Exhibit 10.1
Execution Copy
TRANSITION SERVICES
AGREEMENT
by and among
ALLIED CAPITAL
CORPORATION,
A.C.
CORPORATION
and
CWCAPITAL INVESTMENTS
LLC
Dated as of
April 29, 2005
TRANSITION SERVICES
AGREEMENT
THIS TRANSITION SERVICES
AGREEMENT (this “Transition Services
Agreement” ), dated as of April 29, 2005 is made by
and among Allied Capital Corporation, a Maryland corporation (
“Allied Capital” ), AC Corporation, a
Delaware corporation ( “AC Corp.” and,
together with Allied Capital, “Servicer”
) and CWCapital Investments LLC, a Massachusetts limited liability
company ( “Buyer” ). CDP
Capital-Financing Inc., a company incorporated under the Quebec
Companies Act, is an Affiliate of Buyer and is providing a
performance guarantee as provided herein (“
Guarantor ”).
WHEREAS, Allied Capital is,
both directly and indirectly, engaged in, among other things, the
business of (i) investing in certain real estate-related
securities (the “Real Estate Securities”
), (ii) acting as servicer, special servicer, disposition
consultant and/or performing similar functions in connection with
the assets underlying certain of the Real Estate Securities (such
role, however designated, referred to collectively herein as
“Special Servicer” ); (iii) originating,
acquiring and holding commercial mortgages; and (iv) owning
commercial real estate, both through direct investment and as a
result of foreclosure on commercial mortgages held by it;
WHEREAS, contemporaneously
herewith, Buyer, Guarantor, Allied Capital and, as applicable,
certain of their respective affiliates are entering into (i) a
purchase agreement pursuant to which the Real Estate Securities are
being sold by Allied Capital to Guarantor (the “Real
Estate Securities Purchase Agreement ”); (ii) a
platform asset purchase agreement pursuant to which certain assets
(the “Platform Assets” ) are to be sold
by Servicer to Buyer (the “Platform Assets Purchase
Agreement ”), and (iii) a letter of intent (the
“ REO and Loan Letter of Intent ”) which
contemplates the transfer of certain other assets (the
“Real Estate Assets” and, together with
the Real Estate Securities and the Platform Assets, the
“CRE Operations and Assets” ) by Allied
Capital and one or more of its Affiliates to Guarantor or one or
more of its Affiliates pursuant to a REO and Loan Purchase
Agreement to be negotiated following the date hereof (the
“REO and Loan Purchase Agreement” and,
together with the Real Estate Securities Purchase Agreement and the
Platform Assets Purchase Agreement, the “Purchase
Agreements” );
WHEREAS, closing of the
transactions contemplated by the Real Estate Securities Purchase
Agreement are expected to occur shortly after the execution of this
Transition Services Agreement;
WHEREAS, closing of the
transactions contemplated by the Platform Asset Purchase Agreement
and the REO and Loan Letter of Intent (the “Real Estate
Assets Transfer” ) will occur only following receipt
of necessary consents and approvals and the satisfaction of other
conditions as provided therein;
WHEREAS, during the Services
Period (as defined below), Buyer desires that Servicer continue to
service the CRE Operations and Assets consistent with
Servicer’s past practice and, with respect to the CRE
Operations and Assets after the sale thereof to Buyer or its
Affiliates, on Buyer’s behalf; cooperate with Buyer in
seeking all third party consents or approvals required under any
Servicing Agreement for the appointment of Buyer or its designee as
Special Servicer under such Servicing Agreement, including, with
limitation, any rating agency confirmation (collectively, the
“ Servicing Consents ”); and take all
other actions reasonably necessary to facilitate the transfer
of
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the Assets to Buyer;
NOW, THEREFORE, in
consideration of the forgoing premises and the promises contained
herein, and upon the terms and conditions set forth herein, the
parties hereto agree as follows (capitalized terms used but not
otherwise defined herein shall have the meaning given to them under
the Real Estate Securities Purchase Agreement):
Section 1.
Services Period . (a) For a period
commencing on the date hereof and ending on the later to occur of
(i) June 30, 2005 or (ii) the closing date on which
the Platform Assets are transferred to Buyer (the
“Platform Assets Transfer Date” ),
provided that such period shall not extend past
July 31, 2005 (the “Services Period”
) or, with respect to the operation of certain hardware and
software systems and the provision of related maintenance, support
and other information technology services described in
Exhibit B (the “ IT Operational
Services ”) and the information technology transition
services described in Section 1(d) below and
Exhibit B (the “ IT Transition
Services ”), ending on the six (6) month
anniversary of the date hereof (the “ IT Services
Period ”), Servicer shall provide or cause to be
provided to Buyer the services described in Exhibits A (for
the Services Period) and B (for the IT Period) hereto (the
“Services” ), each with respect to the
CRE Operations and Assets. Except as otherwise provided herein,
Servicer shall provide or cause to be provided the Services:
(i) at quality and quantity levels generally consistent with,
or better than, that at which such services were provided with
respect to the CRE Operations and Assets during the one year period
immediately preceding the date hereof; (ii) for the payments
described in Section 4 below. The Services shall be
provided by the CRE Employees (as defined in Section 8
) who have historically provided such services and, to the extent
approved by Buyer, any additional employees or consultants of
Servicer.
(b) With respect to the Real
Estate Assets, Servicer agrees to continue its ownership and
administration of such assets in the ordinary course of business
consistent with past practice, and to otherwise comply with the
provisions of the REO and Loan Letter of Intent as it relates to
the obligations of Servicer between signing and closing of the Real
Estate Assets Transfer (subject to the exceptions set forth in the
REO and Loan Letter of Intent or in the definitive REO and Loan
Purchase Agreement).
(c) The parties acknowledge and
agree that their mutual intent with respect to the Services is
(i) for CRE Employees to continue providing the same type of
services with respect to the CRE Operations and Assets as they
provide on the date hereof, (ii) for there to be no material
change in such services by reason of the changed ownership of the
CRE Operations and Assets, and (iii) to put each other in
approximately the same economic position as each would have been in
had the Platform Asset Transfer occurred contemporaneously
herewith. Accordingly, in exchange for the amounts to be paid by
Buyer to Servicer in accordance with Section 4 , and
for other good and sufficient consideration (the receipt and
sufficiency of which is hereby acknowledged), the parties hereto
agree that, during the Services Period (x) commencing at 11:59
pm (in New York, New York) on the date hereof, Servicer shall
promptly (but in no event more than three (3) Business Days
following Servicer’s receipt) pass through and forward to
Buyer all servicing, special servicing, liquidation, workout,
disposition agent and related fees and all late fees, default
interest, assumption fees, modification fees and other ancillary
fees (collectively, the “ Servicing Fees
”) to which the Servicer, in its role as Special Servicer, is
entitled under the related servicing agreement, pooling and
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servicing agreements, sale
and servicing agreements and related agreements pursuant to which
Servicer acts as Special Servicer (collectively, the
“Servicing Agreements” ), and
(y) all opportunities for new investments generated by the CRE
Employees shall belong to Buyer and Servicer shall not participate
in any such investment opportunities.
(d) With respect to the IT
Transition Services and the IT Operational Services (collectively,
the “ IT Services ”), Servicer agrees
that it will provide assistance to enable:
(i) the transition of the CRE
Operations and Assets to alternative information technology
infrastructure and arrangements that are at least equivalent to
those currently in use for the CRE Operations and Assets and which
will include the same or equivalent hardware or software as
currently used for the CRE Operations and Assets (except to the
extent Buyer elects to use alternative hardware or software);
(ii) the parties to effect the
transition with the minimum amount of disruption to the CRE
Operations and Assets while providing IT Operational Services at
substantially the same or better levels of service and availability
as those generally enjoyed by Allied Capital for similar or shared
systems; and
(iii) the parties to effect the
transition substantially in accordance with the timelines, plans
and checklists to be mutually agreed as part of the IT Transition
Services.
Section 2.
Services of CRE Employees . (a) From the
date hereof until June 30, 2005, Servicer shall use its
commercially reasonable efforts to continue to employ the CRE
Employees in the positions they hold on the date hereof or such
other positions mutually agreed to by the parties to this
Agreement. From June 30, 2005 until the end of the Services
Period, Servicer shall use its commercially reasonable efforts to
continue to employ the CRE Employees who have received offers of
employment from Buyer in the positions they hold on the date
hereof, or such other positions mutually agreed to by the parties
to this Agreement, until such CRE Employees are hired by Buyer.
Servicer shall cause all CRE Employees involved in providing
Services under this Agreement to satisfy the standards set forth in
Section 1(a) above.
(b) During the Services Period,
at Buyer’s request, Servicer shall provide Buyer with access
to all CRE Employees during ordinary business hours and Servicer
shall not interfere with Buyer’s access in any manner.
Servicer further agrees to provide Buyer with all CRE Employee
information reasonably requested by Buyer (to the extent permitted
by law), and compensation and employee benefits packages of the CRE
Employees.
(c) Promptly following the date
hereof, Servicer shall establish a transition services team with
oversight responsibility for the Services and the IT Services, and
appoint both a Services leader and a IT Services leader reasonably
acceptable to Buyer who shall have primary responsibility for
supervising the Services and the IT Services, respectively.
(d) Servicer and Buyer agree
that the employees providing services shall be employees of
Servicer and not of Buyer. Servicer shall have sole responsibility
for all matters relating to the maintenance of personnel and
payroll records, the withholding of payment of federal, state and
local income and payroll taxes, the payment of workers compensation
and unemployment compensation
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insurance, salaries, wages
and pension, welfare and other fringe benefits and the conduct of
all other matters relating to employment. Servicer shall be
responsible for directing, controlling and evaluating the manner
and means of each employee who provides Services pursuant to this
Transition Services Agreement. However, unless otherwise agreed to
by Buyer, increases in the benefits or compensation of any of the
employees providing Services which occur after the date hereof
shall not be included in any of the payments contemplated in
Section 4 of this Agreement.
Section 3.
Cooperation on Special Servicing Transfer; Buyer
Participation . (a) In addition to and not in
lieu of Servicer’s other obligations hereunder, Servicer
shall cooperate reasonably with Buyer and its representatives in
connection with the steps reasonably required to be taken in order
for Buyer to obtain any of the Servicing Consents, and shall
furnish, upon request, to the applicable trustee, ratings agency or
other appropriate third party such additional information
concerning the Real Estate Securities or Servicing Agreements as
may be reasonably necessary in order for Buyer to obtain the
Servicing Consents.
(b) Servicer shall continue to
act in its role as Special Servicer with respect to the assets
underlying the Real Estate Securities in the ordinary course of
business consistent with its past practice and shall not resign,
provide notice of its intention to resign, or take or fail to take
any action which would be reasonably likely to give rise to the
termination of Servicer as Special Servicer in connection with the
assets underlying any of the Real Estate Securities. In connection
with the foregoing, Servicer shall consult with Buyer on matters of
a material nature, not take such actions without the consent of
Buyer and shall provide Buyer with such updates and other
information as may be reasonably requested by Buyer; provided,
however, that Servicer shall not be liable to Buyer for any such
actions Servicer takes or omits to take at the request of Buyer,
except to the extent the Loss arising from such action or inaction
arises from Servicer’s failure to carry out such action in
accordance with the servicing standard or standard of conduct
required under the applicable Servicing Agreement. Nothing herein
is intended to relieve Servicer from its duties and obligations as
Special Servicer under the Servicing Agreements.
Section 4.
Payment . Buyer shall make payments of amounts
owed to Servicer under this Agreement by wire transfer of
immediately available funds (to an account designated by Servicer
to Buyer in its monthly invoice) as follows:
(a) Cost of Services
.
(i) Exhibit D sets forth
Servicer’s good faith estimate, based on the historical cost
of Seller’s ownership and operation of the CRE Operations and
Assets, of the actual and direct cost that Servicer will incur each
month in connection with its providing Services to Buyer.
(ii) on or before the first day of
each calendar month during the term of this Agreement,
(A) Buyer shall confirm which, if any, of the Services Buyer
will require from Servicer in such calendar month and
(B) Buyer and Servicer shall mutually agree on the cost of
such Services based on Exhibit D , as
Exhibit D may be adjusted in the good faith judgment of
Buyer and Servicer;
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(iii) on the 15 th day of each
calendar month during the term of this Agreement or, if such day is
not a Business Day, the first Business Day thereafter, Servicer
shall deliver an invoice to Buyer detailing the agreed upon cost of
the Services provided or to be provided to Buyer for the entire
calendar month. To the extent that, during the course of a month,
circumstances materially change in a manner not anticipated by
Servicer and Buyer when they agreed on the cost of Services for
such month, the parties will negotiate in good faith as to whether
any adjustment to the costs for such month is appropriate;
(iv) Buyer shall pay each invoice it
receives from Servicer in accordance with
Section 4(a)(iii) no later than the 31 st day of the
month in which it is received.
(b) Expenses
. On each monthly invoice described in
Section 4(a)(iii), Servicer shall notify Buyer of the amount
of expenses incurred by Servicer during the prior month in
connection with the retention of consultants and advisors,
(provided that Buyer approved such retention), and expenses
incurred in connection with servicing the CRE Operations and
Asset
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