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Founder M&A Transition Services Agreement

Matter Completion Sheet — Not Part of the Agreement

Complete every row. Enter N/A and the reason where an item does not apply.

A. Transaction and service perimeter

B. Operational and security design

C. Economics, liability, and release

TRANSITION SERVICES AGREEMENT

This Transition Services Agreement (this “Agreement”) is entered into as of [DATE] by and between [SERVICE PROVIDER], a [JURISDICTION] [ENTITY TYPE] (“Provider”), and [RECIPIENT], a [JURISDICTION] [ENTITY TYPE] (“Recipient”). Provider and Recipient are parties to [ACQUISITION AGREEMENT] dated [DATE] (the “Acquisition Agreement”). Capitalized terms not defined here have the meanings in the Acquisition Agreement.

Recitals

A. Under the Acquisition Agreement, Recipient acquired [BUSINESS / ASSETS / EQUITY] at the Closing.

B. The transferred business used certain services, systems, personnel, facilities, contracts, and infrastructure that cannot practicably be separated at Closing.

C. Provider will supply only the transition services expressly described in the Service Schedules while Recipient builds or obtains replacements under the Exit Plan.

The parties agree as follows.

1. Scope and Operating Principles

1.1 Services

Provider will perform each service described in a signed Service Schedule (each, a “Service”) during its stated Service Period. A Service Schedule must identify the service owner, scope, deliverables, inputs, exclusions, volumes, locations, systems, dependencies, service levels, fee, data categories, third parties, term, and exit milestone. Provider has no obligation to perform an implied service. If a function was inadvertently omitted but was regularly provided to the transferred business during the [six]-month period before Closing and is reasonably necessary for continuity, Recipient may request it under Section 3.3.

1.2 Service standard

Provider will perform each Service with substantially the same degree of care, priority, timeliness, and skill it used for the same function for the transferred business immediately before Closing, but not less than commercially reasonable care. Provider need not improve a Service or exceed the capacity, geographic scope, volume, or hours in the applicable Service Schedule. If a quantified service level conflicts with the historic standard, the quantified level controls.

1.3 Recipient obligations and dependencies

Recipient will timely provide the personnel, decisions, data, access, approvals, equipment, funding, and other dependencies identified in each Service Schedule. Provider is excused from a failure only to the extent directly caused by Recipient’s uncured dependency failure and only if Provider promptly notifies Recipient, uses reasonable efforts to mitigate, and resumes performance when the dependency is restored.

1.4 No operational control or agency

The parties remain independent contractors. Neither may bind the other. Provider does not control the transferred business, employ Recipient personnel, make fiduciary or regulated decisions for Recipient, or assume Recipient liabilities except as expressly stated. Recipient remains responsible for business decisions, customer and regulatory obligations, and the legality of its use of Services.

2. Service Management

2.1 Service managers and governance

Each party appoints a Transition Manager and one owner for each service tower. The managers meet [weekly] during the first [90] days and [monthly] thereafter to review performance, incidents, capacity, invoices, changes, risks, and Exit Plan progress. They will maintain a decision log, issue log, change register, and dependency register. A manager may administer but not amend this Agreement unless separately authorized.

2.2 Escalation

An unresolved issue escalates from the service owners to Transition Managers after [two] Business Days, to executive sponsors after [five] Business Days, and to the dispute procedure after [ten] Business Days. Severity 1 incidents escalate immediately. Operational escalation does not postpone a contractual deadline unless the parties agree in writing.

2.3 Records and reports

Provider will retain records reasonably sufficient to verify Services, service levels, pass-through costs, access, incidents, changes, and invoices for [two] years after the applicable Service Period. Provider will deliver the reports in Exhibit B. Recipient may audit those records once per year and after a material security incident or invoicing error, during normal business hours and subject to confidentiality, privilege, security, and third-party restrictions.

3. Changes and Omitted Services

3.1 Change requests

Either party may submit a written Change Request stating the proposed scope, reason, urgency, dependencies, security and regulatory impact, fees, service levels, implementation plan, and Exit Plan effect. Neither party must implement a change until authorized representatives sign it, except emergency action permitted by Section 3.4.

3.2 Required changes

Provider may require a change reasonably necessary to comply with law, maintain security, preserve a third-party license, respond to a vendor change, or protect systems. Provider will give advance notice where practicable, propose a functionally comparable solution, and allocate cost under the applicable Service Schedule. Recipient may terminate the affected Service if the change materially reduces function or materially increases fees and no reasonable alternative is agreed.

3.3 Omitted service process

Recipient may request an omitted service within [90] days after Closing. The request must show historic provision and transition necessity. Provider will add it if Provider can do so without material burden, law or contract violation, or disproportionate risk. Scope, standard, price, term, and exit milestone will be documented in a Change Order. If the parties dispute historic provision, the decision log and pre-Closing operating records control before general course-of-dealing evidence.

3.4 Emergency changes

Provider may take temporary action without prior approval to address imminent harm to people, systems, data, legal compliance, or business continuity. Provider will notify Recipient promptly, minimize disruption, preserve evidence, and submit a Change Request within [two] Business Days. Emergency authority is not a pricing or scope circumvention.

4. Personnel Facilities and Third Parties

4.1 Personnel

Provider controls assignment, supervision, compensation, and replacement of its personnel. Provider will use personnel with appropriate training and access and will not remove a named key person without reasonable transition except for departure, misconduct, emergency, or legal requirement. Recipient may request removal for documented security, conduct, or performance reasons, and Provider will respond reasonably.

4.2 Facilities and access

Physical and logical access is limited to the locations, systems, hours, and purposes in the Service Schedules. Each party will enforce visitor, safety, acceptable-use, least-privilege, credential, and property-return controls. Access may be suspended for a credible security or safety threat, with prompt notice and a reasonable workaround.

4.3 Third-party services and consents

Provider may use existing vendors identified in the Service Schedules. It will not appoint a material new subcontractor handling Recipient data without the notice and objection process in Exhibit C. The parties will cooperate to obtain consents and replacement licenses. Provider need not breach a contract or law. If consent is unavailable, the parties will pursue a lawful operational equivalent; neither party is required to pay an unapproved fee.

4.4 Pass-through terms

Recipient will comply with disclosed vendor, software, network, facility, and license restrictions applicable to its use. Provider will not impose an undisclosed term. Provider remains responsible for subcontracted performance to the same extent as its own performance, except a scheduled vendor outage for which the Service Schedule expressly allocates a different risk.

5. Information Technology Data and Security

5.1 Permitted processing and roles

Each party may access and process data only to perform or receive the Services, comply with law, protect rights, and execute the Exit Plan. Exhibit C identifies data categories, data subjects, systems, purposes, controller or processor roles, instructions, retention, transfers, subprocessors, and return or deletion. If the parties’ legal roles differ by jurisdiction or Service, Exhibit C will state the allocation by activity.

5.2 Security controls

Each party will maintain administrative, technical, and physical safeguards appropriate to the sensitivity of data and the risks of the Services, including identity management, least privilege, multifactor authentication where appropriate, logging, vulnerability management, encryption, secure transfer, backup, change control, and personnel obligations as specified in Exhibit C. Neither party may bypass controls or commingle data beyond the approved architecture.

5.3 Security incidents

A party discovering unauthorized access, use, loss, alteration, disclosure, or material compromise affecting the other’s data or systems will notify the other without undue delay and within [24] hours after confirmation, provide known facts, preserve evidence, contain and remediate, and give updates. The parties will coordinate legally required notices; no party may name the other publicly without consent unless law requires it. Notice is not an admission of fault.

5.4 Data quality segregation and return

Recipient is responsible for lawful source data and business instructions. Provider is responsible for accurately performing the agreed processing and will maintain logical segregation stated in Exhibit C. At expiration, Provider will return data in the agreed format and delete remaining copies within [30] days, except backups and legally required archives kept inaccessible and protected until ordinary deletion.

5.5 Privilege and regulated data

The parties will not intentionally exchange privileged material without the protocol in Exhibit C. Regulated data, export-controlled information, health information, payment data, biometric data, children’s data, and government information may be processed only if expressly authorized and supported by required agreements and controls.

6. Business Continuity and Service Levels

6.1 Service levels

Exhibit B states availability, response, restoration, accuracy, throughput, delivery, support hours, maintenance, and measurement rules. Excused time is limited to scheduled maintenance, Recipient-caused failure, force majeure, and expressly identified third-party events, in each case only to the documented extent. Provider will report missed levels and a corrective-action plan.

6.2 Incident severity

Severity 1 means critical loss of a Service causing material business, security, safety, or compliance impact without a workaround. Severity 2 means material degradation with a limited workaround. Severity 3 means noncritical impairment. Exhibit B states response, update, restoration target, escalation, and root-cause timing for each level.

6.3 Continuity and disaster recovery

Provider will maintain the continuity and recovery capabilities listed in Exhibit B and test them [annually / during the Service Period]. Recipient will maintain its dependencies and participate in agreed tests. Following a material disruption, Provider will invoke the plan, communicate status, prioritize safety and critical functions, and document recovery decisions.

6.4 Chronic failure

If a Service misses a critical level [three] times in [60] days or remains materially deficient for [ten] Business Days after notice, Recipient may require an executive remediation plan, obtain temporary alternate service where feasible, or terminate the affected Service without an early-termination fee. Service credits are [the sole monetary remedy for service-level failure / not exclusive of direct damages for a separate breach], as selected in Exhibit B.

7. Fees Taxes and Payment

7.1 Fees

Recipient will pay the fees in each Service Schedule: [fixed / at cost / cost plus __% / usage-based]. “Cost” must identify included payroll, benefits, allocation, vendor, overhead, and excluded categories. Pass-through charges require invoices or equivalent evidence and no undisclosed markup. Provider may not charge both a fixed fee and the same cost as a pass-through.

7.2 Invoices and disputes

Provider invoices [monthly in arrears] with service, period, volume, fee, pass-through support, credits, taxes, and prior adjustments. Recipient will pay undisputed amounts within [30] days. It must dispute an amount with reasonable detail within [45] days but will pay the rest. The parties will correct underpayments and overpayments promptly; Provider may not suspend critical Services over a good-faith dispute.

7.3 Taxes

Fees exclude sales, use, value-added, and similar transaction Taxes, which Recipient pays except Taxes on Provider’s income, property, payroll, or personnel. Provider will separately state Taxes and cooperate on exemptions. Withholding is permitted if legally required, with receipts and reasonable cooperation. Any gross-up must be expressly selected.

8. Intellectual Property and Confidentiality

8.1 Existing materials and transition outputs

Each party retains its preexisting IP, tools, systems, templates, data, and improvements not created specifically for the other. Recipient owns its data and the transaction-specific deliverables identified in a Service Schedule upon payment. Provider grants Recipient a nonexclusive license to embedded Provider materials solely as needed to use those deliverables. General know-how and residual knowledge remain with the creating party, subject to confidentiality and no license to source code or personal data.

8.2 Limited access licenses

Each party grants the other a nonexclusive, nontransferable, revocable license during the applicable Service Period to use its systems, data, marks, and materials only as necessary for Services. No license permits reverse engineering, competitive use, disclosure, model training, or use after exit except as expressly stated.

8.3 Confidentiality

The Acquisition Agreement’s confidentiality obligations apply. Recipient information includes business and customer data; Provider information includes retained-business data, systems, security, pricing, and methods. A recipient may disclose to bound personnel and advisers with a need to know and as law requires after notice where lawful. On termination, each party will return or destroy information subject to legal archives.

9. Compliance Audit and Insurance

Each party will comply with laws applicable to its performance, including privacy, security, employment, export, sanctions, anti-bribery, and industry requirements. Neither party is required to obtain a license for the other unless scheduled. Provider will maintain the insurance in Exhibit D, with agreed limits, carriers, evidence, and notice. Recipient audit rights will be coordinated to avoid access to unrelated Provider or third-party confidential information; independent reports may substitute where reasonably sufficient.

10. Indemnification and Liability

10.1 Indemnification

Provider will indemnify Recipient for third-party claims arising from Provider’s gross negligence or willful misconduct, infringement by Provider-created transition deliverables, or Provider’s breach of confidentiality or data-security obligations. Recipient will indemnify Provider for third-party claims arising from unlawful Recipient instructions, Recipient materials, or Recipient’s operation of the transferred business. Procedures follow the Acquisition Agreement unless Exhibit D states a complete replacement.

10.2 Liability limits

Except for excluded claims, each party’s aggregate liability is [fees paid or payable during the preceding twelve months / $AMOUNT]. Neither party is liable for punitive, exemplary, incidental, special, or consequential damages, or lost profits or revenue, except amounts paid to a third party and direct cover or restoration costs expressly included. Excluded claims are [Fraud, willful misconduct, confidentiality, data security, IP indemnity, payment obligations, bodily injury, and property damage], subject to any separate supercap in Exhibit D.

10.3 No expansion of acquisition remedies

This Agreement does not change purchase price, transferred assets, assumed liabilities, acquisition representations, indemnities, or conditions. A claim may not recover the same loss under both agreements. The Acquisition Agreement controls a conflict on transaction risk allocation; this Agreement controls the operational manner of Services.

11. Term Suspension and Exit

11.1 Service periods and extensions

Each Service expires on the date in its Service Schedule without further notice. Recipient may request an extension at least [60] days before expiry. Provider will consider it in good faith but need not agree if capacity, third-party rights, law, stranded cost, or security prevents extension. Any extension must state revised fees and an enforceable final exit date.

11.2 Early termination

Recipient may terminate a Service on [30] days’ notice unless the Service Schedule states a minimum commitment or stranded-cost amount. Either party may terminate an affected Service for uncured material breach after [15] days, insolvency where lawful, prolonged force majeure, or legal prohibition. Critical security threats permit immediate suspension limited to the risk, with prompt notice and restoration planning.

11.3 Exit Plan and transition assistance

Exhibit A is the binding Exit Plan. It identifies replacement solution, owner, milestones, data extraction, documentation, knowledge transfer, testing, parallel run, acceptance, cutover, rollback, decommissioning, credential revocation, asset return, vendor novation, and completion evidence. Provider will give the transition assistance stated there at agreed rates. Recipient’s failure to execute the Exit Plan does not automatically extend a Service.

11.4 Survival

Accrued payment, confidentiality, IP ownership, data return or deletion, audit, liability, dispute, and provisions intended by nature to survive will do so for their stated periods.

12. Disputes and General Terms

Operational disputes first follow Section 2.2. Unresolved disputes are governed by the Acquisition Agreement’s law, forum, jury waiver, and dispute provisions. Notices must be delivered as provided in the Acquisition Agreement, with copies to Transition Managers. Neither party may assign this Agreement without consent except with a permitted transfer of the relevant business, provided the assignor remains liable unless released. Amendments and Change Orders must be signed by authorized representatives. Waiver is written and limited. Invalid provisions are narrowed or severed without altering essential economics. Counterparts and electronic signatures are effective.

Signature Page

PROVIDER: [SERVICE PROVIDER] By: ______________________________
Name: [NAME]
Title: [TITLE]

RECIPIENT: [RECIPIENT] By: ______________________________
Name: [NAME]
Title: [TITLE]

Schedules and Exhibits

Exhibit A Exit Plan

Exhibit B Service Levels and Reporting

Exhibit C Data Processing and Security Schedule

List roles, purposes, instructions, data categories, data subjects, systems, regions, transfers, subprocessors, retention, return, deletion, access, encryption, logs, incident contacts, audits, privileged material, and regulated data. Attach the current security-control matrix and data-flow diagram.

Service Schedule Template

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