Exhibit 10.3
EXECUTION COPY
TRANSITION SERVICES
AGREEMENT
This TRANSITION SERVICES AGREEMENT
(this “ Agreement ”) is entered into on the
1 st
day of May, 2009 (the “
Effective Date ”), between Residential Funding
Company, LLC, a Delaware limited liability company (“
Seller ”), and GMAC LLC, a Delaware limited liability
company (“ Purchaser ”). All capitalized terms
used in this Agreement but not defined herein shall have the
meanings assigned to them in the Purchase Agreement (as defined
below).
WHEREAS, pursuant to and on the
terms and conditions contained in that certain Membership Interest
and Share Purchase Agreement, dated as of the March 31, 2009
(the “ Purchase Agreement ”), between Seller and
Purchaser, Seller is selling, assigning and transferring to
Purchaser, and Purchaser is purchasing from Seller, and taking
assignment and delivery of, among other things, all right, title
and interest in and to all of the issued and outstanding limited
liability company interests of Residential Funding Securities, LLC,
a Delaware limited liability company (“ RFS ”),
and all right, title and interest in and to all of the issued and
outstanding share capital of RFC Investments Limited, a private
company limited by shares incorporated in England and Wales
(“ RFCIL ”);
WHEREAS, RFCIL owns all of the
issued and outstanding share capital of RFSC International Limited,
a private company limited by shares incorporated in England and
Wales (“ RFSC ”);
WHEREAS, Seller presently provides,
directly or indirectly, certain services to RFS and RFSC, and the
parties agree that, during the term of this Agreement, Seller shall
continue to render to RFS and RFSC certain services pursuant to the
terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of
the premises and of the mutual promises herein contained, Seller
and Purchaser agree as follows:
ARTICLE I
SERVICES PROVIDED
1.01 Services . Seller shall
provide, or shall cause its Affiliates or certain third party
service providers (such third party service providers, “
Providers ”) to provide to RFS and RFSC the services
set forth on Schedule A hereto (collectively, the “
Services ”). The Services shall be provided in
accordance with the terms, limitations and conditions set forth in
this Agreement. Unless otherwise agreed to by the parties in
writing, Seller shall perform the Services with substantially the
same degree of care and diligence and using substantially the same
business procedures and policies, standards of care and internal
controls, including loss prevention controls, as those used by
Seller in providing the Services to RFS and RFSC prior to the RFS
Closing and RFCIL Closing, respectively. The parties do not intend
this Agreement to change, in any material respect, the type,
quantity, quality, timeliness or manner of performance of any
Services from those provided prior to the RFS Closing or RFCIL
Closing, respectively. Further, the Services, to the extent outside
the ordinary course of the Services provided hereunder, shall be
rendered pursuant to a written request made from time to time by
Purchaser.
1.02 Term . Seller shall
provide the Services to RFS and RFSC commencing on the Effective
Date and continuing for the period(s) of time specified in
Schedule A , subject to earlier termination under
Section 5.01 .
1.03 Use of Services .
Purchaser shall cause RFS and RFSC to use the Services for
substantially the same purposes and in substantially the same
manner as they used such Services prior to the RFS Closing and
RFCIL Closing.
1.04 Personnel . All
employees of Seller or its Affiliates and those of any Providers
hired by Seller or its Affiliates (collectively, “
Acquired Company Personnel ”) that provide Service to
RFS or RFSC as specified in Schedule A will remain employees
of Seller, its Affiliates or the Providers, as applicable, and
shall not be considered employees of RFS or RFSC. Seller, its
Affiliates and the Providers, as applicable, shall be solely
responsible for (i) all salaries, benefits and other
compensation or payments to Acquired Company Personnel (including
subcontractors), (ii) making all deductions and withholdings
from its employees’ salaries and other compensation and
(iii) the payment of all contributions, taxes and assessments
applicable to its employees.
1.05 Access .
(a) Purchaser agrees to provide, or
to cause RFS and/or RFSC to provide, Seller with all information
reasonably requested by Seller in order to provide the Services
required pursuant to this Agreement. Seller shall treat all such
information as Confidential Information (as defined below). If
Seller or any of its Affiliates is given or gains access, including
unintentional or accidental access, to any of RFS’s or
RFSC’s computer or electronic systems or data storage, due,
directly or indirectly, to Seller’s rendering of the
Services, Seller shall limit such access and use solely to the
performance of the Services and will not attempt to access such
computer system, electronic files, software or other electronic
services other than those specifically required to perform the
Services. Seller shall (i) limit such access to Acquired
Company Personnel who have an express requirement to have such
access in connection with this Agreement and (ii) follow all
reasonable security rules and procedures of RFS and RFSC for use of
RFS’s and RFSC’s electronic resources (provided that
RFS or RFSC has informed Seller of such rules and procedures and
all changes thereto). All use of identification numbers and
passwords disclosed, unintentional or otherwise, to Seller or its
Affiliates and any information obtained by Seller or its
Affiliates, regardless of the means, as a result of Seller’s
access to, and use of, RFS’s or RFSC’s computer and
electronic storage systems shall be deemed to be, and shall be
treated as, Confidential Information (as defined below).
(b) If Purchaser or any of its
Affiliates is given or gains access, including unintentional or
accidental access, to Seller’s, or any of its
Affiliate’s or other Person’s who receive any Services
from Seller, computer or electronic systems or data storage, due,
directly or indirectly, to Seller’s rendering of the
Services, Purchaser shall limit, or cause such Affiliates to limit,
such access and use solely to the use of the Services and will not
attempt to access such computer system, electronic files, software
or other electronic services other than as allowed and necessary
for the use of the Services. All use of identification numbers
and
Transition Services Agreement
passwords disclosed, unintentional
or otherwise, to Purchaser or any of its Affiliates and any
information obtained by Purchaser or any of its Affiliates,
regardless of the means, as a result of Purchaser’s or such
Affiliate’s access to, and use of, Seller’s computer
and electronic storage systems shall be deemed to be, and shall be
treated as, Confidential Information (as defined below).
1.06 Compliance . Seller
will, and will cause its Affiliates and Providers to, use
commercially reasonable efforts to ensure that all employees,
agents or other individuals associated with Seller or such
Affiliates or Providers while at RFS’s or RFSC’s
facilities, (i) comply with the personnel, operational, safety
and security procedures, policies, rules, and regulations
applicable to RFS’s or RFSC’s employees and agents
(provided that RFS or RFSC has informed Seller of such procedures,
policies, rules, and regulations and all changes thereto), as
applicable, (ii) comply with the reasonable requests of RFS
and RFSC pertaining to personal and professional conduct and
(iii) otherwise conduct themselves in a professional and
businesslike manner.
ARTICLE II
PAYMENT
2.01 Fees . Pursuant to and
in accordance with those certain expense sharing agreements, dated
as of the date hereof, between Seller and each of RFS and RFSC,
Seller shall charge RFS and RFSC on a monthly basis in arrears the
actual costs incurred by Seller (or any Provider, as applicable)
for all Services it provided during such month, and RFS and RFSC
shall pay Seller for such Services on a monthly basis for the
preceding month.
ARTICLE III
PERFORMANCE OF
SERVICES
3.01 Performance of Services
. Seller will, or will cause its Affiliates and Providers to, use
commercially reasonable efforts to perform the Services (i) as
described in Section 1.01 and (ii) using Acquired
Company Personnel, to the extent then available and then still
employed or hired by Seller, that are familiar with the technology,
process and procedures used to deliver the Services in accordance
with Seller’s past practices, customs, ways and means for
providing Services to RFS and RFSC prior to the RFS Closing and
RFCIL Closing.
3.02 DISCLAIMER . PURCHASER
ACKNOWLEDGES THAT SELLER IS PROVIDING THE SERVICES TO RFS AND RFSC
AS AN ACCOMMODATION TO RFS’S AND RFSC’S TRANSITION
FOLLOWING THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THE
PURCHASE AGREEMENT. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, SELLER DISCLAIMS ALL WARRANTIES AND GUARANTEES WITH
RESPECT TO THE SERVICES, WHETHER EXPRESS OR IMPLIED, INCLUDING ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
SELLER DOES NOT MAKE ANY WARRANTY THAT ANY SERVICE COMPLIES WITH
ANY LAW, DOMESTIC OR FOREIGN.
Transition Services Agreement
Further, nothing in this Agreement
shall be construed as (i) an assumption by Seller of any
obligation to increase RFS’s or RFSC’s sales or profits
or otherwise to guarantee the business success of RFS or RFSC,
(ii) an assumption by either party of any financial
obligations of the other party, (iii) the creation of any
relationship of employment with any employee of RFS, RFSC or any
Acquired Company Personnel, including any of their Affiliates, or
(iv) the delegation of any of RFS’s or RFSC’s
functions or authority to Seller, it being understood that Seller
will, when so requested, make recommendations and offer advice
pursuant thereto; provided , that each and every decision
with respect thereto shall be, and remain, dependent upon
appropriate action of Purchaser’s, RFS’s or
RFSC’s authorized officers, as applicable.
ARTICLE IV
COVENANTS
4.01 Mutual Cooperation .
Seller and Purchaser shall reasonably cooperate with each other
(and Seller shall reasonably cooperate with RFS and RFSC and
Purchaser shall cause RFS and RFSC to reasonably cooperate with
Seller) in connection with the performance of any Service provided
under this Agreement, including developing reasonable procedures
necessary with respect to information sharing, transfer of data and
similar matters. Purchaser shall provide, or shall cause RFS or
RFSC to provide, Seller with current information concerning the
transition plans of RFS and RFSC on a regular basis and Seller
shall provide Purchaser, RFS and RFSC, as applicable, with such
information as is reasonably necessary to assist RFS and RFSC with
such transition. Seller shall use commercially reasonable efforts
to maintain staffing at levels capable of delivering Services in a
timely manner, consistent with past practice.
4.02 Title to Data . Except
as otherwise provided in this Agreement or the Purchase Agreement,
each party acknowledges that it will acquire no right, title or
interest (including any license rights or rights of use) in any
Intellectual Property that is owned or licensed by the other party
by reason of the Services provided under this Agreement.
4.03 Continued Performance .
Each party agrees that it will, unless otherwise directed by the
other party, continue performing its obligations under this
Agreement while any dispute is being resolved, unless and until
this Agreement expires or is terminated in accordance with its
terms.
4.04 Confidentiality . Each
party acknowledges that in the performance of such party’s
obligations under this Agreement, it may come into possession of
certain confidential and proprietary information relating to the
business of the other party or its Affiliates (collectively, the
“ Confidential Information ”). Each party, on
behalf of itself and its employees and agents, warrants and
guarantees that it will use all reasonable means to safeguard and
maintain the confidentiality of the Confidential Information and
will use the Confidential Information only in fulfilling its
obligations and exercising its rights under this Agreement and
neither party will disclose any of the Confidential Information of
the other party to any third party without the other party’s
prior written consent, except that Confidential Information may be
disclosed (i) to the extent requested by any regulatory
authority, (ii) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process,
(iii) in connection with the exercise of any remedies under
this Agreement or any suit, action or proceeding relating to this
Agreement or the enforcement of rights under this Agreement,
(iv) to the extent such Confidential Information becomes
publicly available other than as a result of a breach of this
Section 4.04 or (v) to the
Transition Services Agreement
extent such Confidential Information becomes
available to a third party from a source other than Purchaser, its
Affiliates or Seller that is not subject to any confidentiality
restrictions, as applicable. If either party becomes legally
compelled by law, process or order of any court, governmental
agency or otherwise to disclose any Confidential Information, such
party shall give the other party prompt notice thereof to permit
such other party to seek a protective order or to take other
appropriate action. A party will be relieved of its confidentiality
obligations under this Section 4.04 only to the extent
that, in the opinion of reputable legal counsel, it becomes legally
compelled to disclose Confidential Information, subject to
protective orders or other restrictions imposed on or granted by
the court, governmental agency or other entity receiving the
Confidential Information.
ARTICLE V
DEFAULTS AND
REMEDIES
5.01 Termination . Purchaser
may terminate the Services, in whole or in part, upon 30
days’ prior written notice to Seller. No such termination
shall affect the obligation of Purchaser to pay to Seller any
amounts payable under this Agreement. During the first six months
following the RFS Closing and the RFCIL Closing (the “
Transition Period ”), Seller shall not (and, as
applicable, shall cause each Provider not to) terminate any
Services without the prior written consent of Purchaser (which
consent may be withheld by Purchaser in its sole discretion). After
the Transition Period, Seller shall provide Purchaser with ninety
(90) days written notice if Seller determines it no longer
desires (or it no longer desires a Provider) to provide a
Service.
5.02 Defaults . A party shall
be deemed to be in default (“ Default ”) under
this Agreement upon the occurrence of any one or more of the
following events with respect to it:
(a) Failure by RFS or RFSC to make
any payment set forth in Section 2.01 when due under
this Agreement if such failure continues for five days after
receipt of written notice thereof from Seller; or
(b) Failure by either party to
perform in all material respects or observe any obligation or
condition of this Agreement to be performed or observed by such
party if such failure continues for five days after receipt of
written notice thereof is given by the other party.
5.03 Remedies; Exculpation .
Following the occurrence of a Default by one party, the other party
may, at such party’s option, terminate or suspend its
obligations under this Agreement. In addition, such party may
pursue any other remedy provided in this Agreement or otherwise
available to it under applicable law or in equity, including
specific performance; provided , that in no event shall
Seller become liable under this Agreement for amounts, in the
aggregate, that exceed the amounts paid to Seller for the provision
of Services under this Agreement, except with respect to
Seller’s fraud, willful misconduct or gross
negligence.
Transition Services Agreement
5.04 Limitations on Liability
.
(a) EACH PARTY EXPLICITLY AGREES
THAT SELLER SHALL HAVE NO LIABILITY UNDER THIS AGREEMENT OR
OTHERWISE IN CONNECTION WITH THE SERVICES OTHER THAN DAMAGES TO THE
EXTENT ARISING FROM SELLER’S FRAUD, GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT. IN NO EVENT SHALL SELLER BE LIABLE TO PURCHASER
OR ITS AFFILIATES OR ANY OTHER PERSON OR ENTITY BY REASON OF THIS
AGREEMENT FOR INDIRECT, CONSEQUENTIAL OR INCIDENTAL DAMAGES OF ANY
KIND OR NATURE, INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS OR
DAMAGE TO OR LOSS OF USE OF ANY PROPERTY, ANY INTERRUPTION OR LOSS
OF SERVICE OR ANY LOSS OF BUSINESS.
(b) Purchaser and its Affiliates
shall not have any liability under this Agreement for damages,
losses or expenses suffered by Seller or its Affiliates as a result
of the performance or non-performance of such party’s
obligations hereunder, unless such damages, losses or expenses are
caused by or arise out of the fraud, willful misconduct or gross
negligence of Purchaser or its Affiliates. In no ev
