Exhibit 10.1
BEACON CAPITAL PARTNERS, INC.
MANAGEMENT AGREEMENT
Management Agreement ("Agreement") made as of January 2, 2002, by and
among Beacon Capital Partners, Inc., a corporation organized under the laws of
the State of Maryland, Beacon Capital Partners, L.P., a limited partnership
organized under the laws of the State of Delaware (together, the "Company"), BCP
Strategic Partners, LLC, a Delaware limited liability company (the "GP"), and
Beacon Capital Partners, LLC, a Delaware limited liability company having its
principal office in Boston, Massachusetts ("Manager").
WHEREAS, the Company has heretofore incurred certain expenses in the
oversight and management of its business;
WHEREAS, the Company adopted, and on April 4, 2001, the shareholders of
the Company approved the adoption of, an Asset Sale Plan pursuant to which the
Company is authorized to sell, transfer or exchange substantially all of its
assets;
WHEREAS, the Company notified the shareholders in the proxy statement
used in connection with their approval of the Asset Sale Plan that it may
contract with a third party advisor affiliated with Xxxx X. Xxxxxxxxx to manage
the Company's assets under the Asset Sale Plan;
WHEREAS, GP is the general partner of Beacon Capital Strategic
Partners, L.P. ("Strategic") and the Company has provided certain services to
Strategic through its wholly owned affiliate, GP;
WHEREAS, heretofore the Company, through two wholly owned affiliates,
has been responsible for overseeing the assets of the Wyndham Voting Trust and
the Cypress Voting Trust (together, the "Voting Trusts"); and
WHEREAS, the Company now wishes to engage Manager, an affiliate of Xxxx
X. Xxxxxxxxx, to provide certain services to the Company, and Manager is willing
to provide such services.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:
1. DEFINED TERMS AND CONSTRUCTION. Capitalized terms used in this
Agreement and not otherwise defined herein shall have the meaning ascribed to
them in the Company's Articles of Incorporation, as in effect as of the date of
this Agreement (the "Charter"). This Agreement shall, to the extent not
otherwise specifically provided herein, be construed in a manner consistent with
the terms of the Charter.
1
2. APPOINTMENT OF ADVISER; STATUS OF PARTIES. Effective January 1,
2002, the Company hereby appoints Manager to act as the manager of the Company
for the period and on the terms herein set forth. GP hereby appoints Manager to
provide the services to GP and Strategic that have heretofore been performed by
the Company or its affiliates on their behalf. Manager accepts such appointment
and agrees to render the services herein set forth for the compensation and on
the terms herein provided. Manager assumes no responsibility under this
Agreement other than to render the services called for in good faith. Manager
shall perform its duties hereunder as an independent contractor and not as an
agent or joint venturer with the Company.
3. DISCRETIONARY AUTHORITY; SERVICES TO BE RENDERED BY MANAGER TO THE
COMPANY.
(a) Subject in all cases to the overall supervision of the
Company exercisable by the Board of Directors of the Company, Manager
shall manage all of the assets and day-to-day operations of the
Company, and Manager shall have full discretion and authority, to the
extent required and not prohibited by this Agreement or by applicable
law, to undertake and perform all acts deemed necessary or appropriate
by it in connection with the management of the Company including,
without limitation, the following:
(i) de-registration of the Company under the Exchange Act
of 1934, including making filings under Sections 12
and 15 thereof following the execution of the
required documents by the appropriate officers of the
Company, and taking all other action necessary or
appropriate in connection with such de-registration;
(ii) undertaking the liquidation of the Company, including
forming a liquidating trust and making all
distributions required under the partnership
agreement of Beacon Capital Partners, L.P. and the
Asset Sale Plan;
(iii) identification, evaluation and consummation of
investments (including short-term investments,
investments in derivatives, purchases or dispositions
of Company stock or interests in the Voting Trusts)
by the Company, if any, including an analysis of the
relative risks and rewards of a proposed transaction
and an evaluation of the characteristics of the
proposed transaction;
(iv) hiring and employing a staff to oversee the
management of the Company, with such staff to have
the experience and to be employed on similar terms
consistent with the past practices of the Company;
(v) preparation and submission to the Board of Directors
of summaries of any transactions into which Manager
shall cause the Company to enter, summaries of
day-to-day operations, and such other information and
reports as the Board of Directors may reasonably
request consistent with the past practices of the
Company;
2
(vi) arranging, structuring, coordinating, and overseeing
the development, financing and management of the
Company's remaining assets, including monitoring the
performance of the Company's investments, compliance
with any relevant covenants, entering into hedging
transactions, carrying out the terms of the Asset
Sale Plan, entering into amendments to financing
agreements and entering into property management,
servicing and special servicing arrangements with
respect to the Company's assets;
(vii) executing the sale, transfer, exchange, other
disposition, financing or refinancing of, or the
exercise of any additional investment, funding,
prepayment, acceleration, exchange, conversion, put
or call rights with respect to, the Company's assets;
(viii) providing such information as the Company may require
for its records or to prepare reports or provide
information to its stockholders including, without
limitation, preparation of the Company's reports
under the Exchange Act of 1934, filing of such
reports following the execution of such reports by
the appropriate officers of the Company, making any
other required filings with federal, state or local
authorities and preparing and distributing reports to
the Company's stockholders;
(ix) performance of services for GP and Strategic
currently performed by the Company under the
partnership agreement of Strategic, including
services for operating the partnership of Strategic;
(x) handling all matters concerning the Company or its
assets which are the subject of threatened or actual
litigation, mediation or arbitration;
(xi) providing services to the trustees of the Voting
Trusts, including assisting the trustees in the
management and distribution of the assets of the
Voting Trusts, and liquidating the corporations
acting as trustees of the Voting Trusts following the
termination of the Voting Trusts; and
(xii) performance of such other functions as have been
performed by the Company in the ordinary course of
its business in the management of the assets and
operations of the Company, Strategic or the Voting
Trusts.
(b) Unless otherwise agreed to by the Board of Directors,
Manager shall refrain from any action which, in its sole judgment or in
the judgment of the Board of Directors (of which Manager has notice)
would (a) adversely affect the status of the Company as a real estate
investment trust as defined in Sections 856-860 of the Internal Revenue
Code of 1986, as may be amended or (b) violate the Charter or By-laws
of the Company.
(c) In discharging its duties hereunder, Manager may from time
to time engage advisors and other parties affiliated with Manager (a
"Related Party") to perform such services as Manager deems appropriate
to the same extent as, and subject to the same conditions pursuant to
which, the Board is permitted under the Charter to do so,
3
provided that Manager shall bear all costs associated with such
services unless such services are of the type which the Company would
otherwise be responsible under the terms of this Agreement.
(d) Manager shall keep books and records necessary for the
Company's audit and reporting requirements.
4. ALLOCATION OF EXPENSES.
(a) The Company shall be responsible for all bonuses for its
employees to be paid for 2001 and shall bear all other charges and
expenses not delegated to Manager hereunder, including additional
charges and expenses that may be incurred by Manager for management of
the assets that are in addition to those contemplated by Section 3 that
Manager performs at the request of the Board of Directors. The Company
shall not be obligated to pay Manager for any services, and Manager
shall not be required to perform any services, which would require the
payment of fees in addition to those under Section 5 unless such
expenses have been approved by the Company.
(b) The Company shall continue to be responsible for the
following expenses including, but not limited to, taxes related to the
assets and income of the Company and the Voting Trusts, legal fees,
costs for any liquidating trusts, transfer agent expenses, payments
under stock option termination agreements, travel expenses related to
the assets of the Company or the Voting Trusts, SEC filing fees,
outside directors' fees, premiums for directors and officers insurance,
premiums for errors and omissions insurance, audit fees, property
related expenses and any other expenses specifically attributable to
the assets of the Company or the Voting Trusts. The Company shall
reimburse Manager for any expenses incurred by Manager for providing
services similar to those listed in the preceding sentence attributable
to the assets of Strategic to the extent Strategic reimburses the
Company or its affiliates for such expenses.
(c) Manager shall be responsible for all of its general and
administrative expenses, including compensation to employees and
related taxes, lease payments for use of office space, utilities, lease
payments on office equipment and other overhead expenses necessary for
the management of the Company consistent with past practices.
5. FEES. As compensation for the services rendered by Manager to the
Company hereunder, the Company shall pay Manager the fees listed below. Fees
shall be paid in quarterly installments, in advance. All valuations required for
purposes of this Agreement shall be established in accordance with generally
accepted accounting principles, consistently applied. The examples contained in
Exhibit A hereto illustrate the application of this Agreement and are an
integral part of this Agreement.
(a) Management Fees.
(i) Beginning on January 1, 2002 and continuing through
December 31, 2002, the Company shall pay to Manager
an annual management fee equal to $13,975,000, for
services performed under Section 3 of this Agreement.
Any amounts agreed to among the parties for services
performed by
4
Manager in addition to those listed in Section 3
shall be paid at such time as the parties may
mutually agree.
(ii) For the period beginning on January 1, 2003 and
continuing through December 31, 2003, the Company
shall pay to Manager an annual management fee equal
to the lesser of (i) $7,250,000 and (ii) the amount
which is found by solving the following equation for
A:
A = w (y/z) where w is the total Expenses
(as defined in Section 5(b) below) incurred
by Manager during such year; y is the Value
of Assets (as defined in Section 5(b) below)
of the Company, of Strategic (without
duplication of the Company's assets) and of
the Voting Trusts and z is Value of Assets
for all of the assets managed by Manager.
See Exhibit A attached hereto and incorporated herein for an
illustration of the fees due under this Section 5(a)(ii).
(iii) For the period beginning on January 1, 2004 and
continuing through the termination of this Agreement,
the Company shall pay to Manager an annual management
fee equal to the lesser of (i) $5,500,000 and (ii)
the amount which is found by solving the following
equation for B:
B = w (y/z) where w is the total Expenses
incurred by Manager during such year; y is
the Value of Assets of the Company, of
Strategic (without duplication of the
Company's assets) and of the Voting Trusts
during such year and z is the Value of
Assets for all of the assets managed by
Manager during such year.
(iv) In making the calculations called for by Sections
5(a)(ii) and 5(a)(iii), (a) the Value of Assets shall
be calculated as of the first day of each quarter for
which payment is due, (b) the Expenses of the Manager
shall be based upon annual budgets and shall be
finally determined as of December 31 for the year in
question, (c) the Management Fee may be adjusted from
quarter to quarter, and (d) there will be a "true-up"
(with appropriate adjustment in payments) between the
Company and Manager (x) on the last business day of
each quarter, payable promptly upon determination, in
order to account for the fluctuation in the daily
weighted average Value of Assets during such quarter;
and (y) following the end of the year in question,
payable within 90 days following the end of such
year, in order to account for the actual Expenses
incurred for the then completed year.
(b) For purposes of this Section 5, "Expenses" incurred by
Manager shall be those general and administrative expenses actually
incurred by Manager in its real estate
5
related operations, whether such services are performed for the Company
or any other entity. "Value of Assets" shall mean the amount, in
dollars, of stabilized equity capital actually invested by the Company,
the Voting Trusts, Strategic and any other entity in assets managed by
Manager, not reduced by any financings or refinancings of such
stabilized equity. Attached hereto as Exhibit C is a schedule of Value
of Assets for all such entities as of the date of this Agreement first
above stated.
6. OTHER ACTIVITIES. It is understood and agreed that Manager and its
Related Parties may provide investment advisory and management services to other
parties. Certain of those parties may have the capacity and desire to invest in
or acquire the type of real estate opportunities that, if the Company were to
terminate its Asset Sale Plan and determine to continue as a going concern,
would likely be within the Company's investment objectives and asset classes.
Manager and its Related Parties will not be required to allocate any investment
opportunities to the Company.
Manager and its Related Parties shall devote to the Company such time
as may be necessary for the proper performance of its duties hereunder;
provided, however, that the Company specifically acknowledges and agrees hereby
that Manager and its Related Parties and their respective officers, directors,
principals, partners, members, managers and employees shall not be required to
devote their full time to the performance of such duties.
Except as provided in this Agreement, any transactions between Manager
or any Related Party and the Company or any assets or entities in which the
Company has an interest and any fees or expense reimbursements payable by the
Company or out of such assets or entities shall be subject to the restrictions
on Manager and any of its Related Parties contained in the Charter, provided
that if the Board of Directors of the Company has authorized the Company to
undertake an action, the Board's approval of this Agreement shall cause such
approval to be deemed to apply to Manager's actions hereunder to the extent
permitted by the Company's authorization. Manager may also enter into
transactions with the Company not otherwise contemplated by this Agreement
provided that such transactions are approved by an independent committee of the
Company's Board of Directors.
7. TRANSFER OF ASSETS. As a condition precedent to the effectiveness of
this Agreement, Manager and the Company shall, on or before January 1, 2002,
enter into an Asset Purchase Agreement substantially in the form attached hereto
as Exhibit B whereby the assets necessary for Manager to manage the business are
transferred to Manager.
8. TERMINATION, AMENDMENT AND ASSIGNMENT.
(a) The Company may terminate this Agreement for cause upon
not less thirty (30) days' prior written notice to Manager. As used
herein, "for cause" shall mean that Manager would not be entitled to
indemnification under Section 9(a) below and the matter had a material
adverse effect upon the Company. Except as set forth above, this
Agreement shall remain in full force and effect until the termination
of the Company and the completion of the liquidation and distribution
of all of its assets.
6
(b) This Agreement may be amended at any time and from time to
time by a written instrument executed by Manager and the Company;
provided, however, that any matters which would, with respect to the
Charter, require the consent of the stockholders of the Company shall
require a similar level of stockholder consent when effected as
amendments to this Agreement.
(c) This Agreement is not subject to assignment by Manager or
the Company without the prior written consent of the other party.
9. LIABILITY AND INDEMNIFICATION.
(a) The Company shall indemnify Manager, any Related Party,
and each of their respective members, managers, officers, directors,
principals, partners, employees or interest holders (each an
"Indemnitee"), from and against any and all losses, claims, damages,
liabilities, joint or several, expenses (including, without limitation,
attorneys' fees and other legal fees and expenses), judgments, fines,
settlements, and other amounts arising from any and all claims,
demands, actions, suits or proceedings, civil, criminal, administrative
or investigative, that arise from or relate to the provision of service
by the Manager under this Agreement, in which such Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise,
unless it is established that: (i) the act or omission of the
Indemnitee was material to the matter giving rise to the proceeding and
either was committed in bad faith or was the result of active and
deliberate dishonesty; (ii) the Indemnitee actually received an
improper personal benefit in money, property or services; or (iii) in
the case of any criminal proceeding, the Indemnitee had reasonable
cause to believe that the act or omission was unlawful. The termination
of any proceeding by conviction of an Indemnitee or upon a plea of nolo
contendere or its equivalent by an Indemnitee, or an entry of an order
of probation against an Indemnitee prior to judgment, creates a
rebuttable presumption that such Indemnitee acted in a manner contrary
to that specified in this Section 9 which entitle such Indemnitee to
Indemnification hereunder.
(b) Reasonable expenses incurred by an Indemnitee who is a
party to a proceeding shall be paid or reimbursed by the Company in
advance of the final disposition of the proceeding upon receipt by the
Company of (i) a written affirmation by the Indemnitee of the
Indemnitee's good faith belief that the standard of conduct necessary
for indemnification by the Company as authorized in this Section 9 has
been met, and (ii) a written undertaking by or on behalf of the
Indemnitee to repay the amount if it shall ultimately be determined
that the standard of conduct has not been met.
(c) An Indemnitee shall not be denied indemnification in whole
or in part under this Section 9 because the Indemnitee had an interest
in the transaction with respect to which the indemnification applies if
the transaction was otherwise permitted by the terms of this Agreement.
10. NON-COMPETITION. The Company acknowledges that it is Manager's
intention to hire substantially all of the current employees of the Company.
Beacon Capital Partners, Inc., in its own capacity and as the general partner of
Beacon Capital Partners, L.P. (the "Partnership")
7
and each of their respective affiliates, hereby waives the terms of any
non-competition or restrictive covenant that may exist for the benefit of the
Company, the Partnership or any of their affiliates with respect to the
employment of such persons by Manager and its affiliates.
11. NOTICES. Notices under this Agreement shall be in writing and shall
be addressed, and delivered or mailed postage prepaid, to the other party at
such address as such other party may designate from time to time for the receipt
of such notices. Until further notice to the other party, the address of each
party to this Agreement for this purpose shall be Xxx Xxxxxxx Xxxxxx, 00xx
Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
12. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
13. ENTIRE AGREEMENT. This Agreement, including the schedules and
exhibits referred to herein and the other writings specifically identified
herein or contemplated hereby, is complete, reflects the entire agreement of the
parties with respect to its subject matter, and supersedes all previous written
or oral negotiations, commitments and writings. No promises, representations,
understandings, warranties and agreements have been made by any of the parties
hereto except as referred to herein or in such schedules and exhibits or in such
other writings; and all inducements to the making of this Agreement relied upon
by either party hereto have been expressed herein or in such schedules or
exhibits or in such other writings.
14. CAPTIONS AND GENDER. The captions in this Agreement are for
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter,
as the context may require.
15. EXECUTION IN COUNTERPARTS. For the convenience of the parties and
to facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
IN WITNESS WHEREOF, the parties hereto, have caused this Agreement to
be signed in duplicate as of the 2nd day of January, 2002.
BEACON CAPITAL PARTNERS, INC.
By: /s/ XXXXXXX X. XXXX
--------------------------------
Name: Xxxxxxx X. Xxxx, Esq.
Title: Senior Vice President
and General Counsel
8
BEACON CAPITAL PARTNERS, L.P.
By: /s/ XXXXXXX X. XXXX
--------------------------------
Name: Xxxxxxx X. Xxxx, Esq.
Title: Senior Vice President
and General Counsel
BCP STRATEGIC PARTNERS, LLC
By: Beacon Capital Partners, L.P.,
a Delaware limited partnership,
as its sole member
By: Beacon Capital Partners, Inc., a
Maryland corporation, as its
General partner
By: /s/ XXXXXXX X. XXXX
--------------------------------
Name: Xxxxxxx X. Xxxx, Esq.
Title: Senior Vice President
and General Counsel
BEACON CAPITAL PARTNERS, LLC
By: /s/ XXXX X. XXXXXXXXX
--------------------------------
Xxxx X. Xxxxxxxxx
Managing Member
9
