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 Serv
