30, 1998 made by and among Banyan Strategic Realty Trust and the Entities listed therein, as Lenders. (6) 4.3 Second Amendment to Convertible Term Loan Agreement dated as of June 26, 1998 made by and among Banyan Strategic Realty Trust and the Entities listed therein, as Lenders. (7) 4.4 Revolving Credit Agreement dated April 30, 1998 among Banyan Strategic Realty Trust, as Borrower and the Capital Company of America, as Lender. (8) 4.5 Loan Agreement dated May 22, 1998 among BSRT Fountain Square L.L.C., BSRT Phoenix Business Park L.L.C., BSRT Newtown Trust, BSRT Southlake L.L.C., BSRT Technology Center L.L.C., BSRT Airways Plaza L.L.C., BSRT Peachtree Pointe L.L.C., BSRT Avalon Center L.L.C., BSRT Sand Lake Tech Center L.L.C., BSRT Park Center L.L.C., BSRT Metric Plaza L.L.C., and BSRT University Corporate Center L.L.C., as Borrower, and the Capital Company of America, as Lender. (7) 4.6 First Amendment to Loan Agreement dated September 11, 1998 among BSRT Fountain Square L.L.C., BSRT Phoenix Business Park L.L.C., BSRT Newton Trust, BSRT Southlake L.L.C., BSRT Technology Center L.L.C., BSRT Airways Plaza L.L.C., BSRT Peachtree Pointe L.L.C., BSRT Avalon Center L.L.C., BSRT Sand Lake Tech Center L.L.C., BSRT Park Center L.L.C., BSRT Metric Plaza L.L.C., and BSRT University Corporate Center L.L.C., as Borrower, and the Capital Company of America LLC, as Lender. (9) 4.7 Loan Agreement dated June 22, 1998 between Banyan/Morgan Wisconsin L.L.C., and Banyan/Morgan Elmhurst L.L.C., as Borrower and the Capital Company of America, as Lender. (7) 4.8 First Amendment to Loan Agreement dated September 11, 1998 between Banyan/Morgan Wisconsin L.L.C., and Banyan/Morgan Elmhurst L.L.C., as Borrower and the Capital Company of America LLC, as Lender. (9) 10.1 Employment Agreement of L.G. Schafran dated October 26, 2000. (*) 10.2 Employment Agreement of Leonard G. Levine as of December 14, 1999. (1) 10.3 Employment Agreement of Leonard G. Levine as of October 1, 1997. (10) EXHIBIT INDEX - ------- 10.4 Employment Agreement of Joel L. Teglia dated November 1, 2000. (*) 10.5 Employment Agreement of Joel L. Teglia dated December 31, 1998. (4) 10.6 Employment Agreement of Robert G. Higgins dated September 1, 2000. (*) 10.7 Separation Agreement of Neil Hansen dated October 1, 2000. (*) 10.8 Employment Agreement of Neil Hansen dated December 31, 1998. (4) 10.9 Separation Agreement of Jay Schmidt dated October 1, 2000. (*) 10.10 Employment Agreement of Jay Schmidt dated December 31, 1998. (4) 10.11 1997 Omnibus Stock and Incentive Plan dated July 9, 1997. (11) 10.12 Share Purchase Agreement by and among Banyan Strategic Realty Trust and the Purchasers listed on the signature page attached thereto dated as of October 10, 1997. (5) 10.13 Registration Rights Agreement dated as of October 10, 1997 between Banyan Strategic Realty Trust and the Purchasers listed on the Signature Pages attached thereto. (5) 10.14 Registration Rights Agreement dated as of October 1, 1997 between Banyan Strategic Realty Trust and Leonard G. Levine. (4) 10.15 Consulting Agreement dated as of February 18, 2000 between CFC Advisory Services Limited Partnership and Banyan Strategic Realty Trust. (12) 10.16 Modification to Consulting Agreement dated as of May 31, 2000 between CFC Advisory Services Limited Partnership and Banyan Strategic Realty Trust. (12) 21 Subsidiaries of Banyan Strategic Realty Trust (1) 27 Financial Data Schedule (*) - -------------------- (*) Filed herewith. (1) Incorporated by reference from the Trust's Form 10-K for the year ended December 31, 1999. (2) Incorporated by reference from the Trust's Form 10-Q dated March 31, 2000. (3) Incorporated by reference from the Trust's Registration Statement on Form S-11 (file number 33-4169). (4) Incorporated by reference from the Trust's Form 10-K for the year ended December 31, 1998. (5) Incorporated by reference from the Trust's Form 8-K dated October 14, 1997. (6) Incorporated by reference from the Trust's Form 10-K/A for the year ended December 31, 1997. (7) Incorporated by reference from the Trust's Form 8-K dated May 22, 1998. (8) Incorporated by reference from the Trust's Form 10-Q dated March 31, 1998. (9) Incorporated by reference from the Trust's Form 8-K/A-1 dated August 14, 1998. (10) Incorporated by reference from the Trust's Form 10-K dated December 31, 1997. (11) Incorporated by reference from the Trust's Form 10-Q for the quarter ended June 30, 1997. (12) Incorporated by reference from the Trust's Form 10-Q for the quarter ended June 30, 2000. EX-10.1 2 0002.txt EXHIBIT 10.1 - ------------ EMPLOYMENT AGREEMENT This Agreement (the "Agreement") is made and entered into as of October 26, 2000 by and between L.G. Schafran (the "Executive") and Banyan Strategic Realty Trust (the "Trust"). WHEREAS, the Executive has been employed as the Trust's interim president and chief executive officer since August 14, 2000; WHEREAS, the Trust is desirous of entering into a written agreement with Executive pursuant to which Executive will continue to serve as the Trust's interim president and chief executive officer. NOW THEREFORE, in consideration of the premises, mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Trust and the Executive do hereby agree as follows: 1. EMPLOYMENT DUTIES. The Trust agrees to employ the Executive as the interim president and chief executive officer of the Trust to perform such duties as may reasonably be assigned from time to time consistent with this position by the Trust's board of trustees. 2. PERFORMANCE. The Executive accepts the appointment described in SECTION 1 of this Agreement and agrees to faithfully and diligently perform the services described therein. 3. EFFECTIVENESS; TERM. The term of this Agreement shall commence as of August 14, 2000 and shall remain in effect unless sooner terminated until February 13, 2002. 4. BASE COMPENSATION. For the services rendered by the Executive hereunder, the Trust shall pay the Executive a base salary at a rate equal to $200,000 per year (the "Base Salary") payable semi-monthly or at the same time and in the same manner in which the payroll of the Trust is paid, as determined by the Trust. 5. INCENTIVE COMPENSATION. In addition to the Base Salary, the Trust shall pay the Executive incentive compensation equal to the greater of: (a) an amount equal to the product of the Base Amount and the applicable Liquidation Incentive Factor; and (b) the "Early Completion Bonus" ("Incentive Compensation"). The amount of Incentive Compensation payable hereunder will be reduced by the amount of any Incentive Compensation previously paid to Executive. For purposes of calculating amounts payable under this SECTION 5: (A) "Applicable Liquidation Incentive Factor" shall mean the percentage set forth in the last column of the table set forth as EXHIBIT A hereto that corresponds to the present value of the amounts distributed to holders of the Trust's beneficial interest set forth in the table; provided that the Applicable Liquidation Incentive Factor shall be zero until such time as the Present Value Aggregate Per Share Distributions equals or exceeds $6.25 per share. (B) "Base Amount" shall mean $300,000. (C) "Early Completion Bonus" shall mean (i) $300,000 if the "Present Value of Aggregate Per Share Distributions" paid by the Trust on or before December 31, 2000 is equal to, or greater than, $6.00 per share (the "Year End Early Completion Bonus"); or (ii) $225,000 if the "Present Value of Aggregate Per Share Distributions" paid by the Trust after December 31, 2000 but on or before March 31, 2001 is equal to, or greater than, $6.00 per share and Executive did not achieve the Year End Early Completion Bonus. (D) "Per Share Distribution Paid to Holders" shall mean: (i) the amount of cash paid, or the fair market value of any distribution in kind (as determined by the Trust's board of trustees exercising reasonable business judgment) paid to the Trust's holders of beneficial interest during the term of this Agreement, or after the term of this Agreement if the transaction or event resulting in such payment or distribution was initiated during the term of this Agreement with the material assistance of Executive, divided by (ii) the number of shares of beneficial interest outstanding on the record date of the distribution or, in the case of a tender offer or open market repurchases, the number of shares of beneficial interest outstanding on the business day before the tender offer or open market repurchase program begins. For these purposes, amounts expended by the Trust to repurchase its securities or amounts realized by holders of the Trust's securities as a result of a third-party tender offer shall be treated as amounts distributed to the holders. Additionally, "Per Share Distribution Paid to Holders" shall not include the distribution declared by the Trust's board on October 13, 2000. (E) "Present Value of Aggregate Per Share Distributions" shall mean the sum of the Per Share Distribution Paid to Holders, in each case, discounted from the date of payment to the date of this Agreement, using a discount rate equal to 12% per annum. The Trust shall pay the Executive any Incentive Compensation earned under this SECTION 5 in cash no later than ten (10) business days after the distribution triggering payment is paid to the holder of shares of beneficial interest of the Trust. 6. ADDITIONAL BENEFITS. During the term of this Agreement, Executive shall also participate in any benefit or deferred compensation plan sponsored by the Trust, including, but not limited to, profit sharing plans, dental and medical plans and disability insurance, if any. Executive shall also be entitled to four (4) weeks paid vacation and shall be reimbursed by the Trust for all reasonable out-of-pocket business expenses incurred by Executive in connection with performing his duties under this Agreement; provided, however, that the Executive shall provide the Trust with an accounting conforming to Internal Revenue Service or other requirements substantiating the nature of all reimbursable expenses. All reimbursements shall be paid to the Executive within a reasonable time after receipt by the Trust of the appropriate documentation. 7. WITHHOLDING. All compensation and benefits paid to Executive hereunder shall be reduced by all federal, state, local and other withholding and similar taxes and payments required by applicable law. 8 TERMINATION. This Agreement and the Executive may be terminated as follows: (A) TERMINATION FOR CAUSE. The Trust may terminate this Agreement for "Cause." For purposes of this Agreement, "Cause" shall mean: (a) conduct of the Executive amounting to fraud, embezzlement, gross negligence, or wilful or illegal misconduct in connection with performing Executive's duties under this Agreement; (b) any act of dishonesty by the Executive in connection with performing Executive's duties under this Agreement; (c) the indictment or conviction of Executive by a court of proper jurisdiction of (or his written, voluntary and freely given confession to) a crime which constitutes a felony or which results in material injury to the Trust's property, assets or reputation; (d) any failure by the Executive to perform or observe any duty assigned to Executive hereunder or the breach by Executive of this Agreement, which continues for a period of five (5) business days after written notice detailing the breach from the Trust to the Executive; provided that no cure period shall be required after the first breach; or (e) the reinstatement by the Trust of Leonard G. Levine as president and chief executive officer. If the Trust terminates this Agreement for Cause as described in (a)-(d), the Trust shall have no further obligation to pay Executive any of the compensation or benefits described in this Agreement. If the Trust terminates this Agreement for Cause as described in (e), the Trust shall be obligated to pay Executive all Base Salary that Executive would have been paid during the remaining term of this Agreement but for the termination plus all Incentive Compensation described in SECTION 5 and any benefits or other amounts due under SECTION 6 as though this Agreement had not been terminated. (B) TERMINATION BY REASON OF DISABILITY. The Trust may terminate this Agreement if the Executive, in the reasonable judgment of the Trust's board of trustees, is unable to perform his duties on account of illness or physical or mental incapacity for a period of more than two (2) months in any twelve (12) consecutive month period. To terminate, the Trust must notify the Executive in writing and pay the Executive: (i) all Base Salary and Incentive Compensation to the extent earned and unpaid through the date of termination, (ii) any amounts or benefits due Executive under SECTION 6 to the date of termination, with the exception of medical benefits which shall continue through the expiration of this Agreement, and (iii) "Adjusted Incentive Compensation." Amounts due under this paragraph shall be paid within thirty (30) business days of termination, except for Adjusted Incentive Compensation. "Adjusted Incentive Compensation" shall mean the product of the Incentive Compensation that would have been paid to Executive had the Agreement not been terminated and "Employment Period" which for these purposes shall be equal to the fraction the numerator of which is the number of days that Executive was employed by the Trust pursuant to this Agreement and the denominator of which is the lesser of: (i) 548; or (ii) the number of days from August 14, 2000 to the date of final liquidation and dissolution of the Trust. Amounts owed for Adjusted Incentive Compensation shall be paid at the time that Incentive Compensation would have been paid under SECTION 5. The Executive shall not have the right to, and the Trust shall have no further obligation to pay, other compensation or reimbursement of any kind, including, without limitation, incentive or severance compensation. (C) TERMINATION BY REASON OF DEATH. The Trust may terminate this Agreement if Executive dies in which case Executive's employment shall be deemed to have terminated as of the last day of the month during which his death occurs. Upon termination, the Trust shall pay his estate or his beneficiaries as the Executive may from time to time designate: (i) all Base Salary and Incentive Compensation to the extent earned and unpaid through the date of termination, (ii) any benefits or amounts due Executive under SECTION 6 to the date of termination, and (iii) Adjusted Incentive Compensation. Amounts due under this paragraph shall be paid within thirty (30) days of termination, except Adjusted Incentive Compensation which shall be paid at the time that Incentive Compensation would have been paid under SECTION 5. The Trust shall not have any other liability or obligation to Executive's estate for other compensation or reimbursement of any kind, including, without limitation, incentive or severance compensation. (D) VOLUNTARY TERMINATION BY EXECUTIVE. The Executive may terminate this Agreement by notifying the Trust in writing at least thirty (30) days prior to the date of termination. Within five (5) business days of the date of termination, the Trust shall pay Executive all benefits and other amounts due under SECTION 6 hereof plus all Base Salary and Incentive Compensation earned but unpaid through the date of termination. If Executive fails to notify the Trust in the manner and time provided herein, the Trust will have no obligation to Executive for compensation or reimbursement of any kind, including, without limitation, incentive and severance compensation. (E) TERMINATION OF THE TRUST. The Trust may terminate this Agreement upon the final liquidation and dissolution of the Trust; provided, however, that the Trust shall pay to the Executive: (i) the balance of the Base Salary that would have been paid to Executive but for the dissolution and liquidation, (ii) any Incentive Compensation earned but unpaid through the date of termination, and (iii) any benefits or other amounts due under SECTION 6 to the date of termination. (F) CHANGE OF CONTROL. The Executive may terminate this Agreement by written notice given to the Trust upon a "Change of Control." For purposes of this SECTION 8(F), "Change of Control" shall mean: (x) that the members of the Trust's board of directors as of the date of this Agreement fail to constitute a majority of the members of the board provided that any individual becoming a member of the board who is nominated by the board shall be treated as if he or she were a member of the board as of the date of this Agreement; or (y) the shareholders of the Trust adopt a plan of liquidation or take other action having the effect of a plan of liquidation without the recommendation or approval of the board; PROVIDED, HOWEVER, this SECTION 8(F) shall not apply if the Change of Control results from a sale of the stock of the Company pursuant to a tender offer recommended for approval by the Trust's board of trustees. Upon termination, the Trust shall pay Executive: (i) all Base Salary and Incentive Compensation to the extent earned and unpaid through the date of termination, (ii) any amounts due Executive under SECTION 6 to the date of termination, and (iii) Adjusted Incentive Compensation. Amounts due under this paragraph shall be paid within thirty (30) business days of termination, except Adjusted Incentive Compensation which shall be paid at the time that Incentive Compensation would have been paid under SECTION 5. 9. OTHER ACTIVITIES OF EXECUTIVE. The Executive shall devote such working time and attention as is necessary to fulfill his responsibilities hereunder. The Executive shall not engage in any activity which may be adverse to the Trust's business, appropriate or usurp business opportunities or engage or invest in businesses or assets which compete directly or indirectly with the Trust. Nothing contained herein shall prohibit the Executive from investing in publicly-traded entities which are engaged in lines of businesses similar to the Trust or from continuing to serve as a director on the boards on which Executive serves as of the date of this Agreement. 10. INDEMNIFICATION. The Trust shall indemnify and hold harmless the Executive from liabilities which the Executive may incur resulting from or arising out of any act undertaken in connection with the Executive's duties under the Agreement in the same manner and to the same extent as the Trust is permitted to indemnify any trustee or other officer of the Trust under the Trust's Amended and Restated Declaration of Trust, as may be amended. 11. NOTICE. Any notice required or permitted hereunder shall be made in writing: (i) either by actual or delivery of the notice into the hands of the party entitled; or (ii) by depositing the notice in the United States mail certified or registered, return receipt requested, all postage prepaid and addressed to the party to whom notice is to be given at the party's respective address set forth below, or such other address as the party may from time to time designate by written notice to the other party. If to the Trust: Banyan Strategic Realty Trust Suite 2900 150 South Wacker Drive Chicago, Illinois 60606 Attn: General Counsel with copies to: Shefsky & Froelich Ltd. 444 North Michigan Avenue Suite 2500 Chicago, Illinois 60611 Attn: Michael J. Choate, Esq. If to the Executive: Mr. L.G. Schafran Banyan Strategic Realty Trust 150 South Wacker Drive Suite 2900 Chicago, Illinois 60606 with a copy to: Jay I. Gordon, Esq. Greenberg Traurig 200 Park Avenue New York, New York 10166 The notice shall be deemed to be received on the earlier of (i) the date of its actual receipt by the party entitled thereto and (ii) the third business day following the date of mailing. 12. AMENDMENT AND WAIVER. No amendment or modification to this Agreement shall be valid or binding on the Trust unless made in writing and signed by an officer of the Trust duly authorized by the board or upon the Executive unless made in writing and signed by the Executive. The waiver by the Trust or the Executive of the breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. 13. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties with respect to the Executive's duties, compensation and severance as an employee of the Trust, there are no representations, warranties, agreements or commitments between the parties hereto with respect to the Executive's employment except as set forth herein. 14. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the internal laws (and not the law of conflicts) of the State of Illinois. The parties agree that any suit, action or proceeding with respect to this Agreement shall be brought in the courts of Cook County in the State of Illinois or in the U.S. District Court for the Northern District of Illinois. The parties hereto accept the exclusive jurisdiction of those courts for the purpose of any such suit, action or proceeding. Venue for any such action, in addition to any other venue permitted by statute, will be Cook County, Illinois. 15. SEVERABILITY. If any provision of this Agreement shall, for any reason, be held unenforceable, the provision shall be severed from this Agreement unless, as a result of severance, the Agreement fails to reflect the basis intent of the parties on the date hereof 16. ASSIGNMENT. Except as provided herein, the Executive may not, under any circumstances delegate any of his rights and obligations hereunder without the prior written consent of the Trust. This Agreement and all of the Trust's rights and obligations hereunder may be assigned or transferred by it, in whole or in part, to be binding upon and inure to the benefit of any subsidiary or successor of the Trust. 17. COST OF ENFORCEMENT. In any suit or proceeding seeking to enforce the terms, covenants or conditions of this Agreement, the prevailing party shall, in addition to all of the remedies and relief that may be available under this Agreement or applicable law, recover his or its reasonable attorneys' fees and costs as shall be determined and awarded by the court or the arbitrator. 18. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which will be deemed an original. 19. PAYMENT OF EXECUTIVE'S FEES. The Trust agrees to pay to Executive the reasonable cost of the attorney's fees incurred by Executive in the negotiation and preparation of this Agreement, within thirty (30) days of receipt by the Trust of a detailed accounting of such fees. [Remainder of page intentionally left blank] IN WITNESS WHEREOF, this Agreement is entered into on the day and year first written above. BANYAN STRATEGIC REALTY TRUST By: ------------------------------ Name: Robert G. Higgins Title: Vice President EXECUTIVE ____________________________________ L.G. Schafran EX-10.4 3 0003.txt EXHIBIT 10.4 - ------------ EMPLOYMENT AGREEMENT This Agreement (the "Agreement") is made and entered into as of November 1, 2000 by and between Joel L. Teglia ("Teglia") and Banyan Strategic Realty Trust, a Massachusetts business trust (the "Trust"). WHEREAS, Teglia is the Trust's Vice President and Chief Financial Officer and is employed by the Trust pursuant to an employment agreement entered into as of December 31, 1998 (the "Existing Agreement"); WHEREAS, the Trust is reviewing its strategic options and may, among other things, engage in transactions as a precedent to liquidating and dissolving the Trust; WHEREAS, the Existing Agreement expires on December 31, 2000 but is automatically renewed for an additional one year period unless notice of non-renewal is given by the Trust to Teglia no later than September 30, 2000; WHEREAS, the Trust notified Teglia, on or before September 30, 2000, that the Existing Agreement would not be renewed but that the Trust was desirous of entering into a new employment agreement with Teglia on the terms and conditions contained herein; WHEREAS, Teglia is desirous of entering into a new employment agreement with the Trust on the terms and conditions contained herein. NOW THEREFORE, in consideration of the premises, mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Trust and Teglia do hereby agree as follows: 1. RECITALS. The recitals to this Agreement are incorporated by reference into this Agreement and made a part hereof as though stated herein. 2. EMPLOYMENT DUTIES. The Trust agrees to employ Teglia initially as Vice President- Chief Financial Officer and following the first annual meeting of shareholders to be held after execution and delivery of this Agreement as the Executive Vice President and Chief Financial Officer of the Trust to perform such duties as may reasonably be assigned from time to time consistent with this position by the Trust's board of trustees. 3. PERFORMANCE. Teglia accepts the appointment described in SECTION 2 of this Agreement and agrees to faithfully and diligently perform the services described therein or assigned by the board of trustees. 4. EFFECTIVENESS; TERM. The term of this Agreement shall commence as of November 1, 2000 and shall continue until October 31, 2002, unless sooner terminated pursuant to SECTION 11 hereunder (the "Term"). 5. BASE COMPENSATION. For the services rendered by Teglia hereunder, the Trust shall pay Teglia a base salary at a rate equal to $180,120 per annum (the "Base Salary") payable at the same time and in the same manner in which the payroll of the Trust is paid, subject to the following increases: (a) commencing on January 1, 2001, the Base Salary shall be increased to $200,000 per annum; and (b) commencing on January 1, 2002, the Base Salary shall be increased to $210,000. 6. OTHER COMPENSATION. On execution and delivery of this Agreement, the Trust shall pay Teglia $204,765 in full settlement of any obligations under the Existing Agreement (the "Retention Payment"). In addition, provided that this Agreement is not terminated under SECTION 11(A) or (D), the Trust shall pay Teglia, in a lump sum, an amount equal to fifty percent (50%) of the aggregate amount of Base Salary paid to Teglia during the period commencing on November 1, 2000 and ending on the date this Agreement expires or is terminated ("Bonus Compensation"). The Bonus Compensation due under this SECTION 6 shall be paid within five (5) business days of expiration or termination of this Agreement. 7. ADDITIONAL BENEFITS. During the term of this Agreement, Teglia shall also participate in any benefit or deferred compensation plan sponsored by the Trust, including, but not limited to, profit sharing plans, dental and medical plans and disability insurance, if any. Teglia shall also be entitled to four (4) weeks paid vacation each year and shall be reimbursed by the Trust for all reasonable out-of-pocket business expenses incurred by Teglia in connection with performing his duties under this Agreement; provided, however, that Teglia shall provide the Trust with an accounting conforming to Internal Revenue Service or other requirements substantiating the nature of all reimbursable expenses. All reimbursements shall be paid to Teglia within a reasonable time after receipt by the Trust of the appropriate documentation. 8. WITHHOLDING. All compensation and benefits paid to Teglia hereunder shall be reduced by all federal, state, local and other withholding and similar taxes and payments required by applicable law. 9. CONFIDENTIALITY. Teglia agrees that as a result of his employment with the Trust, he has acquired, or will acquire, information of a special and unique nature and value that is not generally known to the public or to the Trust's industry regarding the Trust, including but not limited to, business, financial and other records of the Trust and its affiliates, including its and their joint venture partners, software programs, employee records, mailing lists, tenant lists and profiles, prospective tenant lists, accounts receivable and payable ledgers, plans and projections, budgets, marketing data and other similar matters (all such information being hereinafter referred to as "Confidential Information"). Accordingly, Teglia: (A) will not, except as otherwise authorized by the Trust, divulge to any person, firm, corporation, limited liability company, or organization (hereinafter referred to as "Third Parties"), or use or cause or authorize any Third Parties to use, the Confidential Information, except as required by law or court order; and (B) upon termination of this Agreement, will deliver, destroy or delete or cause to be delivered, destroyed or deleted, as the Trust may request, any and all Confidential Information, including drawings, notebooks, keys, data and other documents and materials belonging to the Trust or its affiliates which is in his possession or under his control relating to the Trust or its affiliates, or the business of the Trust, regardless of the medium upon which it is stored, and will deliver to the Trust any other property of the Trust or its affiliates which is in his possession or under his control within five (5) business days of the termination of this Agreement. For purposes of this SECTION 9, the term "Confidential Information" shall not include information which: (i) was in the public domain at the time of execution of this Agreement; (ii) hereafter becomes part of the public domain by publication or otherwise through no unauthorized action of Teglia; or (iii) was received by Teglia through a source other than the Trust which is not under an obligation of confidentiality to the Trust. Teglia further acknowledges and agrees that the Confidential Information is of great value to the Trust and its affiliates and that the restrictions and agreements contained in this Agreement are reasonably necessary to protect the Confidential Information and the goodwill of the Trust's business. Teglia acknowledges that a violation of the provisions of this SECTION 9 will cause irreparable damage to the Trust, the amount of which may be impossible to quantify, and Teglia therefore agrees and understands that if this SECTION 9 is violated, the Trust shall be entitled to injunctive relief in addition to any other remedies available to the Trust at law or in equity. 10. EMPLOYMENT AGREEMENT; RELEASE OF CLAIMS. This Agreement shall supersede the Existing Agreement which shall be void and of no further effect upon the execution and delivery of this Agreement by each party. (A) In consideration of the promises contained herein, and as a natural inducement to the Trust to enter into this Agreement, Teglia hereby releases and forever discharges the Trust and its officers, trustees, employees, investors, shareholders, affiliates and agents from, and agrees not to sue any of these parties concerning any and all actions, liabilities, and other claims for relief and remuneration whatsoever, arising out of, or in any way connected with Teglia's employment by the Trust prior to the date of this Agreement, including all matters in equity, contract, tort or pursuant to statute, whether presently known or unknown, suspected or unsuspected that Teglia may possess arising from any omissions, acts or facts existing as of, or prior to, the date of this Agreement; provided nothing herein shall be deemed to waive or release any claim: (a) for indemnification that Teglia may have under the Trust's Third Amended and Restated Declaration of Trust; or (b) to enforce this Agreement. (B) In consideration of the promises contained herein, and as a natural inducement to Teglia to enter into this Agreement, the Trust hereby releases and forever discharges Teglia and his heirs, executors and administrators from any and all actions, liabilities and other claims for relief or remuneration whatsoever, arising out of, or in any way connected with, Teglia's employment by the Trust prior to the date of this Agreement, including all matters in equity, contract, tort or pursuant to statute except for actions or claims alleging fraud or wilful misconduct by Teglia. 11. TERMINATION. This Agreement and Teglia's employment may be terminated as follows: (A) TERMINATION FOR CAUSE. The Trust may terminate this Agreement for "Cause." For purposes of this Agreement, "Cause" shall mean: i. conduct of Teglia which constitutes fraud, misappropriation, embezzlement, gross negligence, or wilful or illegal misconduct in connection with performing Teglia's duties under this Agreement; ii. any material act of dishonesty by Teglia in connection with performing Teglia's duties under this Agreement that is not covered in (i) above; iii. the indictment or conviction of Teglia by a court of proper jurisdiction of (or his written, voluntary and freely given confession to) a crime which constitutes a felony or which results in material injury to the Trust's property, assets or reputation; or iv. any material breach by Teglia of this Agreement, which continues for a period of five (5) business days after written notice detailing the breach from the Trust to Teglia; provided that no cure period shall be required after the first breach. If the Trust terminates this Agreement for Cause, the Trust shall have no further obligation to pay Teglia any of the compensation or benefits described in this Agreement, except for any Base Salary and amounts or benefits due Teglia under SECTION 7 earned but unpaid through the date of termination. (B) TERMINATION BY REASON OF DISABILITY. The Trust may terminate this Agreement if Teglia, in the reasonable judgment of the Trust's board of trustees, is unable to perform his duties, with or without reasonable accommodation, on account of illness or physical or mental incapacity for a period of more than two (2) months in any twelve (12) consecutive month period. To terminate, the Trust must notify Teglia in writing and pay Teglia all Base Salary and Bonus Compensation to the extent earned and unpaid and any amounts or benefits due Teglia under SECTION 7, all to the date of termination, with the exception of medical benefits which shall continue through the end of the Term. Amounts due under this paragraph shall be paid within five (5) business days of termination. Following termination under this paragraph, Teglia shall not have the right to, and the Trust shall have no further obligation to pay, other compensation or reimbursement of any other kind. (C) TERMINATION BY REASON OF DEATH. The Trust may terminate this Agreement if Teglia dies in which case Teglia's employment shall be deemed to have terminated as of the last day of the month during which his death occurs. Upon termination, the Trust shall pay Teglia's estate or beneficiaries as he may from time to time designate, all Base Salary and Bonus Compensation to the extent earned and unpaid, and any benefits or amounts due Teglia under SECTION 7 above, all to the date of termination. Amounts due under this paragraph shall be paid within five (5) business days of termination. Following termination under this paragraph, the Trust shall not have any other liability or obligation to Teglia's estate or beneficiaries for other compensation or reimbursement of any other kind including, without limitation, incentive compensation. (D) VOLUNTARY TERMINATION BY TEGLIA. Teglia may terminate this Agreement at any time by notifying the Trust in writing at least thirty (30) business days prior to the date of termination. Within five (5) business days of the date of termination, the Trust shall pay Teglia all benefits and other amounts due under SECTION 7 hereof plus all Base Salary earned but unpaid through the date of termination; provided that following termination under this paragraph, the Trust shall have no further obligation to pay Teglia any Bonus Compensation. If Teglia fails to notify the Trust in the manner and time provided herein, the Trust will have no obligation to Teglia for compensation or reimbursement of any other kind. (E) TERMINATION OF THE TRUST. The Trust may terminate this Agreement for any reason: (i) by notifying Teglia in writing at least sixty (60) days prior to the date of termination; or (ii) upon the final liquidation and dissolution of the Trust; provided that in either event the Trust shall pay Teglia all Base Salary and Bonus Compensation to the extent earned and unpaid and any amounts due Teglia under SECTION 7, all to the date of termination. Amounts due under this paragraph shall be paid within five (5) business days of termination. Following termination under this paragraph, Teglia shall not have the right to, and the Trust shall have no further obligation to pay, other compensation or reimbursement of any kind, including, without limitation, incentive or other severance compensation. (F) CHANGE OF CONTROL. Teglia may terminate this Agreement by written notice given to the Trust upon a "Change of Control." For purposes of this SECTION 11(F), "Change of Control" shall mean: (i) that the members of the Trust's board of directors as of the date of this Agreement fail to constitute a majority of the members of the board provided that any individual becoming a member of the board who is nominated by the board shall be treated as if he or she were a member of the board as of the date of this Agreement; (ii) the shareholders of the Trust adopt a plan of liquidation or take other action having the effect of a plan of liquidation without the recommendation or approval of the board; (iii) all of the real estate properties or business of the Trust are disposed of pursuant to a merger, consolidation or other transaction whereby the shareholders of the Trust immediately prior to such merger, consolidation or other transaction retain 50% or less of the voting shares or other ownership/beneficial interests of the entity or entities, if any, that succeed to or obtain the business or properties of the Trust; (iv) the Trust combines with another company and immediately after the combination, the shareholders of the Trust immediately prior to the combination hold 50% or less of the voting shares of the surviving entity; (v) any "person," as such term is used in Sections 3(a)(9) and 13(d) of the Securities Exchange Act of 1934, becomes a "beneficial owner," as such term is used in Rule 13d-3 promulgated under that Act, of 50% or more of the voting shares of the Trust; (vi) the relocation of the Trust's executive offices to a location in excess of 100 miles outside of the Chicago Loop area; (vii) a material breach of this Agreement by the Trust which continues for a period of five (5) business days after written notice detailing the breach from Teglia to the Trust; and (viii) a material diminution of Teglia's duties, responsibilities or authority, or the assignment to him of duties that are inconsistent in any substantial respect with the position, authority or responsibilities associated with the positions set forth in SECTION 2 herein. Upon termination, the Trust shall pay Teglia: (i) all Base Salary and Bonus Compensation to the extent earned and unpaid through the date of termination, and (ii) any amounts due Executive under SECTION 7 to the date of termination. Amounts due under this paragraph shall be paid within thirty (30) business days of termination. 12. OTHER ACTIVITIES OF TEGLIA. Teglia shall devote such working time and attention as is reasonably necessary to fulfill his responsibilities hereunder. Teglia shall not engage in any activity which may be adverse to the Trust's business, appropriate or usurp business opportunities or engage or invest in businesses or assets which compete directly or indirectly with the Trust. Nothing contained herein shall prohibit Teglia from investing in publicly-traded entities which are engaged in lines of businesses similar to the Trust or from continuing to serve as a director on the boards on which Teglia serves as of the date of this Agreement. 13. [RESERVED] 14. NOTICE. Any notice required or permitted hereunder shall be made in writing: (i) either by actual delivery of the notice into the hands of the party entitled; or (ii) by depositing the notice in the United States mail certified or registered, return receipt requested, all postage prepaid and addressed to the party to whom notice is to be given at the party's respective address set forth below, or such other address as the party may from time to time designate by written notice to the other party. If to the Trust: Banyan Strategic Realty Trust Suite 2900 150 South Wacker Drive Chicago, Illinois 60606 Attn: General Counsel with copies to: Shefsky & Froelich Ltd. 444 North Michigan Avenue Suite 2500 Chicago, Illinois 60611 Attn: Michael J. Choate, Esq. If to Teglia: Mr. Joel L. Teglia 150 South Wacker Drive Suite 2900 Chicago, Illinois 60606 with a copy to: Rosenthal and Schanfield, P.C. 55 East Monroe Street, Suite 4620 Chicago, Illinois 60603 Attention: Joel C. Levin, Esq. The notice shall be deemed to be received on the earlier of (i) the date of its actual receipt by the party entitled thereto and (ii) the third business day following the date of mailing. 15. AMENDMENT AND WAIVER. No amendment or modification to this Agreement shall be valid or binding on the Trust unless made in writing and signed by an officer of the Trust duly authorized by the board or upon Teglia unless made in writing and signed by Teglia. The waiver by the Trust or Teglia of the breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. 16. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties with respect to Teglia's duties, compensation and severance as an employee of the Trust. There are no representations, warranties, agreements or commitments between the parties hereto with respect to Teglia's employment except as set forth herein. 17. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the internal laws (and not the law of conflicts) of the State of Illinois. The parties agree that any suit, action or proceeding with respect to this Agreement shall be brought in the courts of Cook County in the State of Illinois or in the U.S. District Court for the Northern District of Illinois. The parties hereto accept the exclusive jurisdiction of those courts for the purpose of any such suit, action or proceeding. Venue for any such action, in addition to any other venue permitted by statute, will be Cook County, Illinois. 18. SEVERABILITY. If any provision of this Agreement shall, for any reason, be held unenforceable, the provision shall be severed from this Agreement unless, as a result of severance, the Agreement fails to reflect the basic intent of the parties on the date hereof 19. ASSIGNMENT. Except as provided herein, Teglia may not, under any circumstances delegate any of his rights and obligations hereunder without the prior written consent of the Trust. This Agreement and all of the Trust's rights and obligations hereunder may be assigned or transferred by it, in whole or in part, to be binding upon and inure to the benefit of any subsidiary or successor of the Trust. 20. COST OF ENFORCEMENT. In any suit or proceeding seeking to enforce the terms, covenants or conditions of this Agreement, the prevailing party shall, in addition to all of the remedies and relief that may be available under this Agreement or applicable law, recover his or its reasonable attorneys' fees and costs as shall be determined and awarded by the court. 21. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which will be deemed an original. IN WITNESS WHEREOF, this Agreement is entered into on the day and year first written above. BANYAN STRATEGIC REALTY TRUST By: ------------------------------ Name: L.G. Schafran Title: Interim President and Chief Executive Officer JOEL TEGLIA ------------------------------ Joel L. Teglia EX-10.6 4 0004.txt EXHIBIT 10.6 - ------------ EMPLOYMENT AGREEMENT This Agreement (the "Agreement") is made and entered into as of September 1, 2000 by and between Robert G. Higgins ("Higgins") and Banyan Strategic Realty Trust (the "Trust"). WHEREAS, Higgins is the Trust's First Vice President/General Counsel and provides legal services to the Trust as an independent contractor; WHEREAS, the Trust is reviewing its strategic options and may, among other things, engage in transactions as a precedent to liquidating and dissolving the Trust; WHEREAS, the Trust is desirous of retaining Higgins' services as an employee instead of an independent contractor to ensure continuity and to minimize certain of its legal expenses during the liquidation and dissolution phase; WHEREAS, Higgins is desirous of entering into an employment agreement with the Trust on terms and conditions contained herein; NOW THEREFORE, in consideration of the premises, mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Trust and Higgins do hereby agree as follows: 1. RECITALS. The recitals to this Agreement are incorporated by reference into this Agreement and made a part of as though stated herein. 2. EMPLOYMENT DUTIES. The Trust agrees to initially employ Higgins as Vice President/General Counsel and following the first annual meeting of shareholders to be held after execution and delivery of this Agreement as the First Vice President, General Counsel and Chief Operating Officer of the Trust to perform such duties as may reasonably be assigned from time to time consistent with this position by the Trust's board of trustees. 3. PERFORMANCE. Higgins accepts the appointment described in SECTION 2 of this Agreement and agrees to faithfully and diligently perform the services described therein or assigned by the board of trustees. 4. EFFECTIVENESS; TERM. The term of this Agreement shall commence as of September 1, 2000 and continue until October 31, 2002 unless sooner terminated pursuant to SECTION 11 herein (the "Term"). 5. BASE COMPENSATION. For the services rendered by Higgins hereunder, the Trust shall pay Higgins a base salary at a rate equal to $260,000 per annum (the "Base Salary") payable at the same time and in the same manner in which payroll of the Trust is customarily paid, subject to the following increases: (a) commencing on January 1, 2001, the Base Salary shall be increased to $275,000 per annum; and (b) commencing on January 1, 2002, the Base Salary shall be increased to $288,750 per annum. 6. OTHER COMPENSATION. (a) RETENTION BONUS. Upon the expiration or termination of this Agreement, provided that this Agreement is not terminated pursuant to SECTION 11(a) OR SECTION 11(d), the Trust shall pay Higgins, in a lump sum, an amount equal to fifty percent (50%) of the aggregate amount of Base Salary paid to Higgins during the period commencing on November 1, 2000 and ending on the date this Agreement expires or is terminated (the "Retention Bonus"). The Retention Bonus due under this SECTION 6(a) shall be paid within five (5) business days of expiration or termination of this Agreement. (b) SEVERANCE PAY. Upon expiration or termination of this Agreement, provided that this Agreement is not terminated pursuant to SECTION 11(a) OR SECTION 11(d), the Trust shall pay to Higgins, in a lump sum, an amount equal to one full year of Base Salary at the then-current payable rate determined pursuant to SECTION 5 (the "Severance Pay"). The Severance Pay due under this SECTION 6(b) shall be paid within five (5) business days of expiration or termination of this Agreement. 7. ADDITIONAL BENEFITS. During the term of this Agreement, Higgins shall also participate in any benefit or deferred compensation plan sponsored by the Trust, including, but not limited to, profit sharing plans, dental and medical plans and disability insurance, if any. Higgins shall also be entitled to four weeks paid vacation per employment year and shall be reimbursed by the Trust for all reasonable out-of-pocket business expenses incurred by Higgins in connection with performing his duties under this Agreement; provided, however, that Higgins shall provide the Trust with an accounting conforming to Internal Revenue Service or other requirements substantiating the nature of all reimbursable expenses. All reimbursements shall be paid to Higgins within a reasonable time after receipt by the Trust of the appropriate documentation. 8. WITHHOLDING. All compensation and benefits paid to Higgins hereunder shall be reduced by all federal, state, local and other withholding and similar taxes and payments required by applicable law. 9. CONFIDENTIALITY. Higgins agrees that as a result of his employment with the Trust, he has acquired, or will acquire, information of a special and unique nature and value that is not generally known to the public or to the Trust's industry regarding the Trust, including but not limited to, business, financial and other records of the Trust and its affiliates, including its and their joint venture partners, software programs, employee records, mailing lists, tenant lists and profiles, prospective tenant lists, accounts receivable and payable ledgers, plans and projections, budgets, marketing data and other similar matters (all such information being hereinafter referred to as "Confidential Information"). Accordingly, Higgins: (a) will not, except as otherwise authorized by the Trust, divulge to any person, firm, corporation, limited liability company, or organization (hereinafter referred to as "Third Parties"), or use or cause or authorize any Third Parties to use, the Confidential Information, except as required by law or court order; and (b) upon termination of this Agreement, will deliver, destroy or delete or cause to be delivered, destroyed or deleted, as the Trust may request, any and all Confidential Information, including drawings, notebooks, keys, data and other documents and materials belonging to the Trust or its affiliates which is in his possession or under his control relating to the Trust or its affiliates, or the business of the Trust, regardless of the medium upon which it is stored, and will deliver to the Trust any other property of the Trust or its affiliates which is in his possession or under his control within five (5) business days of the termination of this Agreement. For purposes of this SECTION 9, the term "Confidential Information" shall not include information which: (i) was in the public domain at the time of execution of this Agreement; (ii) hereafter becomes part of the public domain by publication or otherwise through no unauthorized action of Higgins; or (iii) was received by Higgins through a source other than the Trust which is not under an obligation of confidentiality to the Trust. Higgins further acknowledges and agrees that the Confidential Information is of great value to the Trust and its affiliates and that the restrictions and agreements contained in this Agreement are reasonably necessary to protect the Confidential Information and the goodwill of the Trust's business. Higgins acknowledges that a violation of the provisions of this SECTION 9 will cause irreparable damage to the Trust, the amount of which may be impossible to quantify, and Higgins therefore agrees and understands that if this SECTION 9 is violated, the Trust shall be entitled to injunctive relief in addition to any other remedies available to the Trust at law or in equity. 10. [RESERVED] 11. TERMINATION. This Agreement and Higgins's employment may be terminated as follows: (a) TERMINATION FOR CAUSE. The Trust may terminate this Agreement for "Cause." For purposes of this Agreement, "Cause" shall mean: i. conduct of Higgins which constitutes fraud, misappropriation, embezzlement, gross negligence, or wilful or illegal misconduct in connection with performing Higgins's duties under this Agreement; ii. any material act of dishonesty by Higgins in connection with performing Higgins's duties under this Agreement that is not covered in (i) above; iii. the indictment or conviction of Higgins by a court of proper jurisdiction of (or his written, voluntary and freely given confession to) a crime which constitutes a felony or which results in material injury to the Trust's property, assets or reputation; or iv. any material breach by Higgins of this Agreement, which continues for a period of five (5) business days after written notice detailing the breach from the Trust to Higgins; provided that no cure period shall be required after the first breach. If the Trust terminates this Agreement for Cause, the Trust shall have no further obligation to pay Higgins any of the compensation or benefits described in this Agreement, except for any Base Salary and amounts or benefits due Higgins under SECTION 7 earned but unpaid through the date of termination. (b) TERMINATION BY REASON OF DISABILITY. The Trust may terminate this Agreement if Higgins, in the reasonable judgment of the Trust's board of trustees, is unable to perform his duties, with or without reasonable accommodation, on account of illness or physical or mental incapacity for a period of more than two (2) months in any twelve (12) consecutive month period. To terminate, the Trust must notify Higgins in writing and pay Higgins the Base Salary to the extent earned and unpaid, the Retention Bonus, the Severance Pay and any amounts or benefits due Higgins under SECTION 7, all to the date of termination, with the exception of medical benefits which shall continue through the end of the Term. Amounts due under this paragraph shall be paid within five (5) business days of termination. Following termination under this paragraph, Higgins shall not have the right to, and the Trust shall have no further obligation to pay, other compensation or reimbursement of any other kind. (c) TERMINATION BY REASON OF DEATH. The Trust may terminate this Agreement if Higgins dies in which case Higgins's employment shall be deemed to have terminated as of the last day of the month during which his death occurs. Upon termination, the Trust shall pay Higgins' estate or beneficiaries as he may from time to time designate, all Base Salary, the Retention Bonus and the Severance Pay all to the extent earned and unpaid and any benefits or amounts due Higgins under SECTION 7 above, all to the date of termination. Amounts due under this paragraph shall be paid within five (5) business days of termination. Following termination under this paragraph, the Trust shall not have any other liability or obligation to Higgins's estate for other compensation or reimbursement of any other kind, including, without limitation, incentive compensation. (d) VOLUNTARY TERMINATION BY HIGGINS. Higgins may terminate this Agreement at any time by notifying the Trust in writing at least thirty (30) business days prior to the date of termination. Within five (5) business days of the date of termination, the Trust shall pay Higgins all benefits and other amounts due under SECTION 7 hereof plus all Base Salary earned but unpaid through the date of termination; provided that following termination under this paragraph, the Trust shall have no further obligation to pay Higgins the Retention Bonus or the Severance Pay. If Higgins fails to notify the Trust in the manner and time provided herein, the Trust will have no obligation to Higgins for compensation or reimbursement of any kind, except as otherwise required by law. (e) OTHER TERMINATION BY THE TRUST. The Trust may terminate this Agreement for any reason: (i) by notifying Higgins in writing at least sixty (60) days prior to the date of termination; or (ii) upon the final liquidation and dissolution of the Trust; provided that in either event the Trust shall pay Higgins all Base Salary and Retention Bonus to the extent earned and unpaid, the Severance Pay and any amounts due Higgins under SECTION 7, all to the date of termination. Amounts due under this paragraph shall be paid within five (5) business days of termination. Following termination under this paragraph, Higgins shall not have the right to, and the Trust shall have no further obligation to pay, other compensation or reimbursement of any kind, including, without limitation, incentive or other severance compensation. (f) CHANGE OF CONTROL. Higgins may terminate this Agreement by written notice given to the Trust upon a "Change of Control." For purposes of this SECTION 11(f), "Change of Control" shall mean: (i) that the members of the Trust's board of directors as of the date of this Agreement fail to constitute a majority of the members of the board provided that any individual becoming a member of the board who is nominated by the board shall be treated as if he or she were a member of the board as of the date of this Agreement; (ii) the shareholders of the Trust adopt a plan of liquidation or take other action having the effect of a plan of liquidation without the recommendation or approval of the board; (iii) all of the real estate properties or business of the Trust are disposed of pursuant to a merger, consolidation or other transaction whereby the shareholders of the Trust immediately prior to such merger, consolidation or other transaction retain 50% or less of the voting shares or other ownership/beneficial interests of the entity or entities, if any, that succeed to or obtain the business or properties of the Trust; (iv) the Trust combines with another company and immediately after the combination, the shareholders of the Trust immediately prior to the combination hold 50% or less of the voting shares of the surviving entity; (v) any "person," as such term is used in Sections 3(a)(9) and 13(d) of the Securities Exchange Act of 1934, becomes a "beneficial owner," as such term is used in Rule 13d-3 promulgated under that Act, of 50% or more of the voting shares of the Trust; (vi) the relocation of the Trust's executive offices to a location in excess of 100 miles outside of the Chicago Loop area; (vii) a material breach of this Agreement by the Trust which continues for a period of five (5) business days after written notice detailing the breach from Higgins to the Trust; and (viii) a material diminution of Higgins's duties, responsibilities or authority, or the assignment to him of duties that are inconsistent in any substantial respect with the position, authority or responsibilities associated with the positions set forth in SECTION 2 herein. Upon termination, the Trust shall pay Higgins: (A) all Base Salary and Retention Bonus to the extent earned and unpaid through the date of termination, (B) any amounts due Executive under SECTION 7 to the date of termination, and (C) the Severance Pay. Amounts due under this paragraph shall be paid within thirty (30) business days of termination. 12. OTHER ACTIVITIES OF HIGGINS. Higgins shall devote such working time and attention as is necessary to fulfill his responsibilities hereunder. Higgins shall not engage in any activity which may be adverse to the Trust's business, appropriate or usurp business opportunities or engage or invest in businesses or assets which compete directly or indirectly with the Trust. Nothing contained herein shall prohibit Higgins from investing in publicly-traded entities which are engaged in lines of businesses similar to the Trust, continuing to serve as a director on the boards on which Higgins serves as of the date of this Agreement, or continuing to provide legal advice and counsel to clients so long as such activities do not cause a conflict of interest with the Trust or diminish his responsibilities hereunder. 13. NOTE MATURITY. Consistent with the Trust's retention and severance policy for non-contractual employees, the Non-Recourse Promissory Note, executed by Higgins on January 12, 2000, shall not mature until the later of: (A) the date the Trust has distributed all of its assets to Trust shareholders other than those assets reserved for contingent liabilities; and (B) the termination or expiration of this Agreement; PROVIDED, HOWEVER, notwithstanding the preceding sentence, the Note shall immediately mature upon Higgins's voluntary termination of this Agreement pursuant to SECTION 11(d) herein, or upon his termination for Cause pursuant to SECTION 11(a) herein. 14. NOTICE. Any notice required or permitted hereunder shall be made in writing: (i) either by actual delivery of the notice into the hands of the party entitled; or (ii) by depositing the notice in the United States mail certified or registered, return receipt requested, all postage prepaid and addressed to the party to whom notice is to be given at the party's respective address set forth below, or such other address as the party may from time to time designate by written notice to the other party. If to the Trust: Banyan Strategic Realty Trust Suite 2900 150 South Wacker Drive Chicago, Illinois 60606 Attn: L.G. Schafran with copies to: Shefsky & Froelich Ltd. 444 North Michigan Avenue Suite 2500 Chicago, Illinois 60611 Attn: Michael J. Choate, Esq. If to Higgins: Mr. Robert G. Higgins Attorney at Law 150 South Wacker Drive Suite 2900 Chicago, Illinois 60606 (312) 683-5539 (direct) (312) 553-9800 (fax) (630) 267-7209 (mobile) with a copy to: Michael D. Karpeles Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz 55 E. Monroe Street Suite 3700 Chicago, Illinois 60603 The notice shall be deemed to be received on the earlier of (i) the date of its actual receipt by the party entitled thereto and (ii) the third business day following the date of mailing. 15. AMENDMENT AND WAIVER. No amendment or modification to this Agreement shall be valid or binding on the Trust unless made in writing and signed by an officer of the Trust duly authorized by the board or upon Higgins unless made in writing and signed by Higgins. The waiver by the Trust or Higgins of the breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. 16. ENTIRE AGREEMENT. This Agreement and an Indemnification Agreement between Higgins and the Trust dated as of June 9, 1999 (the "Indemnification Agreement") constitute all of the agreements between the parties with respect to Higgins's rights duties, compensation and severance as an employee of the Trust, there are no representations, warranties, agreements or commitments between the parties hereto with respect to Higgins's employment except as set forth herein and in the Indemnification Agreement. 17. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the internal laws (and not the law of conflicts) of the State of Illinois. The parties agree that any suit, action or proceeding with respect to this Agreement shall be brought in the courts of Cook County in the State of Illinois or in the U.S. District Court for the Northern District of Illinois. The parties hereto accept the exclusive jurisdiction of those courts for the purpose of any such suit, action or proceeding. Venue for any such action, in addition to any other venue permitted by statute, will be Cook County, Illinois. 18. SEVERABILITY. If any provision of this Agreement shall, for any reason, be held unenforceable, the provision shall be severed from this Agreement unless, as a result of severance, the Agreement fails to reflect the basic intent of the parties on the date hereof 19. ASSIGNMENT. Except as provided herein, Higgins may not, under any circumstances delegate any of his rights and obligations hereunder without the prior written consent of the Trust. This Agreement and all of the Trust's rights and obligations hereunder may be assigned or transferred by it, in whole or in part, to be binding upon and inure to the benefit of any subsidiary or successor of the Trust. 20. COST OF ENFORCEMENT. In any suit or proceeding seeking to enforce the terms, covenants or conditions of this Agreement, the prevailing party shall, in addition to all of the remedies and relief that may be available under this Agreement or applicable law, recover his or its reasonable attorneys' fees and costs as shall be determined and awarded by the court. 21. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which will be deemed an original. [Remainder of page intentionally left blank] IN WITNESS WHEREOF, this Agreement is entered into on the day and year first written above. BANYAN STRATEGIC REALTY TRUST By: ------------------------------ Name:L.G. Schafran Title: Interim President and Chief Executive Officer ROBERT G. HIGGINS ____________________________________ Robert G. Higgins EX-10.7 5 0005.txt EXHIBIT 10.7 - ------------ SEPARATION AGREEMENT AND GENERAL RELEASE ---------------------------------------- Neil D. Hansen ("Hansen") and Banyan Strategic Realty Trust, a Massachusetts business trust, ("BSRT") enter into this Separation Agreement and General Release ("Agreement") this 1st day of October, 2000. WHEREAS, Hansen is employed by BSRT pursuant to a written employment agreement dated as of December 31, 1998 (the "Employment Agreement") and serves as BSRT's First Vice President-Asset Management; WHEREAS, BSRT is in the process of marketing all, or substantially all, of its assets for sale to third parties and does not intend to reinvest any sale proceeds in new assets and, therefore, will no longer require Mr. Hansen's services; WHEREAS, Hansen has had health problems during the year 2000 which have prevented him from fully performing his duties, which include periods of extensive travel; WHEREAS, the Agreement expires on December 31, 2000 but is automatically renewed for an additional one (1) year period unless BSRT notifies Hansen by September 30, 2000 of its desire to terminate the Agreement; WHEREAS, BSRT notified Hansen on or before September 30, 2000 that BSRT will not renew the Employment Agreement when it expires on December 31, 2000; and WHEREAS, although the Employment Agreement contains provisions stating rights and obligations of the parties in connection with a decision by BSRT not to renew the Employment Agreement, BSRT and Hansen are desirous of altering these rights and obligations and of creating additional rights and obligations. NOW THEREFORE, in consideration of the mutual promises contained herein, the parties agree as follows: 1. RECITALS. The recitals to this Agreement are incorporated by reference into this Agreement and made a part of as though stated herein. 2. RESIGNATION. Hansen will resign from his position of First Vice President-Asset Management effective at 12:00 a.m. central time on October 2, 2000. 3. SEPARATION PAYMENTS. BSRT shall pay Hansen $342,679 no later than October 1, 2000, subject to tax withholding in accordance with BSRT's payroll practices. Hansen agrees that upon receipt of this payment, he shall have no further right to, and BSRT shall have no further obligation to pay Hansen, any wages, unreimbursed expenses, accrued vacation or any other benefits except for wages and accrued vacation as of October 1, 2000 and except for reimbursable expenses which relate to expenses incurred by Hansen in connection with performing his duties to BSRT prior to October 2, 2000 and for which he has not yet submitted the necessary documentation or otherwise as provided herein; provided that if Hansen fails to submit the necessary documentation for these expenses by November 15, 2000, BSRT will have no further obligation to reimburse Hansen. 4. CONFIDENTIALITY. Each party agrees to keep the facts and terms of this Agreement in strict confidence and to refrain from making any negative or critical remarks about the other party; provided that nothing herein shall prohibit Hansen from disclosing the facts and terms of this Agreement: (a) to taxing authorities for the purpose of determining or reporting Hansen's income to these authorities; (b) in connection with any regulatory, administrative or judicial proceeding, including any proceeding to enforce the terms of this Agreement; (c) to the extent required by law; or (d) to Hansen's private insurance carrier in connection with any disability claim. Hansen also agrees that as a result of his employment with BSRT, he has acquired information of a special and unique nature and value that is not generally known to the public or to BSRT's industry regarding BSRT, including but not limited to, business, financial and other records of BSRT and its affiliates including its and their joint venture partners, software programs, employee records, mailing lists, tenant lists and profiles, prospective tenant lists, accounts receivable and payable ledgers, plans and projections, budgets, marketing data and other similar matters (all such information being hereinafter referred to as "Confidential Information"). Accordingly, Hansen agrees that he: (a) will not, except as otherwise authorized by BSRT, divulge to any person, firm, corporation, limited liability company, or organization (hereinafter referred to as "Third Parties"), or use or cause or authorize any Third Parties to use, the Confidential Information, except as required by law or court order; and (b) shall deliver, destroy or delete or cause to be delivered, destroyed or deleted, as BSRT may request, any and all Confidential Information, including drawings, notebooks, keys, data and other documents and materials belonging to BSRT or its affiliates which is in his possession or under his control relating to BSRT or its affiliates, or the business of BSRT, regardless of the medium upon which it is stored, and will deliver to BSRT any other property of BSRT or its affiliates which is in his possession or under his control on or before October 1, 2000. For purposes of this Section 4, the term Confidential Information shall not include information which: (i) was in the public domain at the time of execution of this Agreement; (ii) hereafter becomes part of the public domain by publication or otherwise through no unauthorized action of Hansen; or (iii) was received by Hansen through a source other than BSRT which is not under an obligation of confidentiality to BSRT. Hansen further acknowledges and agrees that the Confidential Information is of great value to BSRT and its affiliates and that the restrictions and agreements contained in this Agreement are reasonably necessary to protect the Confidential Information and the goodwill of BSRT's business. 5. EMPLOYMENT AGREEMENT. This Agreement shall supersede the Employment Agreement which shall be void and of no further effect upon the later of: (a) the execution and delivery of this Agreement by each party; or (b) October 1, 2000. 6. RELEASE OF CLAIMS. In consideration of the separation payment and other promises contained herein, and as a natural inducement to BSRT to enter into this Agreement, Hansen hereby releases and forever discharges BSRT and its officers, trustees, employees, investors, shareholders, affiliates and agents from, and agrees not to sue any of these parties concerning any and all actions, liabilities, and other claims for relief and remuneration whatsoever, arising out of, or in any way connected with his employment by BSRT, including all matters in equity, contract, tort, or for retaliatory discharge, or pursuant to statute, whether presently known or unknown, suspected or unsuspected, that Hansen may possess arising from any omissions, acts or facts existing as of October 1, 2000, including but not limited to actions or claims under Title VII of the Civil Rights Act of 1964, as amended, the Americans with Disabilities Act, the Fair Labor Standards Act, the Family and Medical Leave Act, the National Labor Relations Act, as amended, and any Illinois or other state or local statute, law or ordinance containing comparable prohibitions, including The Illinois Human Rights Act, as well as any and all claims under the Employee Retirement Income Security Act ("ERISA"), and any and all claims of any kind for attorneys' fees or costs in connection with any case, controversy, claim, charge, or otherwise; provided that nothing herein shall be deemed to waive or release any claim: (a) under the Age Discrimination in Employment Act of 1967, as amended; (b) arising after the date this Agreement was executed; (c) for indemnification that Hansen may have under BSRT's Third Amended and Restated Declaration of Trust; or (d) to enforce this Agreement. In consideration of the separation payment and other promises contained herein, and as a natural inducement to Hansen to enter into this Agreement, BSRT hereby releases and forever discharges Hansen from any and all actions, liabilities and other claims for relief or remuneration whatsoever, arising out of, or in any way connected with, Hansen's employment by BSRT or its affiliates or The Oak Realty Group, Inc., including all matters in equity, contract, tort or pursuant to statute except for actions or claims: (x) alleging fraud or wilful misconduct by Hansen; or (y) brought by BSRT under the Loan Agreement, Non-Recourse Promissory Note, Stock Pledge and Security Agreement entered into between Hansen and BSRT effective on January 12, 2000. 7. REPRESENTATIONS AND WARRANTIES. Hansen represents and warrants that he: (a) has executed and delivered this Agreement knowingly and voluntarily; (b) has read and understands this Agreement in its entirety; (c) has been advised and directed orally and in writing (and this SECTION 7(c) constitutes such written direction) to seek legal counsel and any other advice he wishes with respect to the terms of this Agreement before executing it, that he has sought such advice and has had the opportunity to negotiate the terms of this Agreement; and (d) has not been forced by any employee or agent of BSRT to execute and deliver this Agreement. 8. COBRA. Hansen shall have the right to continue his health insurance coverage at group rates pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") beginning the later of November 1, 2000 and the execution and delivery of this Agreement by each party; provided, however, that this election must be made no later than sixty (60) days after that date. Hansen's current health coverage will continue through October 31, 2000. Notwithstanding the above, if BSRT terminates its health insurance plan prior to March 31, 2002, Hansen acknowledges and agrees that his individual coverage pursuant to COBRA shall terminate. If, after the termination of the plan, BSRT arranges for alternative health insurance coverage for its employees, BSRT shall offer Hansen the option of participating in the alternative plan; provided that Hansen shall reimburse BSRT for the premium associated with providing Hansen with coverage under the alternative plan. 9. NO ADMISSION OF WRONGDOING. This Agreement shall not in any way be construed as an admission by Hansen of any acts of wrongdoing whatsoever against him by BSRT or any of its officers, trustees, employers, agents or advisors. 10. COUNTERPARTS. The Agreement may be executed in one or more counterparts, each of which when so executed and delivered shall be deemed to be an original, and all of which taken together shall constitute but one and the same document. 11. NOTICE. Any notice required or permitted hereunder shall be made in writing: (a) either by actual or delivery of the notice into the hands of the party entitled; or (b) by depositing the notice in the United States mail certified or registered, return receipt requested, all postage prepaid and addressed to the party to whom notice is to be given at the party's respective address set forth below, or such other address as the party may from time to time designate by written notice to the other party. If to BSRT: Banyan Strategic Realty Trust Suite 2900 150 South Wacker Drive Chicago, Illinois 60606 Attn: General Counsel with copies to: Shefsky & Froelich Ltd. 444 North Michigan Avenue Suite 2500 Chicago, Illinois 60611 Attn: Michael J. Choate, Esq. If to Hansen: 5524 W. Main Street Morton Grove, Illinois 60053 with a copy to: Much Shelist Freed Denenberg Ament & Rubinstein, P.C. 200 N. LaSalle Street Suite 2100 Chicago, Illinois 60601 Attn: Don Hershman, Esq. The notice shall be deemed to be received on the earlier of (x) the date of its actual receipt by the party entitled thereto and (y) the third business day following the date of mailing. 12. AMENDMENT AND WAIVER. No amendment or modification to this Agreement shall be valid or binding on the BSRT unless made in writing and signed by an officer of BSRT duly authorized by the board or upon Hansen unless made in writing and signed by Hansen. The waiver by BSRT or Hansen of the breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. 13. ENTIRE AGREEMENT. This Agreement and the Confidentiality Agreement attached hereto constitutes the entire agreement between BSRT and Hansen with respect to the subject matter hereof. There are no representations, warranties, agreements or commitments between the parties hereto with respect to Hansen's separation and release as set forth herein. 14. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the internal laws (and not the law of conflicts) of the State of Illinois. The parties agree that any suit, action or proceeding with respect to this Agreement shall be brought in the courts of Cook County in the State of Illinois or in the U.S. District Court for the Northern District of Illinois. The parties hereto accept the exclusive jurisdiction of those courts for the purpose of any such suit, action or proceeding. Venue for any such action, in addition to any other venue permitted by statute, will be Cook County, Illinois. 15. SEVERABILITY. If any provision of this Agreement shall, for any reason, be held unenforceable, the provision shall be severed from this Agreement unless, as a result of severance, the Agreement fails to reflect the basis intent of the parties on the date hereof. 16. BENEFIT. This Agreement shall be binding upon, and inure to the benefit of, and shall be enforceable by, the successors, assigns, transferees or heirs of the parties hereto. 17. COST OF ENFORCEMENT. In any suit or proceeding seeking to enforce the terms, covenants or conditions of this Agreement, the prevailing party shall, in addition to all of the remedies and relief that may be available under this Agreement or applicable law, recover his or its reasonable attorneys' fees and costs as shall be determined and awarded by the court or the arbitrator. IN WITNESS WHEREOF, this Agreement is entered into on the day and year first written above. BANYAN STRATEGIC REALTY TRUST By: ------------------------------------- Name: Robert G. Higgins Title: Vice President General Counsel ________________________________ Neil D. Hansen EX-10.9 6 0006.txt EXHIBIT 10.9 - ------------ SEPARATION AGREEMENT AND GENERAL RELEASE ---------------------------------------- Jay E. Schmidt ("Schmidt") and Banyan Strategic Realty Trust, a Massachusetts business trust, ("BSRT") enter into this Separation Agreement and General Release ("Agreement") this 1st day of October, 2000. WHEREAS, Schmidt is employed by BSRT pursuant to a written employment agreement dated as of December 31, 1998 (the "Employment Agreement") and serves as BSRT's Vice President-Acquisitions; WHEREAS, BSRT is in the process of marketing all, or substantially all, of its assets for sale to third parties and does not intend to reinvest any sale proceeds in new assets and, therefore, will no longer require Mr. Schmidt's services; WHEREAS, the Agreement expires on December 31, 2000 but is automatically renewed for an additional one (1) year period unless BSRT notifies Schmidt by September 30, 2000 of its desire to terminate the Agreement; WHEREAS, BSRT notified Schmidt on or before September 30, 2000 that BSRT will not renew the Employment Agreement when it expires on December 31, 2000; and WHEREAS, although the Employment Agreement contains provisions stating rights and obligations of the parties in connection with a decision by BSRT not to renew the Employment Agreement, BSRT and Schmidt are desirous of altering these rights and obligations and of creating additional rights and obligations. NOW THEREFORE, in consideration of the mutual promises contained herein, the parties agree as follows: 1. RECITALS. The recitals to this Agreement are incorporated by reference into this Agreement and made a part of as though stated herein. 2. RESIGNATION. Schmidt will resign from his position of First Vice President-Acquisitions effective at 12:00 a.m. central time on October 2, 2000. 3. SEPARATION PAYMENTS. BSRT shall pay Schmidt $280,804 no later than October 1, 2000, subject to tax withholding in accordance with BSRT's payroll practices. Schmidt agrees that upon receipt of this payment, he shall have no further right to, and BSRT shall have no further obligation to pay Schmidt, any wages, unreimbursed expenses, accrued vacation or any other benefits except for wages and accrued vacation as of October 1, 2000 and except for reimbursable expenses which relate to expenses incurred by Schmidt in connection with performing his duties to BSRT prior to October 2, 2000 and for which he has not yet submitted the necessary documentation or otherwise as provided herein; provided that if Schmidt fails to submit the necessary documentation for these expenses by November 15, 2000, BSRT will have no further obligation to reimburse Schmidt. 4. CONFIDENTIALITY. Each party agrees to keep the facts and terms of this Agreement in strict confidence and to refrain from making any negative or critical remarks about the other party; provided that nothing herein shall prohibit Schmidt from disclosing the facts and terms of this Agreement: (a) to taxing authorities for the purpose of determining or reporting Schmidt's income to these authorities; (b) in connection with any regulatory, administrative or judicial proceeding, including any proceeding to enforce the terms of this Agreement; or (c) to the extent required by law. Schmidt also agrees as a result of his employment with BSRT he has acquired information of a special and unique nature and value that is not generally known to the public or to BSRT's industry regarding BSRT, including but not limited to, business, financial and other records of BSRT and its affiliates including its and their joint venture partners, software programs, employee records, mailing lists, tenant lists and profiles, prospective tenant lists, accounts receivable and payable ledgers, plans and projections, budgets, marketing data and other similar matters (all such information being hereinafter referred to as "Confidential Information"). Accordingly, Schmidt: (a) will not, except as otherwise authorized by BSRT, divulge to any person, firm, corporation, limited liability company, or organization (hereinafter referred to as "Third Parties"), or use or cause or authorize any Third Parties to use, the Confidential Information, except as required by law or court order; and (b) shall deliver, destroy or delete or cause to be delivered, destroyed or deleted, as BSRT may request, any and all Confidential Information, including drawings, notebooks, keys, data and other documents and materials belonging to BSRT or its affiliates which is in his possession or under his control relating to BSRT or its affiliates, or the business of BSRT, regardless of the medium upon which it is stored, and will deliver to BSRT any other property of BSRT or its affiliates which is in his possession or under his control on or before October 1, 2000; except that BSRT hereby transfers ownership of a "1996 Micron Notebook" personal computer, serial number 962845-0006 which is in Schmidt's possession to Schmidt. For purposes of this Section 4, the term Confidential Information shall not include information which: (i) was in the public domain at the time of execution of this Agreement; (ii) hereafter becomes part of the public domain by publication or otherwise through no unauthorized action of the Schmidt; or (iii) was received by Schmidt through a source other than BSRT which is not under an obligation of confidentiality to the BSRT. Schmidt further acknowledges and agrees that the Confidential Information is of great value to BSRT and its affiliates and that the restrictions and agreements contained in this Agreement are reasonably necessary to protect the Confidential Information and the goodwill of BSRT's business. 5. EMPLOYMENT AGREEMENT. This Agreement shall supersede the Employment Agreement which shall be void and of no further effect upon the later of: (a) the execution and delivery of this Agreement by each party; or (b) October 1, 2000. 6. RELEASE OF CLAIMS. In consideration of the separation payment and other promises contained herein, and as a natural inducement to BSRT to enter into this Agreement, Schmidt hereby releases and forever discharges BSRT and its officers, trustees, employees, investors, shareholders, affiliates and agents from, and agrees not to sue any of these parties concerning any and all actions, liabilities, and other claims for relief and remuneration whatsoever, arising out of, or in any way connected with his employment by BSRT, including all matters in equity, contract, tort, or for retaliatory discharge, or pursuant to statute, whether presently known or unknown, suspected or unsuspected, that Schmidt may possess arising from any omissions, acts or facts existing as of October 1, 2000, including but not limited to actions or claims under Title VII of the Civil Rights Act of 1964, as amended, the Americans with Disabilities Act, the Fair Labor Standards Act, the Family and Medical Leave Act, the National Labor Relations Act, as amended, and any Illinois or other state or local statute, law or ordinance containing comparable prohibitions, including The Illinois Human Rights Act, as well as any and all claims under the Employee Retirement Income Security Act ("ERISA"), and any and all claims of any kind for attorneys' fees or costs in connection with any case, controversy, claim, charge, or otherwise; provided that nothing herein shall be deemed to waive or release any claim: (a) under the Age Discrimination in Employment Act of 1967, as amended; (b) arising after the date this Agreement was executed; (c) for indemnification that Schmidt may have under BSRT's Third Amended and Restated Declaration of Trust; or (d) to enforce this Agreement. In consideration of the separation payment and other promises contained herein, and as a natural inducement to Schmidt to enter into this Agreement, BSRT hereby releases and forever discharges Schmidt from any and all actions, liabilities and other claims for relief or remuneration whatsoever, arising out of, or in any way connected with, Schmidt's employment by BSRT or its affiliates or The Oak Realty Group, Inc., including all matters in equity, contract, tort or pursuant to statute except for actions or claims: (x) alleging fraud or wilful misconduct by Schmidt; or (y) brought by BSRT under the Loan Agreement, Non-Recourse Promissory Note, Stock Pledge and Security Agreement entered into between Schmidt and BSRT effective January 12, 2000. 7. REPRESENTATIONS AND WARRANTIES. Schmidt represents and warrants that he: (a) has executed and delivered this Agreement knowingly and voluntarily; (b) has read and understands this Agreement in its entirety; (c) has been advised and directed orally and in writing (and this SECTION 7(c) constitutes such written direction) to seek legal counsel and any other advice he wishes with respect to the terms of this Agreement before executing it, that he has sought such advice and has had the opportunity to negotiate the terms of this Agreement; and (d) has not been forced by any employee or agent of BSRT to execute and deliver this Agreement. 8. COBRA. Schmidt shall have the right to continue his health insurance coverage at group rates pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") beginning the later of November 1, 2000 and the execution and delivery of this Agreement by each party; provided, however, that this election must be made no later than sixty (60) days after that date. Schmidt's current health coverage will continue through October 31, 2000. Notwithstanding the above, if BSRT terminates its health insurance plan prior to March 31, 2002, Schmidt acknowledges and agrees that his individual coverage pursuant to COBRA shall terminate. If, after the termination of the plan, BSRT arranges for alternative health insurance coverage for its employees, BSRT shall offer Schmidt the option of participating in the alternative plan; provided that Schmidt shall reimburse BSRT for the premium associated with providing Schmidt with coverage under the alternative plan. 9. NO ADMISSION OF WRONGDOING. This Agreement shall not in any way be construed as an admission by Schmidt of any acts of wrongdoing whatsoever against him by BSRT or any of its officers, trustees, employers, agents or advisors. 10. COUNTERPARTS. The Agreement may be executed in one or more counterparts, each of which when so executed and delivered shall be deemed to be an original, and all of which taken together shall constitute but one and the same document. 11. NOTICE. Any notice required or permitted hereunder shall be made in writing: (a) either by actual or delivery of the notice into the hands of the party entitled; or (b) by depositing the notice in the United States mail certified or registered, return receipt requested, all postage prepaid and addressed to the party to whom notice is to be given at the party's respective address set forth below, or such other address as the party may from time to time designate by written notice to the other party. If to BSRT: Banyan Strategic Realty Trust Suite 2900 150 South Wacker Drive Chicago, Illinois 60606 Attn: General Counsel with copies to: Shefsky & Froelich Ltd. 444 North Michigan Avenue Suite 2500 Chicago, Illinois 60611 Attn: Michael J. Choate, Esq. If to Schmidt: 8980 North Seneca Road Milwaukee, WI 53217 with a copy to: Much Shelist Freed Denenberg Ament & Rubinstein, P.C. 200 N. LaSalle Street Suite 2100 Chicago, Illinois 60601 Attn: Don Hershman, Esq. The notice shall be deemed to be received on the earlier of (x) the date of its actual receipt by the party entitled thereto and (y) the third business day following the date of mailing. 12. AMENDMENT AND WAIVER. No amendment or modification to this Agreement shall be valid or binding on the BSRT unless made in writing and signed by an officer of BSRT duly authorized by the board or upon Schmidt unless made in writing and signed by Schmidt. The waiver by BSRT or Schmidt of the breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. 13. ENTIRE AGREEMENT. This Agreement and the Confidentiality Agreement attached hereto constitutes the entire agreement between BSRT and Schmidt with respect to the subject matter hereof. There are no representations, warranties, agreements or commitments between the parties hereto with respect to Schmidt's separation and release as set forth herein. 14. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the internal laws (and not the law of conflicts) of the State of Illinois. The parties agree that any suit, action or proceeding with respect to this Agreement shall be brought in the courts of Cook County in the State of Illinois or in the U.S. District Court for the Northern District of Illinois. The parties hereto accept the exclusive jurisdiction of those courts for the purpose of any such suit, action or proceeding. Venue for any such action, in addition to any other venue permitted by statute, will be Cook County, Illinois. 15. SEVERABILITY. If any provision of this Agreement shall, for any reason, be held unenforceable, the provision shall be severed from this Agreement unless, as a result of severance, the Agreement fails to reflect the basis intent of the parties on the date hereof. 16. BENEFIT. This Agreement shall be binding upon, and inure to the benefit of, and shall be enforceable by, the successors, assigns, transferees or heirs of the parties hereto. 17. COST OF ENFORCEMENT. In any suit or proceeding seeking to enforce the terms, covenants or conditions of this Agreement, the prevailing party shall, in addition to all of the remedies and relief that may be available under this Agreement or applicable law, recover his or its reasonable attorneys' fees and costs as shall be determined and awarded by the court or the arbitrator. IN WITNESS WHEREOF, this Agreement is entered into on the day and year first written above. BANYAN STRATEGIC REALTY TRUST By: ------------------------------------- Name: Robert G. Higgins Title: Vice President General Counsel ________________________________ Jay E. Schmidt EX-27 7 0007.txt
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BANYAN STRATEGIC REALTY TRUST'S FORM 10-Q FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q. 9-MOS DEC-31-2000 SEP-30-2000 3,209 0 1,377 0 0 4,586 203,685 (19,898) 197,039 6,819 118,341 65,140 0 6,157 (3,159) 197,039 0 28,095 0 0 19,011 0 6,889 1,792 0 1,792 0 (42) 0 1,750 0.09 0.09
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