exv10w2



 





Exhibit 10.2




EXECUTION COPY




MASTER TRANSITION SERVICES AGREEMENT

between

TEMPLE INLAND INC.

and

FORESTAR REAL ESTATE GROUP INC.

and

GUARANTY FINANCIAL GROUP INC.




TABLE OF CONTENTS




	 	 	 	 	 	 	 
	RECITATIONS
	 	 	4	 
	ARTICLE I SERVICES	 	 	5	 
	Section 1.1
	 	Initial Services	 	 	5	 
	Section 1.2
	 	Company Groups	 	 	5	 
	Section 1.3
	 	Omitted Services; Additional Services	 	 	5	 
	Section 1.4
	 	Performance of Services	 	 	5	 
	Section 1.5
	 	Changes to Services	 	 	6	 
	Section 1.6
	 	Use of Third Parties to Provide the Services	 	 	6	 
	Section 1.7
	 	Mutual Cooperation	 	 	6	 
	Section 1.8
	 	Internal Controls, Record Retention and Operating Policies	 	 	6	 
	Section 1.9
	 	Audit Assistance	 	 	6	 
	 
	 	 	 	 	 	 
	ARTICLE II CHARGES AND BILLING; TAXES	 	 	6	 
	Section 2.1
	 	Charges for Transition Services	 	 	7	 
	Section 2.2
	 	Procedure	 	 	7	 
	Section 3.3
	 	Late Payments	 	 	7	 
	Section 2.4
	 	Taxes	 	 	7	 
	Section 2.5
	 	Record-Keeping	 	 	7	 
	Section 2.6
	 	No Set-Off	 	 	7	 
	 
	 	 	 	 	 	 
	ARTICLE III TERM AND TERMINATION	 	 	7	 
	Section 3.1
	 	Term	 	 	7	 
	Section 3.2
	 	Early Termination	 	 	7	 
	Section 3.3
	 	Information Transmission	 	 	8	 
	Section 3.4
	 	Termination Assistance	 	 	8	 
	 
	 	 	 	 	 	 
	ARTICLE IV CONFIDENTIALITY	 	 	8	 
	Section 4.1
	 	Protection of Information	 	 	8	 






Page 1 of 16









 






	 	 	 	 	 	 	 
	Section 4.2
	 	Exclusion of Certain Information	 	 	8	 
	Section 4.3
	 	Non-Public Personal Information	 	 	8	 
	Section 4.4
	 	Security Program	 	 	9	 
	Section 4.5
	 	Notification of Security Breaches	 	 	9	 
	Section 4.6
	 	Operation of a Secure Site	 	 	9	 
	 
	 	 	 	 	 	 
	ARTICLE V REPRESENTATIONS AND WARRANTIES; COVENANTS	 	 	9	 
	Section 5.1
	 	Authorization	 	 	9	 
	Section 5.2
	 	Non-Infringement	 	 	10	 
	Section 5.3
	 	Compliance with Laws	 	 	10	 
	Section 5.4
	 	Disclaimer of Representations and Warranties	 	 	10	 
	 
	 	 	 	 	 	 
	ARTICLE VI LIMITATIONS OF LIABILITY AND INDEMNITY	 	 	10	 
	Section 6.1
	 	Exclusion of Certain Damages	 	 	10	 
	Section 6.2
	 	Provider's Indemnification for Third Party Claims	 	 	10	 
	Section 6.3
	 	Purchaser's Indemnification for Third Party Claims	 	 	10	 
	Section 6.4
	 	Clarification of Indemnification	 	 	10	 
	 
	 	 	 	 	 	 
	ARTICLE VII DISPUTE RESOLUTION; GOVERNING LAW	 	 	10	 
	Section 7.1
	 	Amicable Resolution	 	 	10	 
	Section 7.2
	 	Arbitration	 	 	10	 
	Section 7.3
	 	Governing Law	 	 	11	 
	Section 7.4
	 	Submission to Jurisdiction	 	 	11	 
	Section 7.5
	 	Waiver of Jury Trial	 	 	11	 
	 
	 	 	 	 	 	 
	ARTICLE VIII MISCELLANEOUS	 	 	11	 
	Section 8.1
	 	Survival	 	 	11	 
	Section 8.2
	 	Title to Intellectual Property	 	 	11	 
	Section 8.3
	 	Force Majeure	 	 	11	 
	Section 8.4
	 	Independent Contractors	 	 	12	 
	Section 8.5
	 	Subrogation	 	 	12	 
	Section 8.6
	 	Entire Agreement; Incorporation of Schedules and Exhibits	 	 	12	 
	Section 8.7
	 	Amendments and Waivers	 	 	12	 
	Section 8.8
	 	No Implied Waivers; Cumulative Remedies; Writing Required	 	 	12	 
	Section 8.9
	 	No Third Party Beneficiaries	 	 	12	 






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	Section 8.10
	 	Assignment; Binding Agreement	 	 	12	 
	Section 8.11
	 	Responsible Parties	 	 	12	 
	Section 8.12
	 	Notices	 	 	12	 
	Section 8.13
	 	Severability	 	 	13	 
	Section 8.14
	 	Construction	 	 	13	 
	Section 8.15
	 	Counterparts	 	 	13	 
	Section 8.16
	 	Delivery by Facsimile and Other Electronic Means	 	 	13	 
	 
	 	 	 	 	 	 
	SIGNATURE PAGE	 	 	15	 
	EXHIBIT A — SCHEDULES	 	 	16-89	 
	EXHIBIT B —  GLOSSARY	 	 	90	 
	EXHIBIT C —  DISPUTE RESOLUTION	 	 	92	 
	EXHIBIT D —  NOTICE OF EARLY TERMINATION	 	 	94	 






Page 3 of 16









 






MASTER TRANSITION SERVICES AGREEMENT



Temple-Inland Inc. (“Temple-Inland”), Forestar Real Estate Group Inc. (“Forestar”)
and Guaranty Financial Group Inc. (“Financial Services”) make this Master Transition
Services Agreement (“Agreement”) in consideration of the mutual promises and agreements
contained in this Agreement.




RECITATIONS



A. On the Effective Date, Temple-Inland will distribute to its shareholders pro rata all of the
outstanding stock of Forestar (the “Forestar Distribution”) and all of the outstanding stock of
Financial Services (the “Financial Services Distribution” and, collectively with the Forestar
Distribution, the “Distributions”), both corporations that Temple-Inland currently owns and
controls.



B. Incident to the Distributions, each of the Companies have been required to plan to disaggregate
various shared services and certain common uses of facilities and equipment. In order to facilitate
separation of the Companies on the Effective Date, the Companies have agreed that certain shared
services and certain common uses of facilities and equipment should continue for a transitional
period after the Effective Date (together such shared services and common uses are referred to as
the “Transition Services”).



C. The Provider of the Transition Services and each Purchaser of Transition Services shall agree in
a separate Schedule to this Agreement (“Schedule”) upon the scope, scale and description of
each particular Transition Service to be provided, how long the Transition Service will be
provided, early termination provisions, the price for the Transition Service expressed either as a
fixed unit price or as a fixed periodic price, payment terms and such special terms and conditions
as may be applicable to the particular Transition Service. Each of the Transition Services so
scheduled shall be provided under the terms and conditions set forth in this Agreement as
supplemented or expressly modified by the applicable Schedule. The form of the Schedules shall be
substantially as set forth in Exhibit A.



D. All the capitalized terms used in this Agreement shall have the meaning either given those terms
or incorporated by reference in the Glossary attached as Exhibit B.




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ARTICLE I




SERVICES



Section 1.1 Initial Services. Commencing on the Effective Date, the Company designated as
the Provider on each Schedule to this Agreement, shall provide to the Company or Companies
designated as the Purchaser on the Schedule, the services set forth on that Schedule (“Initial
Services”) under the terms and upon the conditions set forth in this Agreement, including the
applicable Schedule.



Section 1.2 Company Groups. A Company may designate one of its Affiliates as the Provider
on a Schedule. A Company may designate one of its Affiliates as the Purchaser on a Schedule. Any
Company’s Affiliate that provides Transition Services and any Company’s Affiliate that purchases
Transition Services shall be bound by the terms of this Agreement and the applicable Schedule under
which the Transition Services are provided. Unless otherwise specifically provided in the
applicable Schedule, the Affiliate designated either as a Provider or a Purchaser and the Company
designating them shall be jointly and severally liable for all obligations under this Agreement
with respect to the Transition Service provided under the applicable Schedule. As requested by the
other parties to a Schedule, the applicable Company shall cause each of its Affiliates designated
as a Purchaser or a Provider in that Schedule to execute the Schedule to evidence that the member
is legally obligated by that Schedule and terms of this Agreement, but a signature by a member so
designated is not required to bind that member.



Section 1.3 Omitted Services; Additional Services. If during the Term of this Agreement
any of the Companies identifies a service that reasonably should have been included in the
Transition Services, but was inadvertently omitted (“Omitted Services”), then that Company
may request the Company that would have been the Provider of such Omitted Services to furnish the
Transition Services. The Company requested to provide the Omitted Services shall do so if
commercially feasible to provide the Transition Services under the terms of this Agreement for a
fixed unit fee or fixed periodic fee set by the potential Provider in an amount reasonably
estimated to cover the cost of providing the Transition Services and other commercially reasonable
terms covered in a Schedule. If the Company requesting the Omitted Services accepts the terms for
provision of the Omitted Services offered by the potential Provider, those Companies shall enter
into a Schedule that will become part of this Agreement. Companies may also add additional
services (“Additional Services”) that are not Omitted Services by entering into a Schedule
that is made part of this Agreement provided that Additional Services entered under this Agreement
must terminate no later than the end of the term of this Agreement.



Section 1.4 Performance of Services. Provider shall perform its duties and discharge its
obligations under this Agreement in a commercially reasonable manner based upon its current
practices in providing analogous services for itself or its Affiliates (or prior practices in the
absence of a current practice) and in accordance with any service levels and performance
obligations specified in the applicable Schedule. This obligation is subject to and upon the
following conditions:



(a) No Provider shall be required to perform any Transition Service in a manner that would
constitute a violation of applicable law.



(b) No Provider shall be required to perform any Transition Service for the benefit of any Third
Party.



(c) Except as set forth otherwise in an applicable Schedule, no Provider shall be obligated to (i)
hire or train additional employees, (ii) purchase, lease or license any additional equipment or
software or (iii) pay any cost related to the transfer or conversion of Information to Purchaser
upon termination of the Transition Services.



(d) Except as set forth otherwise in an applicable Schedule, Provider shall be solely responsible
for maintaining during the applicable Service Period equipment, software, licenses, personnel,
facilities and other resources reasonably necessary for Provider’s provision of the Transition
Services for which it is responsible that are substantially equivalent to those resources that were
available to the Provider at the Effective Date.



Section 1.5 Changes to Services. Except as provided in Section 1.9 below, Provider may make
changes from time to time in the manner of performing the Transition Services, if:




Page 5 of 16









 







(a) Provider is making similar changes in performing analogous services for itself or its
Affiliates;



(b) Provider furnishes to Purchaser substantially the same notice (in content and timing) and right
of consultation as Provider shall furnish to its Affiliates respecting such changes, provided that
if there is no such notice or right of consultation, then Provider shall give a commercially
reasonable notice and right of consultation to Purchaser;



(c) changes shall not result in any material degradation of the Transition Services and after the
applicable changes, the Transition Services shall meet the standards imposed by this Agreement.



Section 1.6 Use of Third Parties to Provide the Services. Provider may discharge its
duties and perform its obligations under this Agreement through agents, subcontractors or
independent contractors.



Section 1.7 Mutual Cooperation. Purchaser and Provider shall cooperate with each other in
connection with the performance of the Transition Services, including producing on a timely basis
all Information that is reasonably requested with respect to the performance of the Transition
Services.



Section 1.8 Internal Controls, Record Retention and Operating Policies. Provider shall
maintain and comply with the internal controls, record retention policies and other operating
policies and procedures that were in place prior to the Effective Date with respect to each
Transition Service or as otherwise implemented by the Parties to comply with internal standards and
procedures or applicable law. If a Purchaser under a Schedule requires a change to the internal
controls or compliance policies or requires the implementation of additional internal controls or
compliance policies related to a Transition Service in order to comply with changes to applicable
law or internal standards and procedures, the Provider shall change or add to the internal controls
or compliance policies related to the Transition Service as requested by the Purchaser. In
connection with a Provider changing or adding to internal controls or compliance policies as
required by the foregoing, the Purchaser shall pay for any additional costs for the Transition
Service associated with the implementation or maintenance of the applicable change or addition;
provided, however, that if (i) such change or addition is required for the compliance of both the
Purchaser and the Provider with a law or policy applicable to both, or (ii) both the Purchaser and
the Provider will benefit from such change or addition, the Parties shall negotiate in good faith
an equitable sharing of the costs associated with such change or addition.



Section 1.9 Audit Assistance. Provider and Purchaser shall cooperate with the other in
providing such Information as may be required and access for audits by independent certified public
accountants, internal auditors, regulators, or other persons with the right of audit. A Party
acting as a Purchaser hereunder may request its third party auditor to perform a SAS 70 Type II
audit or other audit or review of such Provider’s internal controls and operating environment
related to the Transition Services upon reasonable advance notice, and the Provider shall perform
such an audit or review or assist Purchaser or Purchaser’s third party auditor in connection with
such an audit or review, in each case at the Purchaser’s expense. At the conclusion of such audit
or review, the Provider shall implement such reasonable changes to the Transition Services or
operating environment to correct deficiencies identified in the audit report to ensure compliance
with applicable law or that are otherwise necessary for Provider to comply with Purchaser’s
internal policies in connection with the Transition Services. The Parties shall share the costs to
implement all such changes equally. The Company being audited shall be responsible for all
incremental costs incurred by other Companies in providing such Information or assistance.




ARTICLE II




CHARGES AND BILLING; TAXES



Section 2.1 Charges for Transition Services. The charges for the Transition Services shall
be established in monthly units and shall be (a) as set forth in the applicable Schedules, or (b)
determined in accordance with the charging methodology as set forth in the applicable Schedules
(the “Charges”). Provider shall invoice Purchaser for the Charges in the manner and at the time
provided in the applicable Schedule. Charges shall be good faith advance estimates of Provider’s
cost of providing the Transition Services and shall not be corrected retroactively for actual
costs. Provider may change the Charges for future billing at any time to cover a change in the
cost of providing the Transition Service. Provider will give Purchaser thirty (30) days notice of
any such change in Charges. Annually within 30 days after the anniversary date of this Agreement,
Provider and Purchaser shall review the Charges and make any adjustments to those Charges going
forward to reflect changes in the cost of providing the Transition




Page 6 of 16









 







Services during the preceding year. Changes for any time period covered as an extension of service
beyond the originally scheduled end date shall be at market value instead of cost. The market
value pricing will be determined by the Provider and will be equal and equitable in light of market
conditions for services of a like kind and duration. There will not be any charges for the time
period between the Effective Date and January 1, 2008. The Parties intend that the Charges will be
fair, reasonable and arms length pricing and in compliance with the affiliate transaction
requirements promulgated from time to time by the regulatory entities having authority over
financial services, including Office of Thrift Supervision (OTS) Regulations 12 C.F.R. 563.41 and
563.42 and Sections 23A and 23B of the Federal Reserve Act.



Section 2.2 Procedure. Purchaser shall pay to Provider the Charges as invoiced by Provider,
in the manner and at the time provided in the applicable Schedule. All amounts due and payable
under this Agreement shall be invoiced and paid in U.S. dollars.



Section 2.3 Late Payments. Charges not paid when due in accordance with the provisions of
the applicable Schedule shall bear interest at a rate per annum equal to the lesser of Prime Rate
plus two percent (2%) from such date due until the date paid, or the maximum contractual rate
permitted by law.



Section 2.4 Taxes. Purchaser shall pay any and all Transfer Taxes incurred in connection
with the applicable Provider’s provision of the Transition Services.



Section 2.5 Record-Keeping. Provider shall maintain complete and accurate records of any
invoices and supporting documentation for all amounts billed to, and payments made by, the
Purchaser under this Agreement, subject to Provider’s usual record retention policies. Provider
shall provide to Purchaser or its designee documentation and other information relating to each
invoice as may be reasonably requested by Purchaser to verify that Provider’s charges are accurate,
complete, and valid in accordance with this Agreement.



Section 2.6 No Set-Off. Purchaser’s obligation to make any required payments under this
Agreement shall not be subject to any unilateral right of offset, set-off, deduction or
counterclaim, however arising.




ARTICLE III




TERM AND TERMINATION



Section 3.1 Term. Unless otherwise terminated pursuant to Section 3.2, this
Agreement will terminate with respect to any Transition Service at the close of business on the
last day of the Service Period for such Transition Service designated in the applicable Schedule.
Notwithstanding the foregoing, Purchaser may elect to extend the Service Period for any Transition
Service in accordance with the terms for extension provided in the applicable Schedule, if any are
expressly provided. Except as provided in Section 8.1, this Agreement will terminate at the close
of business on the last day of the last Service Period in effect (the “Term”).



Section 3.2 Early Termination. (a) Purchaser shall have the right at any time during the
Term of this Agreement to terminate its obligation to purchase any Transition Service for future
months, upon the giving of an advance written notice to Provider of (i) not less than the notice
period set forth in the applicable Schedule or, (ii) if the applicable Schedule does not set forth
a number of days, not less than thirty (30) days. If Purchaser terminates a Transition Service
prior to the expiration of the Service Period for such Transition Service, the fees for any
remaining months of the Service Period for associated Transition Services shall be decreased to
account for the Transition Services that are terminated and any prepaid monthly Charges shall be
refunded to Purchaser. Upon early termination of Transition Services under this section, Purchaser
shall pay Provider a termination fee in a reasonable amount set by Provider to reimburse the
Provider for any unreimbursed costs that directly result from the early termination and to recover
any incurred fees or expenses being amortized over the Service Period.




     (b) In addition, Purchaser shall have the right at any time during the Term of this Agreement
to terminate its obligations to purchase any Transition Service if Provider materially breaches a
provision with respect to any particular Transition Service and, if curable, does not cure such
breach within thirty (30) days after being given notice of such breach. Upon termination for
breach, Purchaser shall not be obligated to pay a termination fee and any prepaid charges shall be
prorated and the unused portion refunded to Purchaser.



     (c) Provider shall have the right at any time during the Term of this Agreement to terminate
its obligation to provide any Transition Service if Purchaser materially breaches a provision with
respect to any particular Transition



Page 7 of 16









 




Service and, if curable, does not cure such breach within 30 days after being given notice of
such breach. Failure to timely pay money shall be a material breach.




     (d) Provider shall also have the right at any time during the Term of this Agreement to
terminate its obligations to provide any Transition Service if there is a change in control of
Purchaser. For this section,
“Change in Control” means transfer of a majority of Purchaser’s outstanding voting stock to a
Person not a Party to this Agreement.



     (e) Provider shall also have the right to terminate its obligations to provide any Transition
Service on thirty (30) days written notice if conditions change to render the provision of the
Transition Service commercially unreasonable.



     (f) Written notice of any Early Termination shall be provided in the form attached to this
Agreement as Exhibit D.


Section 3.3 Information Transmission. On or prior to the last day of each relevant Service
Period, the Provider shall use commercially reasonable efforts to support any transfer of
Information concerning the relevant Transition Services to the applicable Purchaser. If requested
by the Purchaser, the Provider shall deliver to the applicable Purchaser, within such time periods
as Provider and Purchaser may reasonably agree, all Information received, generated or computed for
the benefit of such Purchaser during the Service Period, in electronic and/or hard copy form;
provided that (a) the Provider shall not have any obligation to provide or cause to provide
Information in any non-standard format, and (b) the Provider shall be reimbursed for its reasonable
out-of-pocket costs for providing Information in any format other than its standard format, unless
otherwise expressly provided in the applicable Schedule.



Section 3.4 Termination Assistance. Upon termination or expiration of this Agreement, each
Provider shall have an obligation that survives such termination to provide to the Purchaser, or
Purchaser’s designees, services as necessary to effect an orderly and smooth transition of the
Transition Services to the Purchaser or a successor service provider and such other cooperation as
reasonably requested by the Purchaser in connection with such termination or expiration. Any
particular termination and expiration assistance services may be detailed in an applicable Schedule
and shall include, at a minimum, any knowledge transfer, training of Purchaser’s or its designee’s
personnel, transfer of data and other materials related to the Transition Services and any
information and assistance reasonably necessary or desirable or reasonably requested by the
Purchaser to ensure an orderly and smooth transition of the Transition Services to Purchaser or a
successor service provider.




ARTICLE IV




CONFIDENTIALITY



Section 4.1 Protection of Information. Provider and Purchaser may share Information that
is confidential or subject to privacy laws in the course of Provider performing Transition
Services. Provider and Purchaser shall each protect and maintain the confidentiality of all
Information provided to it by the other Party that is either designated as “confidential” by
clearly so marking on or in the transmittal in a manner that may be easily observed, is required to
be kept confidential under law, or contains financial or proprietary data (“Confidential
Information”). Provider and Purchaser shall each use, as applicable, (a) in the absence of a
policy or procedure used to provide substantially the same service before the Effective Date, the
same internal policies and controls to protect and maintain the other’s Confidential Information as
are used to protect their own Confidential information or (b) those policies and procedures that
were in effect prior to the Effective Date and used by the Provider in providing substantially the
same service to Purchaser. Provider and Purchaser shall use the other’s Confidential Information
only as required for the purposes of this Agreement and shall return upon request, subject to the
limitations of Section 3.3, or destroy Confidential Information that is no longer needed to render
Transition Services in accordance with the receiving Party’s retention policies.



Section 4.2 Exclusion of Certain Information. The provisions of Section 4.1 do not apply to
Information that (i) was, is or becomes generally available to the public other than as a result of
a breach of this Section 4.1 or any applicable confidentiality agreement by the receiving Party or
its representatives; (ii) was or is developed by the receiving Party independently of and without
reference to any Confidential Information of the disclosing Party; or (iii) was, is or



Page 8 of 16









 






becomes available to the receiving Party on a non-confidential basis from a Third Party not bound
by a confidentiality agreement.



Section 4.3 Non-Public Personal Information. Non-Public Personal Information means all
“non-public personal information” as defined by the Gramm-Leach-Bliley Act, 15 U.S.C. § 6801 et
seq., as amended from time to time, and all applicable implementing regulations and agency
pronouncements related thereto, as amended from time to time (collectively, the “GLBA”). Provider
agrees to keep confidential, safeguard and not disclose any Non-Public Personal Information in
violation of the GLBA, the Interagency Guidelines Establishing Information Security Standards, the
Fair and Accurate Credit Transactions Act, the Interagency Guidance on Response Programs for
Unauthorized Access to Customer Information and Customer Notice (the “Interagency Guidance”), or in
violation of any other applicable law. Provider warrants that its policies, business practices and
methodologies are, to the extent required, or forseeably required, in compliance with any and all
relevant portions of applicable law.



Section 4.4 Security Program. Provider will maintain reasonable security policies,
procedures, and systems to protect Non-Public Personal Information it receives, stores, uses or
transmits. Provider will maintain a comprehensive, written security program (“Security Program”)
that is designed to: (a) ensure the security and confidentiality of Non-Public Personal
Information; (b) restrict the use of Non-Public Personal Information to the purpose for which it is
given to Provider; (c) protect against anticipated threats or hazards to the security or integrity
of Non-Public Personal Information; and (d) otherwise comply with applicable law and meet the
objectives of 12 C.F.R. Part 570, Appendix B, the Interagency Guidelines Establishing Standards for
Safeguarding Customer Information. The Security Program will include administrative, technical,
and physical safeguards that are commensurate with the scope of Provider activities and the
sensitivity of Non-Public Personal Confidential Information. The Security Program will include, as
appropriate, and without limitation: access controls on electronic systems that are used to
maintain, access or transmit Non-Public Personal Information; adjustments to security programs due
to technology changes; access restrictions at physical locations containing Non-Public Personal
Information; encryption of electronic Confidential Information, as further set forth herein; dual
control procedures; testing and monitoring of electronic systems; and procedures to detect actual
and attempted attacks on or intrusions into the electronic systems containing or processing
Non-Public Personal Information. Provider will promptly provide a copy of its Security Program to
Purchaser upon its request. Upon request, Provider also will provide reasonable evidence that
Provider maintains adequate security controls in accordance with the requirements herein.



Section 4.5 Notification of Security Breaches. Provider will comply with all applicable
law relating to security breaches, including, but not limited to, Texas and California law and the
Interagency Guidance. Provider will respond immediately to remedy any known security breaches or
service disruptions and, in the event of any threatened or actual disclosure, loss or breach in the
security of Information, Provider will immediately notify Purchaser of any threatened or actual
disclosure, loss or breach, and the actions that Provider is taking to prevent any further
disclosure, loss or breach.



Section 4.6 Operation of a Secure Site. Provider will undertake reasonable measures to
ensure the security, confidentiality, and integrity of all Non-Public Personal Information
transmitted through or stored on Provider’s server(s), including, without limitation: (a) providing
at a minimum, 128-bit SSL encrypted session when collecting or utilizing Non-Public Personal
Information; (b) firewall protection; (c) maintenance of independent archival and backup copies of
all of Non-Public Personal Information and ensuring that all back-up tapes that contain any
Non-Public Personal Information are no less than 128-bit encrypted; (d) protecting from any network
attack and other malicious or disabling entry, data, work, code or program; (e) performing periodic
information security risk assessments to identify and assess risks arising from any third party
connection to the Provider’s information system and implementing any appropriate mitigating
security controls; and (f) ensuring that Non-Public Personal Information is stored on a database
that is separate from all web server(s) and on a host that is secured on Provider’s internal
network or a non-Internet facing network. Provider will ensure that all user identifications and
passwords and Confidential Information received and transmitted via the Internet is, at a minimum,
128-bit SSL encrypted. All stored passwords will be encrypted pursuant to these same encryption
standards. Provider will use industry standard encryption algorithms to meet its encryption
requirements hereunder.



Page 9 of 16









 







ARTICLE V




REPRESENTATIONS AND WARRANTIES; COVENANTS



Section 5.1 Authorization. Each Company represents and warrants: (a) that this Agreement
has been validly executed and delivered by such Company and that the provisions set forth in this
Agreement constitute legal, valid, and binding obligations of such Company and any of its
Affiliates designated by Company as a Provider or Purchaser, enforceable against such Company and
each such Affiliate in accordance with their terms, subject to bankruptcy, insolvency,
reorganization and other laws affecting creditors’ rights generally, and with regard to equitable
remedies, to the discretion of the court before which proceedings to obtain such remedies may be
pending; and (b) that such Company has all requisite corporate power and authority to enter into
this Agreement, including requisite authorizations from each Affiliate that may be designated as a
Provider or Purchaser.



Section 5.2 Non-Infringement. Provider shall perform Transition Services under this
Agreement in a manner that does not and shall not infringe, or constitute an infringement or
misappropriation of, any intellectual property rights of any Third Party.



Section 5.3 Compliance with Laws. Each Party shall perform Transition Services under this
Agreement in a manner that complies in all material respects with all applicable laws.



Section 5.4 Disclaimer of Representations and Warranties. EXCEPT AS EXPRESSLY STATED IN
THIS AGREEMENT, PURCHASER ACKNOWLEDGES AND AGREES THAT ALL TRANSITION SERVICES AND ANY GOODS
DELIVERED INCIDENT THERETO ARE PROVIDED ON AN “AS-IS” “WHERE-IS” BASIS AND THAT PROVIDER MAKES NO
WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE TRANSITION SERVICES AND PROVIDER HEREBY
DISCLAIMS ANY REPRESENTATION OR WARRANTIES WITH RESPECT TO THE TRANSITION SERVICES, INCLUDING
WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.




ARTICLE VI




LIMITATIONS OF LIABILITY AND INDEMNITY



Section 6.1 Exclusion of Certain Damages. IN NO EVENT SHALL ANY PROVIDER OR PURCHASER, ITS
AFFILIATES OR ITS DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS BE LIABLE TO THE OTHER PARTY FOR
INDIRECT, SPECIAL, EXEMPLARY, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THE
PERFORMANCE OF TRANSITION SERVICES, EVEN IF THAT PROVIDER OR PURCHASER HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES, AND EACH PROVIDER OR PURCHASER HEREBY WAIVES ON BEHALF OF ITSELF AND
THE MEMBERS OF ITS GROUP ANY CLAIM FOR SUCH DAMAGES, INCLUDING ANY CLAIM FOR LOST PROFITS, WHETHER
ARISING IN CONTRACT, TORT OR OTHERWISE.



Section 6.2 Provider’s Indemnification for Third Party Claims. Provider shall indemnify,
defend and hold harmless Purchaser and its directors, officers and employees, and each of the
successors and assigns of any of the foregoing from and against any and all claims of Third Parties
relating to, arising out of or resulting from Provider’s gross negligence or willful misconduct in
the performance of its obligations hereunder, or breach of this Agreement, other than to the extent
such Third Party claims are attributable to the gross negligence, negligence, willful misconduct or
breach of this Agreement by any Person so indemnified by Provider.



Section 6.3 Purchaser’s Indemnification for Third Party Claims. Purchaser shall indemnify,
defend and hold harmless Provider and its directors, officers and employees, and each of the
successors and assigns of any of the foregoing from and against any and all claims of Third Parties
relating to, arising out of or resulting from Purchaser’s gross negligence or willful misconduct in
the performance of its obligations hereunder, or breach of this Agreement, other than to the extent
such Third Party claims are attributable to the gross negligence, negligence, willful misconduct or
breach of this Agreement by any Person so indemnified by Purchaser.



Section 6.4 Clarification of Indemnification. As used in Sections 6.2 and 6.3, without
limitation, “willful misconduct” includes any felony where scienter is an element, any intentional
tort or any common law fraud.




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ARTICLE VII




DISPUTE RESOLUTION; GOVERNING LAW



Section 7.1 Amicable Resolution. In accordance with Exhibit C, each Company and
each Provider and Purchaser shall seek to resolve in an amicable manner all disputes and
disagreements connected with their respective rights and obligations under this Agreement,
including involving such senior management as may be required to reach resolution of any dispute.



Section 7.2 Arbitration. Subject to Section 7.1, and except for suits seeking injunctive
relief or specific performance, in the event of any dispute, controversy or claim arising under or
in connection with this Agreement (including any dispute, controversy or claim relating to the
breach, termination or validity of this Agreement), Provider and Purchaser agree to submit any such
dispute, controversy or claim to binding arbitration in accordance with Exhibit C.



Section 7.3 Governing Law. All questions concerning the construction, validity and
interpretation of this Agreement shall be governed by and construed in accordance with the law of
the State of Texas and applicable federal law, without giving effect to any conflict of law
principle.



Section 7.4 Submission to Jurisdiction. SUBJECT TO SECTION 7.2, EACH OF THE PARTIES
IRREVOCABLY SUBMITS (FOR ITSELF AND IN RESPECT OF ITS PROPERTY) TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT SITTING IN AUSTIN, TEXAS, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT AND AGREES THAT ALL CLAIMS IN RESPECT OF THE ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT; PROVIDED THAT THE PARTIES MAY BRING ACTIONS OR PROCEEDINGS AGAINST
EACH OTHER IN OTHER JURISDICTIONS TO THE EXTENT NECESSARY TO IMPLEAD THE OTHER PARTY IN ANY ACTION
COMMENCED BY A THIRD PARTY THAT IS RELATED TO THIS AGREEMENT. EACH PARTY ALSO AGREES NOT TO BRING
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY OTHER COURT OR IN
OTHER JURISDICTIONS UNLESS SUCH ACTIONS OR PROCEEDINGS ARE NECESSARY TO IMPLEAD THE OTHER PARTY IN
ANY ACTION COMMENCED BY A THIRD PARTY THAT IS RELATED TO THIS AGREEMENT. EACH OF THE PARTIES WAIVES
ANY DEFENSE OF INCONVENIENT FORUM TO THE MAINTENANCE OF ANY ACTION OR PROCEEDING SO BROUGHT AND
WAIVES ANY BOND, SURETY, OR OTHER SECURITY THAT MIGHT BE REQUIRED OF ANY OTHER PARTY WITH RESPECT
THERETO. ANY PARTY MAY MAKE SERVICE ON ANY OTHER PARTY BY SENDING OR DELIVERING A COPY OF THE
PROCESS TO THE PARTY TO BE SERVED AT THE ADDRESS AND IN THE MANNER PROVIDED FOR THE GIVING OF
NOTICES IN SECTION 8.12. NOTHING IN THIS SECTION 7.4, HOWEVER, SHALL AFFECT THE RIGHT OF ANY PARTY
TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AT EQUITY. EACH PARTY AGREES THAT A
FINAL NONAPPEALABLE JUDGMENT IN ANY ACTION OR PROCEEDING SO BROUGHT SHALL BE CONCLUSIVE AND MAY BE
ENFORCED BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW OR AT EQUITY.



Section 7.5 Waiver of Jury Trial. AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF
THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT WITH
COUNSEL), EACH PARTY EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING
RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.




ARTICLE VIII




MISCELLANEOUS



Section 8.1 Survival. Sections 1.9, Article 2, Sections 3.3 and 3.4, and Articles 4-7,
shall survive any expiration or termination of this Agreement and of each Schedule made under this
Agreement.



Section 8.2 Title to Intellectual Property. Each Purchaser 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 any Provider, by reason of the provision of the
Transition Services provided hereunder. No Purchaser will remove or alter any copyright, trademark,
confidentiality or other proprietary notices that appear on any intellectual property owned or
licensed by any Provider, and each Purchaser shall reproduce any such notices on any and all copies
thereof. No





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Purchaser will attempt to decompile, translate, reverse engineer or make excessive copies of any
intellectual property owned or licensed by any Provider, and each Purchaser shall promptly notify
such Provider of any such attempt, regardless of whether by Purchaser or any Third Party, of which
Purchaser becomes aware.



Section 8.3 Force Majeure. No Party shall be held liable or responsible to another Party or
be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or
performing any term of this Agreement when such failure or delay is caused by or results from
events beyond the reasonable control of the non-performing Party, including fires, floods,
earthquakes, embargoes, shortages, epidemics, pandemics, quarantines, war, acts of war (whether war
be declared or not), terrorist acts, insurrections, riots, civil commotion, strikes, lockouts or
other labor disturbances (whether involving the workforce of the non-performing Party or of any
other Person), acts of God or acts, omissions or delays in acting by any governmental authority.
The suspension of performance shall be of no greater scope and no longer duration than is necessary
and the non-performing Party shall use commercially reasonable efforts to remedy its inability to
perform.



Section 8.4 Independent Contractors. The Parties each acknowledge that they are separate
entities, each of which has entered into this Agreement for independent business reasons. The
relationships of the Parties hereunder are those of independent contractors and nothing contained
herein shall be deemed to create a joint venture, employer/employee, partnership or any other
relationship.



Section 8.5 Subrogation. If any liability arises from the performance of any Transition
Services under this Agreement by a Third Party contractor, the Purchaser with respect to such
Transition Services shall be subrogated to such rights, if any, as the Provider may have against
such third party contractor.



Section 8.6 Entire Agreement; Incorporation of Schedules and Exhibits. This Agreement
(including all Schedules and Exhibits) constitutes the entire agreement among the Parties with
respect to the subject matter hereof and thereof and supersedes all prior agreements and
understandings, both written and oral, among the Parties with respect to the subject matter. All
Schedules and Exhibits referred to herein are hereby incorporated in and made a part of this
Agreement as if set forth in full herein.



Section 8.7 Amendments and Waivers. This Agreement may be amended and any provision of this
Agreement may be waived, provided that any such amendment or waiver shall be binding upon a Party
only if such amendment or waiver is set forth in a writing executed by such Party. No course of
dealing between or among any Persons having any interest in this Agreement shall be deemed
effective to modify, amend or discharge any part of this Agreement or any rights or obligations of
any party hereto under or by reason of this Agreement.



Section 8.8 No Implied Waivers; Cumulative Remedies; Writing Required. No delay or failure
in exercising any right, power or remedy hereunder shall affect or operate as a waiver thereof; nor
shall any single or partial exercise thereof or any abandonment or discontinuance of steps to
enforce such a right, power or remedy preclude any further exercise thereof or of any other right,
power or remedy. The rights and remedies hereunder are cumulative and not exclusive of any rights
or remedies that any Party hereto would otherwise have. Any waiver, permit, consent or approval of
any kind or character of any breach or default under this Agreement or any such waiver of any
provision of this Agreement must satisfy the conditions set forth in Section 8.7 and shall be
effective only to the extent in such writing specifically set forth.



Section 8.9 No Third Party Beneficiaries. Nothing in this Agreement, express or implied, is
intended to confer on any Person other than the Parties, and their respective successors and
permitted assigns, any rights or remedies of any nature whatsoever under or by virtue of this
Agreement.



Section 8.10 Assignment; Binding Agreement. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in part, by operation
of law or otherwise by any of the Parties without the prior written consent of the other Parties,
and any instrument purporting to make such an assignment without prior written consent shall be
void; provided, however, either Party may assign this Agreement to a successor entity in
conjunction with a merger effected solely for the purpose of changing such Party’s state of
incorporation. Subject to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the Parties and their respective successors and permitted
assigns.



Section 8.11 Responsible Parties. Each Party shall be responsible for its Affiliates
compliance with the terms and conditions of this Agreement.




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Section 8.12 Notices. All notices, demands and other communications given under this
Agreement must be in writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested), telecopied (and confirmed by telecopy answer back),
or sent by reputable overnight courier service (charges prepaid) to the recipient at the address
indicated below or such other address or to the attention of such other Person as the recipient
Party shall have specified by prior written notice to the sending Party. Any notice, demand or
other communication under this Agreement shall be deemed to have been given when so personally
delivered or so telecopied and confirmed (if telecopied before 5:00 p.m. Central Time on a business
day, or if sent, one business day after deposit with an overnight courier, or, if mailed, five
business days after deposit in the U.S. mail.




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TEMPLE-INLAND INC.

Attn: Morris Davis, General Counsel

1300 South Mopac Expressway

Austin, TX 78746

Fax: (512) 434-8051




FORESTAR REAL ESTATE GROUP INC.

Attn: David Grimm, General Counsel

1300 South Mopac Expressway

Austin, TX 78746

Fax: (512) 434-5780




GUARANTY FINANCIAL GROUP INC.

Attn: Scott Almy, General Counsel

8333 Douglas Avenue

Dallas, TX 75225

Fax: (214) 360-1908



The Parties may, in their discretion, agree to accept notices and other communications hereunder by
electronic communications pursuant to procedures agreed to, provided that approval of such
procedures may be limited to particular notices or communications. Unless the Parties agree
otherwise, notices and other communications sent to an e-mail address shall be deemed received upon
the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return
receipt requested” function, as available, return e-mail or other written acknowledgement),
provided that if such notice or other communication is not sent during the normal business hours of
the recipient, such notice or communication shall be deemed to have been sent at the opening of
business on the next business day for the recipient.



Section 8.13 Severability. The Parties agree that (i) the provisions of this Agreement
shall be severable in the event that for any reason whatsoever any of the provisions hereof are
invalid, void or otherwise unenforceable, (ii) any such invalid, void or otherwise unenforceable
provisions shall be replaced by other provisions which are as similar as possible in terms to such
invalid, void or otherwise unenforceable provisions but are valid and enforceable, and (iii) the
remaining provisions shall remain valid and enforceable to the fullest extent permitted by
applicable law.



Section 8.14 Construction. The descriptive headings herein are inserted for convenience of
reference only and are not intended to be a substantive part of or to affect the meaning or
interpretation of this Agreement. Whenever required by the context, any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular
forms of nouns, pronouns, and verbs shall include the plural and vice versa. Reference to any
agreement, document, or instrument means such agreement, document, or instrument as amended or
otherwise modified from time to time in accordance with the terms thereof, and if applicable
hereof. The use of the words “include” or “including” in this Agreement shall be by way of example
rather than by limitation. The use of the words “or,” “either” or “any” shall not be exclusive. The
Parties have participated jointly in the negotiation and drafting of this Agreement. In the event
an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as
if drafted jointly by the Parties hereto, and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this
Agreement. The Parties agree that prior drafts of this Agreement shall be deemed not to provide any
evidence as to the meaning of any provision hereof or the intent of the Parties hereto with respect
hereto. In case of ambiguity or conflict between the terms and conditions of the body of this
Agreement and the terms and conditions of a Schedule to this Agreement, the terms and conditions of
the Schedule shall control.



Section 8.15 Counterparts. This Agreement may be executed in multiple counterparts (any one
of which need not contain the signatures of more than one Party), each of which shall be deemed to
be an original but all of which taken together shall constitute one and the same agreement.



Section 8.16 Delivery by Facsimile and Other Electronic Means. This Agreement, and any
amendments hereto, to the extent signed and delivered by means of a facsimile machine or other
electronic transmission, shall be treated in



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all manner and respects as an original contract and shall be considered to have the same binding
legal effects as if it were the original signed version thereof delivered in person. At the request
of any Party, each other Party shall re-execute original forms thereof and deliver them to all
other Parties. No Party shall raise the use of a facsimile machine or other electronic means to
deliver a signature or the fact that any signature was transmitted or communicated through the use
of facsimile machine or other electronic means as a defense to the formation of a contract and each
such Party forever waives any such defense.




[SIGNATURE PAGE FOLLOWS]




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SIGNED: To be effective as of the Effective Date on this 11th day of December, 2007.




	 	 	 	 	 	 	 
	 	 	TEMPLE-INLAND INC.
	 
	 	 	 	 	 	 
	 

	 	 	 	/s/ Doyle R. Simons	 	 
	 	 	 
	 

	 	Name:
	 	Doyle R. Simons	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:
	 	Executive Vice President	 	 
	 

	 	 	 	 	 	 





	 	 	 	 	 	 	 
	 	 	FORESTAR REAL ESTATE GROUP INC.
	 
	 	 	 	 	 	 
	 

	 	 	 	/s/ James M. DeCosmo	 	 
	 	 	 
	 

	 	Name:
	 	James M. DeCosmo	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:
	 	President and Chief Executive Officer	 	 
	 

	 	 	 	 	 	 





	 	 	 	 	 	 	 
	 	 	GUARANTY FINANCIAL GROUP INC.
	 
	 	 	 	 	 	 
	 

	 	
	 	/s/ Michael D. Calcote	 	 
	 	 	 
	 

	 	Name:
	 	Michael D. Calcote	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:
	 	Executive Vice President and Treasurer	 	 
	 

	 	 	 	 	 	 






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