As filed with the Securities and Exchange Commission on November 1, 2012

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


 

Amendment No. 1 to

 

FORM 10

 

GENERAL FORM FOR REGISTRATION OF SECURITIES

PURSUANT TO SECTION 12(b) OR 12(g)

OF THE SECURITIES EXCHANGE ACT OF 1934

 


 

ALTISOURCE ASSET MANAGEMENT CORPORATION

(Exact name of registrant as specified in its charter)

 

United States Virgin Islands

 

66-0783125

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. employer

identification number)

 

402 Strand St.

Frederiksted, United States Virgin Islands 00840-3531

(Address of principal executive offices)

 

Registrant’s telephone number, including area code:

(340) 692-1055

 


 

Securities to be registered pursuant to Section 12(g) of the Act:

 

Title of each class

 

Name of each exchange on which each class is to be
registered

Common Stock, $0.01 par value per share

 

[   ]

 

Securities to be registered pursuant to Section 12(b) of the Act:  None

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-

accelerated filer, or a smaller reporting company.  See the definition of “large accelerated filer,”

“accelerated filer,” “non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer o

 

Accelerated filer o

 

Non-accelerated filer o
(Do not check if a smaller
reporting company)

 

Smaller reporting company x

 

 

 



 

ALTISOURCE ASSET MANAGEMENT CORPORATION

 

Cross-Reference Sheet Between the Information Statement and Item of Form 10

 

Our information statement may be found as Exhibit 99.1 to this Form 10.  For your convenience, we have provided below a cross-reference sheet identifying where the items required by Form 10 can be found in the information statement.

 

Item No.

 

Caption

 

Location in Information Statement

 

 

 

 

 

1

.

 

Business

 

See “Summary,” “Forward-Looking Statements,” “The Separation,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business”

 

 

 

 

 

 

1

A.

 

Risk Factors

 

See “Risk Factors” and “Forward-Looking Statements”

 

 

 

 

 

 

2

.

 

Financial Information

 

See “Summary,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

 

 

 

 

 

 

3

.

 

Properties

 

See “Business—Properties and Facilities”

 

 

 

 

 

 

4

.

 

Security Ownership of Certain Beneficial Owners and Management

 

See “Security Ownership of Certain Beneficial Owners and Management”

 

 

 

 

 

 

5

.

 

Directors and Executive Officers

 

See “Management”

 

 

 

 

 

 

6

.

 

Executive Compensation

 

See “Management”

 

 

 

 

 

 

7

.

 

Certain Relationships and Related Transactions, and Director Independence

 

See “Summary,” “Risk Factors,” “Relationship Between Altisource and Us Following the Separation,” “Management” and “Certain Relationships and Related Party Transactions”

 

 

 

 

 

 

8

.

 

Legal Proceedings

 

See “Business—Legal Proceedings”

 

 

 

 

 

 

9

.

 

Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters

 

See “The Separation” and “Description of Capital Stock”

 

 

 

 

 

 

10

.

 

Recent Sales of Unregistered Securities

 

None

 

 

 

 

 

 

11

.

 

Description of Registrant’s Securities to be Registered

 

See “Description of Capital Stock”

 

 

 

 

 

 

12

.

 

Indemnification of Directors and Officers

 

See “Indemnification of Directors and Officers”

 

 

 

 

 

 

13

.

 

Financial Statements and Supplementary Data

 

See “Summary,” and “Index to Financial Statements” and the financial statements referenced therein

 

 

 

 

 

 

14

.

 

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 

None

 

 

 

 

 

 

15

.

 

Financial Statements and Exhibits

 

See “Index to Financial Statements” and the financial statements referenced therein

 

ii



 

(a)           List of Financial Statements and Schedules.

 

The following financial statements are included in the information statement and filed as part of this registration statement on Form 10:

 

(1)                                  Financial Statements of Altisource Asset Management Corporation including Report of Independent Registered Certified Public Accounting Firm.

 

(b)           Exhibits.  The following documents are filed as exhibits hereto.

 

Exhibit
Number

 

Exhibit Description

 

 

 

2.1^

 

Form of Separation Agreement between Altisource Asset Management Corporation and Altisource Portfolio Solutions S.A.

 

 

 

3.1*

 

Articles of Incorporation of Altisource Asset Management Corporation.

 

 

 

3.2*

 

Certificate of Amendment (Articles of Incorporation) of Altisource Asset Management.

 

 

 

3.3*

 

Second Certificate of Amendment (Articles of Incorporation) of Altisource Asset Management Corporation.

 

 

 

3.4*

 

Bylaws of Altisource Asset Management Corporation.

 

 

 

10.1^

 

Form of Support Services Agreement between Altisource Asset Management Corporation and Altisource Solutions S.à r.l.

 

 

 

10.2^

 

Form of Tax Matters Agreement between Altisource Asset Management Corporation and Altisource Solutions S.à r.l.

 

 

 

10.3^

 

Form of Asset Management Agreement between Altisource Asset Management Corporation and Altisource Residential Corporation.

 

 

 

10.4^

 

Form of Trademark License Agreement between Altisource Asset Management Corporation and Altisource Solutions S.à r.l.

 

 

 

10.5^

 

Form of Asset Management Agreement between Altisource Asset Management Corporation and NewSource Reinsurance Company Ltd.

 

 

 

10.6^

 

Form of Shareholders’ Agreement among Altisource Asset Management Corporation, Altisource Residential Corporation and NewSource Reinsurance Company Ltd.

 

 

 

10.7^

 

Form of Title Services Agreement between NewSource Reinsurance Company Ltd. and Altisource Solutions S.à r.l.

 

 

 

10.8^

 

Form of Management Agreement between NewSource Reinsurance Company Ltd. and Marsh IAS Management Services (Bermuda) Ltd.

 

 

 

10.9^

 

Form of Technology Products and Services Agreement between Altisource Asset Management Corporation and Altisource Solutions S.à r.l.

 

 

 

99.1  

 

Preliminary Information Statement of Altisource Asset Management Corporation, subject to completion, dated [   ], 2012.

 

iii



 


 

 

* To be filed by amendment.

 

 

^    Filed herewith.

 

iv



 

SIGNATURE

 

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement on Form 10 to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

Altisource Asset Management Corporation

 

 

 

 

 

By:

/s/ William C. Erbey

 

Name:

William C. Erbey

 

Title:

Chairman

 

Dated:  November 1, 2012

 

v


EXHIBIT 2.1

 

 

SEPARATION AGREEMENT

 

By and Between

 

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

 

and

 

ALTISOURCE ASSET MANAGEMENT CORPORATION

 

Dated as of [    ], 2012

 

 



 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I DEFINITIONS

 

1

 

 

 

ARTICLE II THE SEPARATION

8

 

 

 

Section 2.01

Separation Transactions

8

 

 

 

Section 2.02

Certain Agreements Govern

8

 

 

 

Section 2.03

Termination of Agreements

8

 

 

 

Section 2.04

Transfer of Agreements; Consent

8

 

 

 

Section 2.05

Certain Licenses and Permits

9

 

 

 

Section 2.06

Intentionally Omitted

9

 

 

 

Section 2.07

Disclaimer of Representations and Warranties

9

 

 

 

Section 2.08

Inadvertent or Incorrect Transfers or Omissions of Assets or Liabilities

10

 

 

 

ARTICLE III EMPLOYEE MATTERS

10

 

 

 

Section 3.01

General Allocation of Assets and Liabilities for Existing Plans

10

 

 

 

Section 3.02

Cessation of Participation in ALTISOURCE Plans

10

 

 

 

Section 3.03

Adoption of New AAMC Plans

11

 

 

 

Section 3.04

Stock Options

11

 

 

 

Section 3.05

Form S-8

11

 

 

 

Section 3.06

Section 16

12

 

 

 

ARTICLE IV ACTIONS PENDING THE DISTRIBUTION

12

 

 

 

Section 4.01

Actions Prior to the Distribution

12

 

 

 

Section 4.02

Conditions Precedent to Consummation of the Distribution

12

 

 

 

ARTICLE V THE DISTRIBUTION

14

 

 

 

Section 5.01

The Distribution

14

 

 

 

Section 5.02

Sole Discretion of ALTISOURCE

15

 

 

 

ARTICLE VI MUTUAL RELEASES; INDEMNIFICATION

15

 

 

 

Section 6.01

Release of Pre-Closing Claims

15

 

 

 

Section 6.02

Indemnification by AAMC

17

 

 

 

Section 6.03

Indemnification by ALTISOURCE

17

 

 

 

Section 6.04

Indemnification of Third Party Claims

18

 

i



 

TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

Section 6.05

Indemnification Obligations Net of Insurance Proceeds and Other Amounts

18

 

 

 

Section 6.06

Procedures for Indemnification of Third Party Claims

19

 

 

 

Section 6.07

Additional Matters

20

 

 

 

Section 6.08

Remedies Cumulative

20

 

 

 

Section 6.09

Survival of Indemnities

20

 

 

 

Section 6.10

Limitation on Liability

21

 

 

 

ARTICLE VII EXCHANGE OF INFORMATION; CONFIDENTIALITY

21

 

 

 

Section 7.01

Agreement for Exchange of Information; Archives

21

 

 

 

Section 7.02

Ownership of Information

22

 

 

 

Section 7.03

Compensation for Providing Information

22

 

 

 

Section 7.04

Limitations on Liability

22

 

 

 

Section 7.05

Other Agreements Providing for Exchange of Information

22

 

 

 

Section 7.06

Production of Witnesses; Records; Cooperation

22

 

 

 

Section 7.07

Confidentiality

23

 

 

 

Section 7.08

Protective Arrangements

24

 

 

 

ARTICLE VIII DISPUTE RESOLUTION

24

 

 

 

Section 8.01

Disputes

24

 

 

 

Section 8.02

Escalation; Mediation

25

 

 

 

Section 8.03

Court Actions

25

 

 

 

ARTICLE IX FURTHER ASSURANCES AND ADDITIONAL COVENANTS

25

 

 

 

Section 9.01

Further Assurances

25

 

 

 

Section 9.02

Insurance Matters

26

 

 

 

ARTICLE X TERMINATION

27

 

 

 

Section 10.01

Termination

27

 

 

 

Section 10.02

Effect of Termination

27

 

 

 

ARTICLE XI MISCELLANEOUS

27

 

 

 

Section 11.01

Counterparts; Entire Agreement; Corporate Power

27

 

 

 

Section 11.02

Governing Law

27

 

 

 

Section 11.03

Assignability

28

 

ii



 

TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

Section 11.04

Third Party Beneficiaries

28

 

 

 

Section 11.05

Notices

28

 

 

 

Section 11.06

Severability

29

 

 

 

Section 11.07

Publicity

29

 

 

 

Section 11.08

Expenses

29

 

 

 

Section 11.09

Headings

29

 

 

 

Section 11.10

Survival of Covenants

29

 

 

 

Section 11.11

Waivers of Default

30

 

 

 

Section 11.12

Specific Performance

30

 

 

 

Section 11.13

Amendments

30

 

 

 

Section 11.14

Interpretation

30

 

 

 

Section 11.15

Jurisdiction; Service of Process

31

 

 

 

Section 11.16

Waiver of Jury Trial

31

 

 

 

SCHEDULE I SEPARATION TRANSACTIONS

 

 

iii



 

SEPARATION AGREEMENT

 

SEPARATION AGREEMENT, dated as of [    ], 2012, between ALTISOURCE PORTFOLIO SOLUTIONS S.A., a public limited liability company organized under the laws of the Grand Duchy of Luxembourg (“ALTISOURCE”) and ALTISOURCE ASSET MANAGEMENT CORPORATION, a U.S. Virgin Islands corporation and a subsidiary of ALTISOURCE) (“AAMC”).  Capitalized terms used herein and not otherwise defined shall have the respective meanings assigned to them in Article I.

 

R E C I T A L S

 

WHEREAS, the board of directors of ALTISOURCE has determined that it is in the best interests of ALTISOURCE and its shareholders to have the ALTISOURCE Business operate separately from the AAMC Business, to contribute the AAMC Business to AAMC, and to distribute all of the outstanding capital stock of AAMC to the shareholders of ALTISOURCE;

 

WHEREAS, ALTISOURCE and AAMC have prepared, and AAMC has filed with the Commission, the Form 10, which includes the Information Statement and sets forth disclosure concerning AAMC and the Distribution; and

 

WHEREAS, in connection with the foregoing and to set forth certain aspects of their ongoing relationship after the Separation and the Distribution, the Parties, and certain of their respective Subsidiaries and Affiliates, are entering into this Agreement and the Ancillary Agreements.

 

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, the Parties agree as follows:

 

ARTICLE I

 

Definitions

 

For the purpose of this Agreement, the following terms shall have the following meanings:

 

AAMC” has the meaning set forth in the caption.

 

AAMC Business” means the business and operations of AAMC and its Subsidiaries conducted (i) prior to the Separation, by ALTISOURCE and certain members of the ALTISOURCE Group, and (ii) from and after the Separation, by the AAMC Group, including the businesses contributed by ALTISOURCE to AAMC pursuant to Article II.

 

AAMC Common Stock” means the common stock, $0.01 par value per share, of AAMC.

 

AAMC Employees” has the meaning set forth in Section 3.01.

 



 

AAMC Group” means AAMC and any Subsidiary of AAMC immediately after the Distribution, if any.

 

AAMC Indemnitees” has the meaning set forth in Section 6.03.

 

AAMC Stock Options” has the meaning set forth in Section 3.04(a).

 

Action” means any demand, action, suit, countersuit, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority or any federal, state, local, foreign or international arbitration or mediation tribunal.

 

Adjusted ALTISOURCE Stock Options” has the meaning set forth in Section 3.04(a).

 

Affiliate” of any Person means a Person that controls, is controlled by or is under common control with such Person.  As used herein, “control” of any entity means the possession, directly or indirectly, through one or more intermediaries, of the power to direct or cause the direction of the management or policies of such entity, whether through ownership of voting securities or other interests, by contract or otherwise.

 

Agent” means the distribution agent appointed by ALTISOURCE to distribute the shares of AAMC Common Stock held by ALTISOURCE pursuant to the Distribution.

 

Agreement” means this Separation Agreement.

 

ALTISOURCE” has the meaning set forth in the caption.

 

ALTISOURCE Business” means (a) the business and operations of ALTISOURCE and its Subsidiaries and other Affiliates immediately after the Distribution and (b) except as otherwise expressly provided herein, any terminated, divested or discontinued businesses or operations of ALTISOURCE and its Subsidiaries and other Affiliates.

 

ALTISOURCE Common Stock” means the common stock, $1.00 par value per share, of ALTISOURCE.

 

ALTISOURCE Group” means ALTISOURCE and each of its Subsidiaries and other Affiliates immediately after the Distribution.

 

ALTISOURCE Indemnitees” has the meaning set forth in Section 6.02.

 

ALTISOURCE Stock Options” has the meaning set forth in Section 3.04(a).

 

Ancillary Agreements” means the Services Agreement, the Tax Matters Agreement, the License Agreement, the Technology Products and Services Agreement and any instruments, assignments and other documents and agreements executed in connection with the implementation of the transactions contemplated by this Agreement, including Article II.

 

2



 

Assets” means assets, properties and rights (including goodwill), wherever located (including in the possession of vendors or other third parties or elsewhere), whether real, personal or mixed, tangible, intangible or contingent, in each case whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of any Person, including the following:

 

(a)                                 all accounting and other books, records and files, whether in paper, microfilm, microfiche, computer tape or disc, magnetic tape or any other form;

 

(b)                                 all apparatus, computers and other electronic data processing equipment, fixtures, machinery, furniture, office and other equipment, and other tangible personal property;

 

(c)                                  all interests in real property of whatever nature, including easements, whether as owner, mortgagee or holder of a security interest in real property, lessor, sublessor, lessee, sublessee or otherwise;

 

(d)                                 all interests in any capital stock or other equity interests of any Subsidiary or any other Person; all bonds, notes, debentures or other securities issued by any Subsidiary or any other Person; all loans, advances or other extensions of credit or capital contributions to any Subsidiary or any other Person; and all other investments in securities of any Person;

 

(e)                                  all license agreements, leases of personal property, open purchase orders for raw materials, supplies, parts or services, unfilled orders for the manufacture and sale of products and other contracts, agreements or commitments and all rights arising thereunder;

 

(f)                                   all letters of credit, performance bonds and other surety bonds;

 

(g)                                  all written technical information, data, specifications, research and development information, engineering drawings, operating and maintenance manuals and materials and analyses prepared by consultants and other third parties;

 

(h)                                 all domestic and foreign patents, copyrights, trade names, domain names, trademarks, service marks, registrations and applications for any of the foregoing, databases, mask works, Information, inventions (whether or not patentable or patented), processes, know-how, procedures, other proprietary information, and licenses from third parties granting the right to use any of the foregoing;

 

(i)                                     all computer applications, programs and other software, including operating software, network software, firmware, middleware, design software, design tools, systems documentation, manuals and instructions;

 

(j)                                    all cost information, sales and pricing data, customer prospect lists, supplier records, customer and supplier lists, customer and vendor data, correspondence and lists, product literature, artwork, design, development and manufacturing files, vendor and customer drawings, formulations and specifications, quality records and reports and other books, records, studies, surveys, reports, plans and documents;

 

3



 

(k)                                 all prepaid expenses, trade accounts and other accounts and notes receivables;

 

(l)                                     all claims or rights against any Person arising from the ownership of any Asset, all rights in connection with any bids or offers and all claims, choses in action or similar rights, whether accrued or contingent;

 

(m)                             all rights under insurance policies and all rights in the nature of insurance, indemnification or contribution;

 

(n)                                 all licenses (including radio and similar licenses), permits, approvals and authorizations that have been issued by any Governmental Authority;

 

(o)                                 cash or cash equivalents, bank accounts, lock boxes and other deposit arrangements; and

 

(p)                                 interest rate, currency, commodity or other swap, collar, cap or other hedging or similar agreements or arrangements.

 

Assigned Contract” means (a) any contract that in ALTISOURCE’s sole judgment relates exclusively to the AAMC Business and (b) with respect to any contract that relates, but does not in ALTISOURCE’s sole judgment relate exclusively, to the AAMC Business (“Partial Assigned Contracts”), the portion, if any, of such Partial Assigned Contract that, in ALTISOURCE’s sole judgment, relates to the AAMC Business (the “AAMC Portion”).

 

Assignee” has the meaning set forth in Section 2.04(b).

 

Code” means the Internal Revenue Code of 1986, as amended.

 

Commission” means the U.S. Securities and Exchange Commission.

 

Consents” means any consents, waivers or approvals from, or notification requirements to, any Person other than a member of either Group.

 

Distribution” means the distribution by ALTISOURCE to the Record Holders of all the outstanding shares of AAMC Common Stock owned by ALTISOURCE on the Distribution Date on a pro rata basis.

 

Distribution Date” means the date determined in accordance with Section 4.02 on which the Distribution occurs.

 

Escalation Notice” has the meaning set forth in Section 8.02.

 

Exchange Act” means the Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

 

Existing AAMC Plans” has the meaning set forth in Section 3.01.

 

Existing ALTISOURCE Plans” has the meaning set forth in Section 3.01.

 

4



 

Form 10” means the registration statement on Form 10 filed by AAMC with the Commission to effect the registration of AAMC Common Stock pursuant to the Exchange Act in connection with the Distribution, as such registration statement may be amended or supplemented from time to time.

 

Governmental Approvals” means any notices, reports or other filings to be given to or made with, or any consents, registrations, approvals, permits or authorizations to be obtained from, any Governmental Authority.

 

Governmental Authority” shall mean any federal, state, local, foreign or international court, government, department, commission, board, bureau, agency, official or other legislative, judicial, regulatory, administrative or governmental authority.

 

Group” means either the ALTISOURCE Group or the AAMC Group, as the context requires.

 

Indemnifying Party” has the meaning set forth in Section 6.05(a).

 

Indemnitee” has the meaning set forth in Section 6.05(a).

 

Indemnity Payment” has the meaning set forth in Section 6.05(a).

 

Information” means information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, algorithms, computer programs or other software, marketing plans, customer names, communications by or to attorneys (including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), and other technical, financial, employee or business information or data.

 

Information Statement” means the Information Statement sent to each Record Holder in connection with the Distribution.

 

Insurance Policies” means the insurance policies written by insurance carriers, including those (if any) affiliated with ALTISOURCE, pursuant to which AAMC or one or more of its Subsidiaries after the Distribution Date (or their respective officers or directors) will be insured or self-insured parties after the Distribution Date.

 

Insurance Proceeds” means those monies:

 

(a)                                 received by an insured (or its successor-in-interest) from an insurance carrier;

 

(b)                                 paid by an insurance carrier on behalf of the insured (or its successor-in-interest); or

 

5



 

(c)                                  received (including by way of set off) from any third party in the nature of insurance, contribution or indemnification in respect of any Liability;

 

in any such case net of any applicable premium adjustments (including reserves and retrospectively rated premium adjustments) and net of any costs or expenses incurred in the collection thereof.

 

Intercompany Accounts” has the meaning set forth in Section 2.03(a).

 

Liabilities” means any and all claims, debts, demands, actions, causes of action, suits, damages, obligations, accruals, accounts payable, reckonings, bonds, indemnities and similar obligations, agreements, promises, guarantees, make whole agreements and similar obligations, and other liabilities and requirements, including all contractual obligations, whether absolute or contingent, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever arising, and including those arising under any law, rule, regulation, Action, threatened or contemplated Action (including the costs and expenses of demands, assessments, judgments, settlements and compromises relating thereto and attorneys’ fees and any and all costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any such Actions or threatened or contemplated Actions), order or consent decree of any Governmental Authority or any award of any arbitrator or mediator of any kind, and those arising under any contract, commitment or undertaking, including those arising under this Agreement or any Ancillary Agreement, in each case, whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of any Person), of any nature or kind, whether or not the same would properly be reflected on a balance sheet.

 

License Agreement” means the Trademark License Agreement to be entered into between Solutions and AAMC.

 

OTC” means the OTC market.

 

Party” shall mean either party hereto, and “Parties” shall mean both parties hereto.

 

Person” means an individual, a general or limited partnership, a corporation, a trust, a joint venture, an unincorporated organization, a limited liability entity, any other entity and any Governmental Authority.

 

Post-Distribution Stock Options” has the meaning set forth in Section 3.04(a).

 

Record Date” means the close of business on the date determined by the ALTISOURCE board of directors as the record date for determining the shares of ALTISOURCE Common Stock.

 

Record Holders” means holders of record as of the Record Date of all of the shares of ALTISOURCE Common Stock that were outstanding on the Record Date.

 

6



 

Separation” means (a) any actions to be taken pursuant to Article II and (b) if not addressed by Article II, any transfers of Assets and any assumptions of Liabilities, in each case, between a member of one Group and a member of the other Group, provided for in this Agreement or any Ancillary Agreement.

 

Services Agreement” means the Support Services Agreement dated as of the Distribution Date between Solutions and AAMC.

 

Solutions” means Altisource Solutions S.à r.l., a private limited liability company organized under the laws of the Grand Duchy of Luxembourg and a wholly-owned subsidiary of ALTISOURCE.

 

Specified Documents” means the Form 10, the Information Statement and any other registration statement filed with the Commission in connection with the Distribution by or on behalf of AAMC or any other member of the AAMC Group.

 

Subsidiary” of any Person means any corporation or other organization whether incorporated or unincorporated of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such Person or by any one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries; provided, however, that no Person that is not directly or indirectly wholly owned by any other Person shall be a Subsidiary of such other Person unless such other Person controls, or has the right, power or ability to control, that Person.

 

Tax Matters Agreement” means the Tax Matters Agreement to be entered into between Solutions and AAMC.

 

Taxes” has the meaning set forth in the Tax Matters Agreement.

 

Technology Products and Services Agreement” means the Technology Products and Services Agreement dated as of the Distribution Date between Solutions and AAMC.

 

Third Party Claim” means any assertion by a Person (including any Governmental Authority) who is not a member of the ALTISOURCE Group or the AAMC Group of any claim, or the commencement by any such Person of any Action, against any member of the ALTISOURCE Group or the AAMC Group.

 

Transaction Indemnitees” has the meaning set forth in Section 6.04.

 

Transaction Third Party Claim” has the meaning set forth in Section 6.04.

 

Transfer” means to sell, assign, transfer, convey and/or deliver.

 

7



 

ARTICLE II

 

The Separation

 

Section 2.01                                Separation Transactions.  On or prior to the Distribution Date, ALTISOURCE shall, and shall cause AAMC and each other Subsidiary and controlled Affiliate of ALTISOURCE to, effect each of the transactions and Transfers set forth on Schedule I, which transactions and Transfers shall be accomplished substantially in the order described on and subject to the limitations set forth on Schedule I, in each case, with such modifications, if any, as ALTISOURCE shall determine are necessary or desirable for efficiency or similar purposes.

 

Section 2.02                                Certain Agreements Govern.  Each of ALTISOURCE and AAMC agrees on behalf of itself and its Subsidiaries that the provisions of the Tax Matters Agreement shall exclusively govern the allocation of Assets and Liabilities related to Taxes.

 

Section 2.03                                Termination of Agreements.

 

(a)                                  Except as set forth in Section 2.03(b), in furtherance of the releases and other provisions of Section 6.01, each of AAMC, on the one hand, and ALTISOURCE, on the other hand, shall terminate, or cause to be terminated, effective as of the Distribution Date, any and all agreements, arrangements, commitments and understandings (including all intercompany accounts payable or accounts receivable (“Intercompany Accounts”) accrued as of the Distribution Date) whether or not in writing, between or among AAMC and/or any other member of the AAMC Group, on the one hand, and ALTISOURCE and/or any other member of the ALTISOURCE Group, on the other hand.  No such terminated Intercompany Account, agreement, arrangement, commitment or understanding (including any provision thereof that purports to survive termination) shall be of any further force or effect after the Distribution Date.

 

(b)                                 The provisions of Section 2.03(a) shall not apply to any of the following agreements, arrangements, commitments, understandings or Intercompany Accounts (or to any of the provisions thereof):  (i) this Agreement and the Ancillary Agreements (and each other agreement, arrangement, commitment, understanding or Intercompany Account expressly contemplated by this Agreement or any Ancillary Agreement to be entered into by either Party or any other member of its Group); and (ii)  any other agreements, arrangements, commitments, understandings or Intercompany Accounts set forth on Schedule 2.03(b).

 

Section 2.04                                Transfer of Agreements; Consent.  On or prior to the Distribution Date:

 

(a)                                  Subject to the provisions of this Section 2.04 and the terms of the Ancillary Agreements, with respect to Partial Assigned Contracts, (i) ALTISOURCE shall use reasonable efforts to cause each such Partial Assigned Contract to be divided into separate contracts for each of the ALTISOURCE Business and the AAMC Business or (ii) if such a division is not possible, ALTISOURCE shall cause the AAMC Portion of such Partial Assigned Contract to be assigned to AAMC, or otherwise to cause the same economic and business terms to govern with respect to such AAMC Portion (by subcontract, sublicense or otherwise).

 

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(b)                                 Notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an agreement to assign any Assigned Contract, in whole or in part, or any rights thereunder if the agreement to assign or attempt to assign, without the consent of a third party, would constitute a breach thereof or in any way adversely affect the rights of the assignor or the assignee (the “Assignee”) thereof.  Until such consent is obtained, or if an attempted assignment thereof would be ineffective or would adversely affect the rights of any party hereto so that the Assignee would not, in fact, receive all such rights, the parties will cooperate with each other in any alternative arrangement designed to provide for the Assignee the benefits of, and to permit the Assignee to assume liabilities under, any such Assigned Contract.  The Parties shall use commercially reasonable efforts (which shall not require the payment of money to the counterparty to any such Assigned Contract) to obtain required consents to assignment of Assigned Contracts hereunder.

 

Section 2.05                                Certain Licenses and Permits.  On or prior to the Distribution Date, all licenses, permits and authorizations issued by Governmental Authorities which exclusively relate to the AAMC Business but which are held in the name of ALTISOURCE or any of its Subsidiaries (other than AAMC or any of its Subsidiaries), or any of their respective employees, officers, directors, stockholders, agents, or otherwise, on behalf of AAMC (or its Subsidiaries) shall, to the extent Transferable and to the extent not requiring a consent, approval or authorization for such Transfer, be Transferred by ALTISOURCE to AAMC (or its Subsidiaries).

 

Section 2.06                                Intentionally Omitted.

 

Section 2.07                                Disclaimer of Representations and Warranties  Each of ALTISOURCE (on behalf of itself and each other member of the ALTISOURCE Group) and AAMC (on behalf of itself and each other member of the AAMC Group) understands and agrees that, except as expressly set forth herein or in any Ancillary Agreement, no party to this Agreement, any Ancillary Agreement or any other agreement or document contemplated by this Agreement or any Ancillary Agreement, is representing or warranting in any way as to any Assets, businesses or Liabilities transferred or assumed as contemplated hereby or thereby, as to any consents or approvals required in connection therewith, as to the value or freedom from any security interests of, or any other matter concerning, any Assets of such party, or as to the absence of any defenses or right of setoff or freedom from counterclaim with respect to any claim or other asset, including any accounts receivable, of any such party, or as to the legal sufficiency of any assignment, document or instrument delivered hereunder to convey title to any asset or thing of value upon the execution, delivery and filing hereof or thereof.  Except as may expressly be set forth herein or in any Ancillary Agreement, any such assets are being transferred on an “as is,” “where is” basis, and the respective transferees shall bear the economic and legal risks that (a) any conveyance shall prove to be insufficient to vest in the transferee good and marketable title, free and clear of any security interest, and (b) any necessary Governmental Approvals or other Consents are not obtained or that any requirements of laws or judgments are not complied with.

 

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Section 2.08                                Inadvertent or Incorrect Transfers or Omissions of Assets or Liabilities.

 

(a)                                  In the event that it is discovered after the Distribution that there was an inadvertent or incorrect omission of the Transfer or assignment by or on behalf of one Party to or on behalf of the other Party of any Asset or Liability that, in the sole judgment of ALTISOURCE, had the Parties given specific consideration to such Asset or Liability prior to the Distribution, would have otherwise been listed on an appropriate Schedule hereto or otherwise caused to be so Transferred or assigned pursuant to this Agreement or any Ancillary Agreement, then upon such a determination by ALTISOURCE, the Parties shall promptly effect such Transfer or assignment of such Asset or Liability, without payment of separate consideration therefor.

 

(b)                                 In the event that it is discovered after the Distribution that there was an inadvertent or incorrect Transfer or assignment by or on behalf of one Party to or on behalf of the other Party of any Asset or Liability that, in the sole judgment of ALTISOURCE, had the Parties given specific consideration to such Asset or Liability prior to the Distribution, would have otherwise not been listed on an appropriate Schedule hereto or otherwise would not have been so Transferred or assigned pursuant to this Agreement or any Ancillary Agreement, then upon such a determination by ALTISOURCE, the Parties shall promptly unwind such Transfer or assignment of such Asset or Liability and return such Asset to, or cause the assumption of such Liability by, the appropriate Party, without payment of separate consideration therefor.

 

(c)                                  The Parties hereby agree that to the extent any such Transfer or assignment, or any such unwind of Transfer of assignment, as provided pursuant to Section 2.08(a) or Section 2.08(b) above, is effected after the Distribution Date, such Transfer or assignment or such unwind of Transfer or assignment shall be given effect for all purposes as if such action had occurred as of the Distribution Date.

 

ARTICLE III

 

Employee Matters

 

Section 3.01                                General Allocation of Assets and Liabilities for Existing Plans.  Except as otherwise specifically provided herein, from and after the Distribution, (a) ALTISOURCE shall retain, or shall cause the applicable other members of the ALTISOURCE Group or its or their applicable employee benefit plans to retain, sponsorship of, and all Assets and Liabilities arising out of or relating to, all employment, compensation and employee benefits-related plans, programs, agreements and arrangements sponsored or maintained by ALTISOURCE or any of its Subsidiaries (other than AAMC and its Subsidiaries) immediately prior to the Distribution (collectively, the “Existing ALTISOURCE Plans”) and (b) AAMC shall retain, or shall cause the applicable other members of the AAMC Group or its or their applicable employee benefit plans to retain, sponsorship of, and all Assets and Liabilities arising out of or relating to, all employment, compensation and employee benefits-related plans, programs, agreements and arrangements sponsored or maintained by AAMC or any of its Subsidiaries immediately prior to the Distribution, if any (collectively, the “Existing AAMC Plans”).

 

Section 3.02                                Cessation of Participation in ALTISOURCE Plans.  Except as otherwise expressly provided herein, as of the Distribution, each employee of AAMC or any of its Subsidiaries (whether or not on disability or any other leave of absence), after giving effect to

 

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the Distribution, (collectively, the “AAMC Employees”) shall immediately cease to be eligible for and participate actively in any Existing ALTISOURCE Plan.

 

Section 3.03                                Adoption of New AAMC Plans.  Except as otherwise expressly provided herein, in connection with the Distribution, AAMC shall provide, or shall cause to be provided, compensation and employee benefits to the AAMC Employees under one or more existing or newly adopted employee benefit plans, programs or arrangements.  Except as otherwise expressly provided herein, AAMC shall be solely responsible for all Liabilities arising out of or relating to such plans, programs and arrangements.

 

Section 3.04                                Stock Options.  (a) Subsequent to the effectiveness of the Form 10, but prior to the consummation of the Distribution, and subject to the consummation of the Distribution, each option to purchase ALTISOURCE Common Stock (“ALTISOURCE Stock Options”) granted and outstanding under the 2009 Equity Incentive Plan of ALTISOURCE (“ALTISOURCE Option Plan”) shall remain granted and outstanding and shall not, and ALTISOURCE shall cause (to the maximum extent permitted under the ALTISOURCE Option Plan) the ALTISOURCE Stock Options not to, terminate, accelerate or otherwise vest as a result of the Distribution, and each holder thereof immediately prior to the Distribution will be entitled to the following, determined in a manner in accordance with, and subject to, the ALTISOURCE Option Plan, FAS123R and Section 409A of the Code: (i) an option to acquire a number of shares of AAMC Common Stock equal to the product of (x) the number of shares of ALTISOURCE Common Stock subject to the ALTISOURCE Stock Option held by such holder on the Distribution Date and (y) the distribution ratio of one (1) share of AAMC Common Stock for every ten (10) shares of ALTISOURCE Common Stock (the “AAMC Stock Options”), with an exercise price to be determined in a manner consistent with this Section 3.04 and (ii) the adjustment of the exercise price of such holder’s ALTISOURCE Stock Option, to be determined in a manner consistent with this Section 3.04 (the “Adjusted ALTISOURCE Stock Options”) (the AAMC Stock Options and the Adjusted ALTISOURCE Stock Options, together, the “Post-Distribution Stock Options”).

 

(b)                                 The option exercise price of the AAMC Stock Options and the Adjusted ALTISOURCE Stock Options shall be set in accordance with Treasury Regulation Section 1.409A-1(b)(5)(v)(D), to maintain the intrinsic value of the ALTISOURCE Stock Options as of the Distribution Date, and to maintain the ratio of exercise price to fair market value of the ALTISOURCE Stock Options and the Post-Distribution Stock Options.

 

(c)                                  Each of ALTISOURCE and AAMC intends that, subsequent to the Distribution, AAMC shall establish, or shall cause to be established, one or more equity incentive or similar plans that will allow or provide for the issuance of restricted stock, new options (or other equity-based awards) to acquire AAMC Common Stock, or other equity awards on such terms, and subject to such conditions (including, without limitation, as to eligibility, vesting and performance criteria), as AAMC may decide in its sole discretion.

 

Section 3.05                                Form S-8.  Subsequent to the effectiveness of the Form 10, but prior to the consummation of the Distribution, AAMC shall prepare and file with the Commission a registration statement on Form S-8 (or another appropriate form) registering a number of shares of AAMC Common Stock equal to the number of shares subject to the options

 

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to purchase AAMC Common Stock resulting from the actions contemplated in Section 3.04 above and under any new equity incentive or similar plan.  AAMC shall use its reasonable best efforts to cause any such registration statement to be effective (and the current status of the prospectus or prospectuses required thereby shall be maintained) as long as any such options to purchase AAMC Common Stock may remain outstanding.

 

Section 3.06                                Section 16.  The Parties shall take all reasonable steps as may be required to cause the transactions contemplated by this Article III and any other acquisitions of AAMC equity securities (including derivative securities) or dispositions of ALTISOURCE equity securities (including derivative securities) in connection with this Agreement by each individual who is a director or officer of ALTISOURCE or AAMC subject to Section 16 of the Exchange Act to be exempt under Rule 16b-3 promulgated under the Exchange Act.

 

ARTICLE IV

 

Actions Pending the Distribution

 

Section 4.01                                Actions Prior to the Distribution.  (a) Subject to Section 4.02 and Section 5.02, ALTISOURCE and AAMC shall use reasonable efforts to consummate the Distribution, including by taking the actions specified in this Section 4.01.

 

(b)                                 Prior to the Distribution Date, ALTISOURCE shall mail the Information Statement to the Record Holders.

 

(c)                                  AAMC shall use reasonable efforts to take all such action, if any, as may be necessary or appropriate to have the AAMC Common Stock quoted on the OTC prior to the Distribution Date.

 

(d)                                 ALTISOURCE and AAMC shall use reasonable efforts to take all such action, if any, as may be necessary or appropriate under the state securities or blue sky laws in connection with the transactions contemplated by this Agreement and the Ancillary Agreements.

 

(e)                                  ALTISOURCE and AAMC shall cooperate in preparing, filing with the Commission and causing to become effective any registration statements or amendments thereof which are necessary or appropriate in order to effect the transactions contemplated hereby.

 

(f)                                    Prior to the Distribution Date, ALTISOURCE shall duly elect, as members of the AAMC board of directors, the individuals listed as members of the AAMC board of directors in the Information Statement, and such individuals shall continue to be members of the AAMC board of directors on the Distribution Date.

 

(g)                                 Immediately prior to the Distribution Date, the articles of incorporation of AAMC, in substantially the form filed as an exhibit to the Form 10, shall be in effect.

 

Section 4.02                                Conditions Precedent to Consummation of the Distribution.  The obligations of the Parties to consummate the Distribution shall be conditioned on the satisfaction, or waiver by ALTISOURCE, of the following conditions:

 

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(a)                                  Each Ancillary Agreement shall have been executed by each party thereto and shall be in force and effect.

 

(b)                                 The Form 10 shall have been filed with the Commission and declared effective by the Commission, no stop order suspending the effectiveness of the Form 10 shall be in effect, no proceedings for such purpose shall be pending before or threatened by the Commission and the Information Statement shall have been mailed to Record Holders.

 

(c)                                  The AAMC Common Stock shall be quoted on the OTC or a national securities exchange, subject to official notice of issuance.

 

(d)                                 The Separation shall have been completed.

 

(e)                                  Any material Governmental Approvals and any other material Consents necessary to consummate the Separation and the Distribution shall have been obtained and be in full force and effect.

 

(f)                                    No order, injunction or decree issued by any Governmental Authority of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Separation or the Distribution shall be in effect, and no other event outside the control of ALTISOURCE shall have occurred or failed to occur that prevents the consummation of the Separation or the Distribution.

 

(g)                                 There shall not be pending any litigation or other proceeding:  challenging or seeking to restrain or prohibit the consummation of the Separation or the Distribution; seeking to limit the effect of the Separation or the Distribution or the operation of the ALTISOURCE Business or AAMC Business after the Separation or the Distribution; or seeking material damages from either ALTISOURCE or AAMC.

 

(h)                                 No other events or developments shall have occurred prior to the Distribution Date that, in the judgment of the board of directors of ALTISOURCE, would result in the Distribution having a material adverse effect on ALTISOURCE or on the shareholders of ALTISOURCE.

 

(i)                                     The actions set forth in Section 4.01(b), 4.01(d), Section 4.01(f), and Section 4.01(g) shall have been completed.

 

The foregoing conditions are for the sole benefit of ALTISOURCE and shall not give rise to or create any duty on the part of ALTISOURCE or the ALTISOURCE board of directors to waive or not waive such conditions or in any way limit the right of ALTISOURCE to terminate this Agreement as set forth in Article XI or alter the consequences of any such termination from those specified in such Article.  Any determination made by the ALTISOURCE board of directors prior to the Distribution concerning the satisfaction or waiver of any or all of the conditions set forth in this Section 4.02 shall be conclusive.

 

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ARTICLE V

 

The Distribution

 

Section 5.01                                The Distribution.  (a) AAMC shall cooperate with ALTISOURCE to accomplish the Distribution and shall, at the direction of ALTISOURCE, promptly take any and all actions necessary or desirable to effect the Distribution.  ALTISOURCE shall select any manager in connection with the Distribution, as well as any financial printer, solicitation and/or exchange agent and financial, legal, accounting and other advisors for ALTISOURCE.  ALTISOURCE and AAMC, as the case may be, will provide, or cause the applicable member of its Group to provide, to the Agent all share certificates, if any, and any information required in order to complete the Distribution.

 

(b)                                 Subject to the terms and conditions set forth in this Agreement, (i) on or prior to the Distribution Date, ALTISOURCE shall deliver to the Agent for the benefit of the Record Holders all the issued and outstanding shares of AAMC Common Stock then owned by ALTISOURCE or any other member of the ALTISOURCE Group and book-entry transfer authorizations for such shares and (ii) on the Distribution Date, ALTISOURCE shall instruct the Agent to distribute, with respect to Record Holders, by means of a pro rata dividend to each Record Holder (or such Record Holder’s bank or brokerage firm on such Record Holder’s behalf) electronically, by direct registration in book-entry form, one share of AAMC Common Stock for every ten (10) shares of ALTISOURCE Common Stock held by such Record Holder, subject to Section 5.01(c) below.  It is the intent of the foregoing that the Distribution be effected on a pro rata, as if converted basis.  The Distribution shall be effective at 11:59 p.m. New York City time on the Distribution Date.  On or immediately following the Distribution Date, the Agent will mail an account statement indicating the number of shares of AAMC Common Stock that have been registered in book-entry form in the name of each Record Holder that holds physical share certificates representing its shares of ALTISOURCE Common Stock and that is the registered holder of the shares represented by those certificates (including the amount of cash in lieu of fractional shares as provided in Section 5.01(c) below).

 

(c)                                  Record Holders who, after aggregating the number of shares of AAMC Common Stock (or fractions thereof) to which such Record Holder would be entitled on the Record Date, would be entitled to receive a fraction of a share of AAMC Common Stock in the Distribution, will receive cash in lieu of fractional shares. Fractional shares of AAMC Common Stock will not be distributed in the Distribution nor credited to book-entry accounts. The Agent shall, as soon as practicable after the Distribution Date (a) determine the number of whole shares and fractional shares of AAMC Common Stock allocable to each Record Holder, (b) aggregate all such fractional shares into whole shares and sell the whole shares obtained thereby in open market transactions at then prevailing trading prices on behalf of holders who would otherwise be entitled to fractional share interests, and (c) distribute to each such holder, or for the benefit of each such beneficial owner, such holder’s or owner’s ratable share of the net proceeds of such sale, based upon the average gross selling price per share of AAMC Common Stock after making appropriate deductions for any amount required to be withheld for United States federal income tax purposes. ALTISOURCE shall bear the cost of brokerage fees and transfer taxes incurred in connection with these sales of fractional shares, which such sales shall occur as soon after the Distribution Date as practicable and as determined by the Agent. None of ALTISOURCE,

 

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AAMC or the applicable Agent will guarantee any minimum sale price for the fractional shares of AAMC Common Stock. Neither ALTISOURCE nor AAMC will pay any interest on the proceeds from the sale of fractional shares. The Agent will have the sole discretion to select the broker-dealers through which to sell the aggregated fractional shares and to determine when, how and at what price to sell such shares. Neither the Agent nor the selected broker-dealers will be Affiliates of ALTISOURCE or AAMC.  Any AAMC Common Stock or cash in lieu of fractional shares with respect to AAMC Common Stock that remains unclaimed by any holder of record one hundred-eighty (180) days after the Distribution Date shall be delivered to AAMC. AAMC shall hold such AAMC Common Stock and/or cash for the account of such holder of record and any such holder of record shall look only to AAMC for such AAMC Common Stock and/or cash, if any, in lieu of fractional share interests, subject in each case to applicable escheat or other abandoned property laws.

 

Section 5.02                                Sole Discretion of ALTISOURCE.  ALTISOURCE shall, in its sole and absolute discretion, determine the Distribution Date and all terms of the Distribution, including the form, structure and terms of any transactions and/or offerings to effect the Distribution and the timing of and conditions to the consummation thereof.  In addition and notwithstanding anything to the contrary set forth herein, ALTISOURCE may at any time and from time to time until the completion of the Distribution decide to abandon the Distribution or modify or change the terms of the Distribution, including by accelerating or delaying the timing of the consummation of all or part of the Distribution.

 

ARTICLE VI

 

Mutual Releases; Indemnification

 

Section 6.01                                Release of Pre-Closing Claims.  (a) Except as provided in Section 6.01(c), effective as of the Distribution Date, AAMC does hereby, for itself and each other member of the AAMC Group, their respective Affiliates (other than any member of the ALTISOURCE Group), successors and assigns, and all Persons who at any time prior to the Distribution Date have been shareholders, directors, officers, agents or employees of any member of the AAMC Group (in each case, in their respective capacities as such), release and forever discharge ALTISOURCE and the other members of the ALTISOURCE Group, their respective Affiliates (other than any member of the AAMC Group), successors and assigns, and all Persons who at any time prior to the Distribution Date have been shareholders, directors, officers, agents or employees of any member of the ALTISOURCE Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at law or in equity (including any right of contribution), whether arising under any contract or agreement, by operation of law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Distribution Date, including in connection with the transactions and all other activities to implement the Separation or the Distribution.

 

(b)                                 Except as provided in Section 6.01(c), effective as of the Distribution Date, ALTISOURCE does hereby, for itself and each other member of the ALTISOURCE Group, their respective Affiliates (other than any member of the AAMC Group), successors and

 

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assigns, and all Persons who at any time prior to the Distribution Date have been shareholders, directors, officers, agents or employees of any member of the ALTISOURCE Group (in each case, in their respective capacities as such), release and forever discharge AAMC, the other members of the AAMC Group, their respective Affiliates (other than any member of the ALTISOURCE Group), successors and assigns, and all Persons who at any time prior to the Distribution Date have been shareholders, directors, officers, agents or employees of any member of the AAMC Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at law or in equity (including any right of contribution), whether arising under any contract or agreement, by operation of law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Distribution Date, including in connection with the transactions and all other activities to implement the Separation or the Distribution.

 

(c)                                  Nothing contained in Section 6.01(a) or (b) shall impair any right of any Person to enforce this Agreement, any Ancillary Agreement or any agreements, arrangements, commitments or understandings that are specified in Section 2.03(b) not to terminate as of the Distribution Date, in each case in accordance with its terms.  Nothing contained in Section 6.01(a) or (b) shall release any Person from:

 

(i)                                     any Liability provided in or resulting from any agreement among any members of the ALTISOURCE Group or the AAMC Group that is specified in Section 2.03(b) as not to terminate as of the Distribution Date, or any other Liability specified in such Section 2.03(b) as not to terminate as of the Distribution Date;

 

(ii)                                  any Liability, contingent or otherwise, assumed, transferred, assigned or allocated to the Group of which such Person is a member in accordance with, or any other Liability of any member of any Group under, this Agreement or any Ancillary Agreement;

 

(iii)                               any Liability that the Parties may have with respect to indemnification or contribution pursuant to this Agreement for claims brought against the Parties or the members of their respective Groups or any of their respective Subsidiaries or Affiliates or any of the respective directors, officers, employees or agents of any of the foregoing by third Persons, which Liability shall be governed by the provisions of this Article VI and, if applicable, the appropriate provisions of the Ancillary Agreements; or

 

(iv)                              any Liability the release of which would result in the release of any Person other than a Person released pursuant to this Section 6.01.

 

In addition, nothing contained in Section 6.01(a) shall release ALTISOURCE from honoring its existing obligations to indemnify any director, officer or employee of AAMC or any of its Subsidiaries on or prior to the Distribution Date who was a director, officer or employee of ALTISOURCE or any of its Subsidiaries on or prior to the Distribution Date, to the extent such director, officer or employee becomes a named defendant in any litigation involving

 

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ALTISOURCE or any of its Subsidiaries and was entitled to such indemnification pursuant to then existing obligations.

 

(d)                                 AAMC shall not make, and shall not permit any other member of the AAMC Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against ALTISOURCE or any other member of the ALTISOURCE Group, or any other Person released pursuant to Section 6.01(a), with respect to any Liabilities released pursuant to Section 6.01(a).  ALTISOURCE shall not, and shall not permit any other member of the ALTISOURCE Group, to make any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification against AAMC or any other member of the AAMC Group, or any other Person released pursuant to Section 6.01(b), with respect to any Liabilities released pursuant to Section 6.01(b).

 

(e)                                  It is the intent of each of ALTISOURCE and AAMC, by virtue of the provisions of this Section 6.01, to provide for a full and complete release and discharge of all Liabilities existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged to have existed on or before the Distribution Date, between or among AAMC or any other member of the AAMC Group, on the one hand, and ALTISOURCE or any other member of the ALTISOURCE Group, on the other hand (including any contractual agreements or arrangements existing or alleged to exist between or among any such members on or before the Distribution Date), except as expressly set forth in Section 6.01(c).  At any time, at the reasonable request of the other Party, each Party shall cause each member of its respective Group to execute and deliver releases reflecting the provisions hereof.

 

Section 6.02                             Indemnification by AAMC.  Except as provided in Section 6.05, AAMC shall indemnify, defend and hold harmless ALTISOURCE, each other member of the ALTISOURCE Group and each of their respective former and current directors, officers and employees, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “ALTISOURCE Indemnitees”), from and against any and all Liabilities of the ALTISOURCE Indemnitees relating to, arising out of or resulting from any of the following items (without duplication):

 

(a)                                 the AAMC Business, including the failure of AAMC or any other member of the AAMC Group or any other Person to pay, perform or otherwise promptly discharge any Liability relating to, arising out of or resulting from the AAMC Business in accordance with its terms, whether prior to or after the Distribution Date or the date hereof; and

 

(b)                                 any breach by AAMC or any other member of the AAMC Group of this Agreement or any of the Ancillary Agreements.

 

Section 6.03                             Indemnification by ALTISOURCE.  Except as provided in Section 6.05, ALTISOURCE shall indemnify, defend and hold harmless AAMC, each other member of the AAMC Group and each of their respective former and current directors, officers and employees, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “AAMC Indemnitees”), from and against any and all Liabilities of the AAMC

 

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Indemnitees relating to, arising out of or resulting from any of the following items (without duplication):

 

(a)                                 the ALTISOURCE Business, including the failure of ALTISOURCE or any other member of the ALTISOURCE Group or any other Person to pay, perform or otherwise promptly discharge any Liability relating to, arising out of or resulting from the ALTISOURCE Business in accordance with its terms, whether prior to or after the Distribution Date or the date hereof; and

 

(b)                                 any breach by ALTISOURCE or any other member of the ALTISOURCE Group of this Agreement or any of the Ancillary Agreements.

 

Section 6.04                             Indemnification of Third Party Claims.  Except as provided in Section 6.05 and subject to any contrary provision in any Ancillary Agreement, each Party shall indemnify, defend and hold harmless the other Party, each other member of such other Party’s Group and each of their respective former and current directors, officers and employees, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “Transaction Indemnitees”), from and against any Liabilities of the Transaction Indemnitees relating to, arising out of or resulting from any Third Party Claim as to which such Transaction Indemnitees are entitled to indemnification under this Agreement, including any Third Party Claim relating to, arising out of or resulting from any untrue statement or alleged untrue statement of a material fact contained in any Specified Document or any omission or alleged omission to state a material fact in any Specified Document required to be stated therein or necessary to make the statements therein not misleading (any such Third Party Claim, a “Transaction Third Party Claim”).

 

Section 6.05                             Indemnification Obligations Net of Insurance Proceeds and Other Amounts.  (a) The Parties intend that any Liability subject to indemnification or reimbursement pursuant to this Article VI will be net of Insurance Proceeds that actually reduce the amount of, or are paid to the applicable Indemnitee in respect of, such Liability.  Accordingly, the amount that either Party (an “Indemnifying Party”) is required to pay to any Person entitled to indemnification hereunder (an “Indemnitee”) will be reduced by any Insurance Proceeds theretofore actually recovered by or on behalf of the Indemnitee in respect of the related Liability.  If an Indemnitee receives a payment (an “Indemnity Payment”) required by this Agreement from an Indemnifying Party in respect of any Liability and subsequently receives Insurance Proceeds in respect of such Liability, then the Indemnitee will pay to the Indemnifying Party an amount equal to the excess of the Indemnity Payment received over the amount of the Indemnity Payment that would have been due if such Insurance Proceeds had been received, realized or recovered before the Indemnity Payment was made.

 

(b)                                 An insurer that would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto or have any subrogation rights with respect thereto by virtue of the indemnification provisions hereof, it being expressly understood and agreed that no insurer or any other third party shall be entitled to a “wind-fall” (i.e., a benefit they would not be entitled to receive in the absence of the indemnification provisions) by virtue of the indemnification provisions hereof.  Nothing contained in this Agreement or any Ancillary

 

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Agreement shall obligate any member of any Group to seek to collect or recover any Insurance Proceeds.

 

Section 6.06                             Procedures for Indemnification of Third Party Claims.  (a) If an Indemnitee shall receive notice or otherwise learn of a Third Party Claim with respect to which an Indemnifying Party may be obligated to provide indemnification to such Indemnitee pursuant to Section 6.02, Section 6.03 or Section 6.04 or any other Section of this Agreement or any Ancillary Agreement, such Indemnitee shall give such Indemnifying Party written notice thereof within 10 days after becoming aware of such Third Party Claim.  Any such notice shall describe the Third Party Claim in reasonable detail.  Notwithstanding the foregoing, the failure of any Indemnitee or other Person to give notice as provided in this Section 6.06(a) shall not relieve the related Indemnifying Party of its obligations under this Article VI, except to the extent that such Indemnifying Party is actually prejudiced by such failure to give notice.

 

(b)                                 An Indemnifying Party may elect to defend, at such Indemnifying Party’s own expense (subject to the requirement to share expenses related to the defense of Transaction Third Party Claims pursuant to Section 6.04) and by such Indemnifying Party’s own counsel, any Third Party Claim.  Within 20 days after the receipt of notice from an Indemnitee in accordance with Section 6.06(a) (or sooner, if the nature of such Third Party Claim so requires), the Indemnifying Party shall notify the Indemnitee of its election as to whether the Indemnifying Party will assume responsibility for defending such Third Party Claim.  After notice from an Indemnifying Party to an Indemnitee of its election to assume the defense of a Third Party Claim, such Indemnitee shall have the right to employ separate counsel and to participate in (but not control) the defense, compromise, or settlement thereof, but (subject to Section 6.04) the fees and expenses of such counsel shall be the expense of such Indemnitee, except that the Indemnifying Party shall be liable for the fees and expenses of counsel employed by the Indemnitee for any period during which the Indemnifying Party has not assumed the defense of such Third Party Claim (other than during any period in which the Indemnitee shall have failed to give notice of the Third Party Claim in accordance with Section 6.06(a)).

 

(c)                                  If an Indemnifying Party elects not to assume responsibility for defending a Third Party Claim, or fails to notify an Indemnitee of its election as provided in Section 6.06(b), such Indemnitee may defend such Third Party Claim at the cost and expense of the Indemnifying Party (subject to the requirement to share expenses related to the defense of Transaction Third Party Claims pursuant to Section 6.04).

 

(d)                                 If an Indemnifying Party elects to assume the defense of a Third Party Claim in accordance with the terms of this Agreement, the Indemnitee shall agree to any settlement, compromise or discharge of such Third Party Claim that the Indemnifying Party may recommend and that by its terms obligates the Indemnifying Party to pay the full amount of the liability in connection with such Third Party Claim and that releases the Indemnified Party completely in connection with such Third Party Claim.

 

(e)                                  No Indemnifying Party shall consent to entry of any judgment or enter into any settlement of any Third Party Claim without the consent of the applicable Indemnitee or Indemnitees if the effect thereof is to permit any injunction, declaratory judgment, other order or other nonmonetary relief to be entered, directly or indirectly, against any Indemnitee.

 

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(f)                                   Whether or not the Indemnifying Party assumes the defense of a Third Party Claim, no Indemnitee shall admit any liability with respect to, or settle, compromise or discharge, such Third Party Claim without the Indemnifying Party’s prior written consent.

 

(g)                                  The provisions of Section 6.06 (other than this Section 6.06(g)) and Section 6.07 shall not apply to Taxes (which are covered by the Tax Matters Agreement).

 

Section 6.07                             Additional Matters.  (a) Any claim on account of a Liability that does not result from a Third Party Claim shall be asserted by written notice given by the Indemnitee to the related Indemnifying Party.  Such Indemnifying Party shall have a period of 30 days after the receipt of such notice within which to respond thereto.  If such Indemnifying Party does not respond within such 30-day period, such Indemnifying Party shall be deemed to have refused to accept responsibility to make payment.  If such Indemnifying Party does not respond within such 30-day period or rejects such claim in whole or in part, such Indemnitee shall be free to pursue such remedies as may be available to such party as contemplated by this Agreement and the Ancillary Agreements.

 

(b)                                 In the event of payment by or on behalf of any Indemnifying Party to any Indemnitee in connection with any Third Party Claim, such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnitee as to any events or circumstances in respect of which such Indemnitee may have any right, defense or claim relating to such Third Party Claim against any claimant or plaintiff asserting such Third Party Claim or against any other Person.  Such Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right, defense or claim.

 

(c)                                  In the event of an Action in which the Indemnifying Party is not a named defendant, if either the Indemnitee or Indemnifying Party shall so request, the Parties shall endeavor to substitute the Indemnifying Party for the, or add the Indemnifying Party as an additional, named defendant, if at all practicable.  If such substitution or addition cannot be achieved for any reason or is not requested, the named defendant shall allow the Indemnifying Party to manage the Action as set forth in this Section, and the Indemnifying Party shall fully indemnify the named defendant against all costs of defending the Action (including court costs, sanctions imposed by a court, attorneys’ fees, experts’ fees and all other external expenses), the costs of any judgment or settlement and the cost of any interest or penalties relating to any judgment or settlement.

 

Section 6.08                             Remedies Cumulative.  The remedies provided in this Article VI shall be cumulative and, subject to the provisions of Article IX, shall not preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against any Indemnifying Party.

 

Section 6.09                             Survival of Indemnities.  The rights and obligations of each of ALTISOURCE and AAMC and their respective Indemnitees under this Article VI shall survive the sale or other transfer by any party of any assets or businesses or the assignment by it of any Liabilities.

 

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Section 6.10                             Limitation on Liability.  Except as may expressly be set forth in this Agreement or any Ancillary Agreement, none of ALTISOURCE, AAMC or any other member of either Group shall in any event have any Liability to the other or to any other member of the other’s Group, or to any other ALTISOURCE Indemnitee or AAMC Indemnitee, as applicable, for any incidental, indirect, special, punitive or consequential damages, whether or not caused by or resulting from negligence or breach of obligations hereunder or under any Ancillary Agreement and whether or not informed of the possibility of the existence of such damages, provided, however, that the provisions of this Section shall not limit an Indemnifying Party’s indemnification obligations hereunder or in any Ancillary Agreement with respect to any Liability any Indemnitee may have to any third party not affiliated with any member of the ALTISOURCE Group or the AAMC Group for any incidental, indirect, special, punitive or consequential damages.

 

ARTICLE VII

 

Exchange of Information; Confidentiality

 

Section 7.01                             Agreement for Exchange of Information; Archives.  (a) Each of ALTISOURCE and AAMC, on behalf of its Group, agrees to provide, or cause to be provided, to the other Group, at any time before the Distribution Date or until the sixth anniversary thereof, as soon as reasonably practicable after written request therefor, any Information in the possession or under the control of such Group that the requesting Party reasonably needs (i) to comply with reporting, disclosure, filing or other requirements imposed on the requesting Party or any member of its Group (including under applicable securities or tax laws) by a Governmental Authority having jurisdiction over the requesting Party or such member, (ii) for use in any other judicial, regulatory, administrative, tax or other proceeding or in order to satisfy audit, accounting, claims, regulatory, litigation, tax or other similar requirements, in each case other than claims or allegations that one Party to this Agreement has against the other, or (iii) to comply with its obligations under this Agreement or any Ancillary Agreement; provided, however, that in the event that either Party determines that any such provision of Information could be commercially detrimental, violate any law or agreement or waive any attorney-client privilege, the Parties shall take all reasonable measures to permit the compliance with such obligations in a manner that avoids any such harm or consequence.

 

(b)                                 After the Distribution Date, until the sixth anniversary thereof, each of ALTISOURCE and AAMC shall have access during regular business hours (as in effect from time to time) to the documents that relate, in the case of ALTISOURCE, to the ALTISOURCE Business that are located in archives retained or maintained by AAMC or, in the case of AAMC, to the AAMC Business that are located in archives retained or maintained by ALTISOURCE.  Each of ALTISOURCE and AAMC may obtain copies (but not originals) of documents for bona fide business purposes and may obtain objects for exhibition purposes for commercially reasonable periods of time if required for bona fide business purposes, provided that the party receiving such objects shall cause any such objects to be returned promptly in the same condition in which they were delivered to such party and that each of ALTISOURCE and AAMC shall comply with any rules, procedures or other requirements, and shall be subject to any restrictions (including prohibitions on removal of specified objects), that are then applicable to the other.  Nothing herein shall be deemed to restrict the access of any member of the ALTISOURCE

 

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Group or AAMC Group to any such documents or objects or to impose any liability on any member of the ALTISOURCE Group or the AAMC Group, as applicable, if any such documents are not maintained or preserved by ALTISOURCE or AAMC, as applicable.

 

(c)                                  Until the sixth anniversary of the date hereof, each of ALTISOURCE and AAMC (i) shall maintain in effect at its own cost and expense adequate systems and controls to the extent necessary to enable the members of the other Group to satisfy their respective reporting, accounting, audit and other obligations and (ii) shall provide, or cause to be provided, to the other Party in such form as such other Party shall reasonably request, at no charge to the requesting Party, all financial and other data and information as such requesting Party reasonably determines necessary or advisable in order to prepare its financial statements and reports or filings with any Governmental Authority.

 

Section 7.02                             Ownership of Information.  Any Information owned by one Group that is provided to a requesting Party pursuant to Section 7.01 shall be deemed to remain the property of the providing Party.  Unless specifically set forth herein, nothing contained in this Agreement shall be construed as granting or conferring rights of license or otherwise in any such Information.

 

Section 7.03                             Compensation for Providing Information.  Except as set forth in Section 7.01(c), the Party requesting Information agrees to reimburse the other Party for the reasonable costs, if any, of creating, gathering and copying such Information, to the extent that such costs are incurred for the benefit of the requesting Party.  Except as may be otherwise specifically provided elsewhere in this Agreement or in any other agreement between the Parties, such costs shall be computed in accordance with the providing Party’s standard methodology and procedures.

 

Section 7.04                             Limitations on Liability.  Neither Party shall have any liability to the other Party in the event that any Information exchanged or provided pursuant to this Agreement that is an estimate or forecast, or that is based on an estimate or forecast, is found to be inaccurate in the absence of willful misconduct by the Party providing such Information.  Neither Party shall have any liability to the other Party if any Information is destroyed after reasonable efforts by such Party to comply with the provisions of Section 7.01.

 

Section 7.05                             Other Agreements Providing for Exchange of Information.  The rights and obligations granted under this Article VII are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange, retention or confidential treatment of Information set forth in any Ancillary Agreement.

 

Section 7.06                             Production of Witnesses; Records; Cooperation.  (a) After the Distribution Date, except in the case of an adversarial Action by one Party against the other Party, each Party shall use reasonable efforts to make available to the other Party, upon written request, the former, current and future directors, officers, employees, other personnel and agents of the members of its Group as witnesses and any books, records or other documents within its control or that it otherwise has the ability to make available, to the extent that any such person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents may reasonably be required in connection with any

 

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Action in which the requesting Party may from time to time be involved, regardless of whether such Action is a matter with respect to which indemnification may be sought hereunder.  The requesting Party shall, except as otherwise required by Article VII, bear all costs and expenses in connection therewith.

 

(b)                                 If an Indemnifying Party chooses to defend or to seek to compromise or settle any Third Party Claim, the other Party shall make available to such Indemnifying Party, upon written request, the former, current and future directors, officers, employees, other personnel and agents of the members of its Group as witnesses and any books, records or other documents within its control or that it otherwise has the ability to make available, to the extent that any such person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents may reasonably be required in connection with such defense, compromise or settlement, and shall otherwise cooperate in such defense, compromise or settlement.

 

(c)                                  Without limiting any provision of this Section, each of the Parties agrees to cooperate, and to cause each member of its Group to cooperate, with the other Party in the defense of any infringement or similar claim with respect to the Licensed Mark or Licensed Trade Name (as such terms are defined in the License Agreement), including any claim of infringement of any mark using the word “ALTISOURCE” or any derivation thereof and shall not acknowledge, or permit any member of its Group to acknowledge, the validity or infringing use of any intellectual property of a third Person in a manner that would hamper or undermine the defense of such infringement or similar claim.

 

(d)                                 The obligation of the Parties to provide witnesses pursuant to this Section 7.06 is intended to be interpreted to facilitate cooperation and shall include the obligation to provide as witnesses inventors and other officers without regard to whether the witness or the employer of the witness could assert a possible business conflict (subject to the exception set forth in the first sentence of Section 7.06(a)).

 

(e)                                  In connection with any matter contemplated by this Section 7.06, the Parties will enter into a mutually acceptable joint defense agreement so as to maintain to the extent practicable any applicable attorney-client privilege or work product immunity of any member of either Group.

 

Section 7.07                             Confidentiality.  (a) Subject to Section 7.08, each of ALTISOURCE and AAMC, on behalf of itself and each other member of its Group, agrees to hold, and to cause its directors, officers, employees, agents, accountants, counsel and other advisors and representatives to hold, in strict confidence, with at least the same degree of care that applies to confidential and proprietary information of ALTISOURCE pursuant to policies in effect as of the Distribution Date, all Information concerning the other Group that is either in its possession (including Information in its possession prior to the Distribution Date) or furnished by the other Group or its directors, officers, employees, agents, accountants, counsel and other advisors and representatives at any time pursuant to this Agreement, any Ancillary Agreement or otherwise, and shall not use any such Information other than for such purposes as shall be expressly permitted hereunder or thereunder, except, in each case, to the extent that such Information has been (i) in the public domain through no fault of such Party or any other

 

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member of such Group or any of their respective directors, officers, employees, agents, accountants, counsel and other advisors and representatives, (ii) later lawfully acquired from other sources by such Party (or any other member of such Party’s Group), which sources are not known by such Party to be themselves bound by a confidentiality obligation, or (iii) independently generated without reference to any proprietary or confidential Information of any member of the other Group.

 

(b)                                 Each Party agrees not to release or disclose, or permit to be released or disclosed, any such Information (excluding Information described in clauses (i), (ii) and (iii) of Section 7.07(a)) to any other Person, except its directors, officers, employees, agents, accountants, counsel and other advisors and representatives who need to know such Information (who shall be advised of their obligations hereunder with respect to such Information), except in compliance with Section 7.08.  Without limiting the foregoing, when any Information is no longer needed for the purposes contemplated by this Agreement or any Ancillary Agreement, each Party will promptly, after request of the other Party, either return the Information to the other Party in a tangible form (including all copies thereof and all notes, extracts or summaries based thereon) or certify to the other Party that any Information not returned in a tangible form (including any such Information that exists in an electronic form) has been destroyed (and such copies thereof and such notes, extracts or summaries based thereon).

 

Section 7.08                             Protective Arrangements.  In the event that either Party or any other member of its Group either determines on the advice of its counsel that it is required to disclose any Information pursuant to applicable law or receives any demand under lawful process or from any Governmental Authority to disclose or provide Information of the other Party (or any other member of the other Party’s Group) that is subject to the confidentiality provisions hereof, such Party shall, to the extent permitted by law, notify the other Party as soon as practicable prior to disclosing or providing such Information and shall cooperate, at the expense of the requesting Party, in seeking any reasonable protective arrangements requested by such other Party.  Subject to the foregoing, the Person that received such request may thereafter disclose or provide Information to the extent required by such law (as so advised by counsel) or by lawful process or such Governmental Authority.

 

ARTICLE VIII

 

Dispute Resolution

 

Section 8.01                             Disputes.  Subject to Section 11.12 and except as otherwise specifically provided in any Ancillary Agreement, the procedures for discussion, negotiation and mediation set forth in this Article VIII shall apply to all disputes, controversies or claims (whether arising in contract, tort or otherwise) that may arise out of or relate to, or arise under or in connection with, this Agreement or any Ancillary Agreement, or the transactions contemplated hereby or thereby (including all actions taken in furtherance of the transactions contemplated hereby or thereby on or prior to the date hereof), or the commercial or economic relationship of the parties relating hereto or thereto, between or among any members of the ALTISOURCE Group, on the one hand, and any members of the AAMC Group, on the other hand.

 

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Section 8.02                             Escalation; Mediation.  (a) It is the intent of the Parties to use reasonable efforts to resolve expeditiously any dispute, controversy or claim between or among them with respect to the matters covered hereby that may arise from time to time on a mutually acceptable negotiated basis.  In furtherance of the foregoing, a Party involved in a dispute, controversy or claim may deliver a notice (an “Escalation Notice”) demanding an in-person meeting involving representatives of the Parties at a senior level of management (or if the Parties agree, of the appropriate strategic business unit or division within such entity).  A copy of any such Escalation Notice shall be given to the General Counsel, or like officer or official, of the Party involved in the dispute, controversy or claim (which copy shall state that it is an Escalation Notice pursuant to this Agreement).  Any agenda, location or procedures for such discussions or negotiations between the Parties may be established by the Parties from time to time; provided, however, that the Parties shall use reasonable efforts to meet within 30 days of the Escalation Notice.

 

(b)                                 If the Parties are not able to resolve the dispute, controversy or claim through the escalation process referred to above, then the matter shall be referred to mediation.  The Parties shall retain a mediator to aid the Parties in their discussions and negotiations by informally providing advice to the Parties.  Any opinion expressed by the mediator shall be strictly advisory and shall not be binding on the Parties or be admissible in any other proceeding.  The mediator may be chosen from a list of mediators previously selected by the Parties or by other agreement of the Parties.  Costs of the mediation shall be borne equally by the Parties involved in the matter, except that each Party shall be responsible for its own expenses.  Mediation shall be a prerequisite to the commencement of any Action by either Party against the other Party.

 

(c)                                  In the event that any resolution of any dispute, controversy or claim pursuant to the procedures set forth in Section 8.02(a) or (b) in any way affects an agreement or arrangement between either of the Parties and a third party insurance carrier, the consent of such third party insurance carrier to such resolution, to the extent such consent is required, shall be obtained before such resolution can take effect.

 

Section 8.03                             Court Actions.  (a) In the event that either Party, after complying with the provisions set forth in Section 8.02, desires to commence an Action, such Party may submit the dispute, controversy or claim (or such series of related disputes, controversies or claims) to any court of competent jurisdiction.

 

(b)                                 Unless otherwise agreed in writing, the Parties will continue to provide service and honor all other commitments under this Agreement and each Ancillary Agreement during the course of dispute resolution pursuant to the provisions of this Article VIII with respect to all matters not subject to such dispute, controversy or claim.

 

ARTICLE IX

 

Further Assurances and Additional Covenants

 

Section 9.01                             Further Assurances.  (a) In addition to the actions specifically provided for elsewhere in this Agreement, each of the Parties shall, subject to Section 4.02 and

 

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Section 5.02, use reasonable efforts, prior to, on and after the Distribution Date, to take, or cause to be taken, all actions, and to do, or cause to be done, all things, reasonably necessary, proper or advisable under applicable laws, regulations and agreements to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements.

 

(b)                                 Without limiting the foregoing, prior to, on and after the Distribution Date, each Party shall cooperate with the other Party, without any further consideration, but at the expense of the requesting Party, (i) to execute and deliver, or use reasonable efforts to execute and deliver, or cause to be executed and delivered, all instruments, including any bills of sale, stock powers, certificates of title, assignments of contracts and other instruments of conveyance, assignment and transfer as such Party may reasonably be requested to execute and deliver by the other Party, (ii) to make, or cause to be made, all filings with, and to obtain, or cause to be obtained, all consents, approvals or authorizations of, any Governmental Authority or any other Person under any permit, license, agreement, indenture or other instrument, (iii) to obtain, or cause to be obtained, any Governmental Approvals or other Consents required to effect the Separation or the Distribution and (iv) to take, or cause to be taken, all such other actions as such Party may reasonably be requested to take by the other Party from time to time, consistent with the terms of this Agreement and the Ancillary Agreements, in order to effect the provisions and purposes of this Agreement and the Ancillary Agreements and any transfers of Assets or assignments and assumptions of Liabilities hereunder or thereunder and the other transactions contemplated hereby and thereby.

 

(c)                                  On or prior to the Distribution Date, ALTISOURCE and AAMC, in their respective capacities as direct and indirect shareholders of their respective Subsidiaries, shall each ratify any actions that are reasonably necessary or desirable to be taken by AAMC or any other Subsidiary of ALTISOURCE, as the case may be, to effect the transactions contemplated by this Agreement.

 

(d)                                 Prior to the Distribution Date, if either Party identifies any commercial or other service that is needed to assure a smooth and orderly transition of its business in connection with the consummation of the transactions contemplated hereby, and that is not otherwise governed by the provisions of this Agreement or any Ancillary Agreement, the Parties will cooperate in determining whether there is a mutually acceptable arm’s-length basis on which the other Party will provide such service.

 

Section 9.02                             Insurance Matters.  (a) ALTISOURCE and AAMC agree to cooperate in good faith to provide for an orderly transition of insurance coverage from the date hereof through the Distribution Date and for the treatment of any Insurance Policies that will remain in effect following the Distribution Date on a mutually agreeable basis.  In no event shall ALTISOURCE, any other member of the ALTISOURCE Group or any ALTISOURCE Indemnitee have liability or obligation whatsoever to any member of the AAMC Group or any AAMC Indemnitee in the event that any Insurance Policy or other contract or policy of insurance shall be terminated or otherwise cease to be in effect for any reason, shall be unavailable or inadequate to cover any Liability of any member of the AAMC Group or any AAMC Indemnitee for any reason whatsoever or shall not be renewed or extended beyond the current expiration date.

 

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ARTICLE X

 

Termination

 

Section 10.01                      Termination.  This Agreement may be terminated by ALTISOURCE at any time, in its sole discretion, prior to the Distribution Date.

 

Section 10.02                      Effect of Termination.  In the event of any termination of this Agreement prior to the Distribution Date, neither Party (or any of its directors or officers) shall have any Liability or further obligation to the other Party.

 

ARTICLE XI

 

Miscellaneous

 

Section 11.01                      Counterparts; Entire Agreement; Corporate Power.  (a) This Agreement and each Ancillary Agreement may be executed in one or more counterparts, including by facsimile or by e-mail delivery of a “.pdf” format data file, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each party hereto or thereto and delivered to the other parties hereto or thereto.

 

(b)                                 This Agreement, the Ancillary Agreements and the exhibits, schedules and appendices hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the Parties with respect to the subject matter hereof other than those set forth or referred to herein or therein.

 

(c)                                  ALTISOURCE represents on behalf of itself and each other member of the ALTISOURCE Group, and AAMC represents on behalf of itself and each other member of the AAMC Group, as follows:

 

(i)                                     each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform each of this Agreement and each Ancillary Agreement to which it is a party and to consummate the transactions contemplated hereby and thereby; and

 

(ii)                                  this Agreement and each Ancillary Agreement to which it is a party has been (or, in the case of any Ancillary Agreement, will be on or prior to the Distribution Date) duly executed and delivered by it and constitutes, or will constitute, a valid and binding agreement of it enforceable in accordance with the terms thereof.

 

Section 11.02                      Governing Law.  This Agreement and, unless expressly provided therein, each Ancillary Agreement, shall be governed by and construed and interpreted in accordance with the internal laws of the State of New York applicable to contracts made and to be performed wholly in such State and irrespective of the choice of law principles of the State of New York, as to all matters (other than with respect to the corporate action of the ALTISOURCE

 

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board of directors attendant to the declaration and payment of the dividend of the AAMC Common Stock, which shall be governed by the laws of Luxembourg).  Notwithstanding the foregoing, in the event that a court of competent jurisdiction determines that the choice of New York law is unenforceable, this Agreement shall be governed by the laws of the U.S. Virgin Islands.

 

Section 11.03                      Assignability.  Except as set forth in any Ancillary Agreement, this Agreement and each Ancillary Agreement shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective successors and permitted assigns; provided, however, that no party hereto or thereto may assign its rights or delegate its obligations under this Agreement or any Ancillary Agreement without the express prior written consent of the other parties hereto or thereto.

 

Section 11.04                      Third Party Beneficiaries.  Except for the indemnification rights under this Agreement of any ALTISOURCE Indemnitee or AAMC Indemnitee in their respective capacities as such, (a) the provisions of this Agreement and each Ancillary Agreement are solely for the benefit of the parties hereto or thereto and are not intended to confer upon any Person except the parties hereto or thereto any rights or remedies hereunder or thereunder and (b) there are no third party beneficiaries of this Agreement or any Ancillary Agreement and neither this Agreement nor any Ancillary Agreement shall provide any third person with any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to this Agreement or any Ancillary Agreement.  Without limiting the generality of the foregoing, this Agreement is solely for the benefit of the parties hereto, and no current or former director, officer, employee or independent contractor of any member of the ALTISOURCE Group or any member of the AAMC Group or any other individual associated therewith (including any beneficiary or dependent thereof) shall be regarded for any purpose as a third-party beneficiary of this Agreement, and no provision of this Agreement shall create such rights in any such persons in respect of any benefits that may be provided, directly or indirectly, under any benefit plan, program, policy, agreement or arrangement of any member of the ALTISOURCE Group or any member of the AAMC Group.  No provision of this Agreement shall constitute a limitation on the rights to amend, modify or terminate any benefit plans, programs, policies, agreements or arrangements of any member of the ALTISOURCE Group or any member of the AAMC Group, and nothing herein shall be construed as an amendment to any such benefit plan, program, policy, agreement or arrangement.  No provision of this Agreement shall require any member of the ALTISOURCE Group or any member of the AAMC Group to continue the employment of any employee of any member of the ALTISOURCE Group or any member of the AAMC Group for any specific period of time following the Distribution Date.

 

Section 11.05                      Notices.  All notices or other communications under this Agreement or any Ancillary Agreement shall be in writing and shall be deemed to be duly given when (a) delivered in person, (b) sent by telecopier (except that, if not sent during normal business hours for the recipient, then at the opening of business on the next business day for the recipient) to the fax numbers set forth below or (c) deposited in the United States mail or private express mail, postage prepaid, addressed as follows:

 

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If to ALTISOURCE, to:

 

Altisource Portfolio Solutions S.A.

291, Route d’Arlon

L-1150 Luxembourg

Attn:  Corporate Secretary

Fax No.:  352-2744-9499

 

If to AAMC to:

 

Altisource Asset Management Corporation

14A & 14C Strand Street

Frederiksted, VI 00840

Attn:  Corporate Secretary

Fax No.:  770-644-7420

 

Either Party may, by notice to the other Party, change the address to which such notices are to be given.

 

Section 11.06                      Severability.  If any provision of this Agreement or any Ancillary Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or thereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby or thereby, as the case may be, is not affected in any manner materially adverse to either Party.  Upon any such determination, the Parties shall negotiate in good faith in an effort to agree upon a suitable and equitable provision to effect the original intent of the Parties.

 

Section 11.07                      Publicity.  Prior to the Distribution, each of AAMC and ALTISOURCE shall consult with each other prior to issuing any press releases or otherwise making public statements with respect to the Distribution or any of the other transactions contemplated hereby and prior to making any filings with any Governmental Authority with respect thereto.

 

Section 11.08                      Expenses.  Except as expressly set forth in this Agreement or in any Ancillary Agreement, all third party fees, costs and expenses paid or incurred in connection with the Separation and the Distribution will be paid by ALTISOURCE.

 

Section 11.09                      Headings.  The article, section and paragraph headings contained in this Agreement and in the Ancillary Agreements are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement or any Ancillary Agreement.

 

Section 11.10                      Survival of Covenants.  Except as expressly set forth in this Agreement or any Ancillary Agreement, (a) the covenants in this Agreement and the liabilities

 

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for the breach of any obligations in this Agreement and (b) any covenants, representations or warranties contained in any Ancillary Agreement and any liabilities for the breach of any obligations contained in any Ancillary Agreement, in each case, shall survive each of the Separation and the Distribution and shall remain in full force and effect.

 

Section 11.11                      Waivers of Default.  Waiver by any party hereto or to any Ancillary Agreement of any default by any other party hereto or thereto of any provision of this Agreement or such Ancillary Agreement shall not be deemed a waiver by the waiving party of any subsequent or other default.

 

Section 11.12                      Specific Performance.  Subject to Section 5.02 and notwithstanding the procedures set forth in Article VIII, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement or any Ancillary Agreement, the party or parties who are to be hereby or thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief of its rights under this Agreement or such Ancillary Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.  The other party or parties shall not oppose the granting of such relief.  The parties to this Agreement and any Ancillary Agreement agree that the remedies at law for any breach or threatened breach hereof or thereof, including monetary damages, are inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived.  Any requirements for the securing or posting of any bond with such remedy are waived.

 

Section 11.13                      Amendments.  No provisions of this Agreement or any Ancillary Agreement shall be deemed waived, amended, supplemented or modified by any party hereto or thereto, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the party against whom it is sought to enforce such waiver, amendment, supplement or modification.

 

Section 11.14                      Interpretation.  Words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other genders as the context requires.  The terms “hereof,” “herein, “and “herewith” and words of similar import, unless otherwise stated, shall be construed to refer to this Agreement or the applicable Ancillary Agreement as a whole (including all of the schedules, exhibits and appendices hereto or thereto) and not to any particular provision of this Agreement or such Ancillary Agreement.  Article, Section, Exhibit, Schedule and Appendix references are to the articles, sections, exhibits, schedules and appendices of or to this Agreement or the applicable Ancillary Agreement unless otherwise specified.  Any reference herein to this Agreement or any Ancillary Agreement, unless otherwise stated, shall be construed to refer to this Agreement or such Ancillary Agreement as amended, supplemented or otherwise modified from time to time, as permitted by Section 11.14 and the terms of any applicable provision in any Ancillary Agreement.  The word “including” and words of similar import when used in this Agreement (or the applicable Ancillary Agreement) shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified.  The word “or” shall not be exclusive.  There shall be no presumption of interpreting this Agreement or any provision hereof against the draftsperson of this Agreement or any such provision.

 

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Section 11.15                      Jurisdiction; Service of Process.  Any action or proceeding arising out of or relating to this Agreement or any Ancillary Agreement shall be brought in the courts of the State of New York located in the County of New York or in the United States District Court for the Southern District of New York (if any party to such action or proceeding has or can acquire jurisdiction), and each of the parties hereto or thereto irrevocably submits to the exclusive jurisdiction of each such court in any such action or proceeding, waives any objection it may now or hereafter have to venue or to convenience of forum, agrees that all claims in respect of the action or proceeding shall be heard and determined only in any such court and agrees not to bring any action or proceeding arising out of or relating to this Agreement or any Ancillary Agreement in any other court.  The parties to this Agreement or any Ancillary Agreement agree that any of them may file a copy of this paragraph with any court as written evidence of the knowing, voluntary and bargained agreement between the parties hereto and thereto irrevocably to waive any objections to venue or to convenience of forum.  Process in any action or proceeding referred to in the first sentence of this Section may be served on any party to this Agreement or any Ancillary Agreement anywhere in the world.  Notwithstanding the foregoing, in the event that a court of competent jurisdiction determines that the choice of New York jurisdiction in accordance with this Section 11.15 is unenforceable, any action or proceeding arising out of or relating to this Agreement or any Ancillary Agreement shall be brought in the courts of the U.S. Virgin Islands.

 

Section 11.16                      Waiver of Jury Trial.  EACH PARTY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, WAIVES (TO THE EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.

 

*                                         *                                         *                                         *                                         *

 

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IN WITNESS WHEREOF, the Parties have caused this Separation Agreement to be executed as of the date first written above by their duly authorized representatives.

 

 

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

 

 

 

 

 

 

By

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

ALTISOURCE ASSET MANAGEMENT CORPORATION

 

 

 

 

 

 

 

 

 

 

By

 

 

 

 

Name:

 

 

 

Title:

 



 

Schedule I
Separation Transactions

 

1.              Solutions dividends 100% of its equity interest in AAMC to ALTISOURCE.

 

2.              ALTISOURCE contributes to AAMC all of the assets making up the business of AAMC prior to the AAMC separation.

 

3.              ALTISOURCE dividends 100% of its equity interest in AAMC to the shareholders of record of ALTISOURCE.

 

4.              ALTISOURCE contributes $[    ] to AAMC.

 


EXHIBIT 10.1

 

SUPPORT SERVICES AGREEMENT, dated as of [    ], 2012, by and between ALTISOURCE SOLUTIONS S.à r.l., a private limited liability company organized under the laws of the Grand Duchy of Luxembourg (“ALTISOURCE” or together with its Affiliates “ALTISOURCE Group”) and ALTISOURCE ASSET MANAGEMENT CORPORATION, a corporation organized under the laws of the U.S. Virgin Islands (“AAMC” or together with its Affiliates “AAMC Group”).

 

RECITALS

 

WHEREAS, Altisource Portfolio Solutions S.A., the sole parent of ALTISOURCE (“ALTISOURCE Parent”), and AAMC are parties to a Separation Agreement dated as of [    ], 2012 (the “Separation Agreement”), pursuant to which ALTISOURCE Parent will (i) contribute the AAMC Business (as defined in the Separation Agreement) and (ii) distribute (the “Distribution”) to the holders of shares of ALTISOURCE Parent’s outstanding capital stock all of the outstanding capital stock of AAMC;

 

WHEREAS, following the Distribution, AAMC will operate the AAMC Business, and ALTISOURCE Parent will operate the Altisource Business (as defined in the Separation Agreement); and

 

WHEREAS, following the Distribution, AAMC desires to receive, and ALTISOURCE is willing to provide, or cause to be provided, certain services in connection with the AAMC Business for a limited period of time and subject to the terms and conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, the parties agree as follows:

 

1.             Definitions.

 

(a)           Capitalized terms used herein and not otherwise defined have the meanings given to such terms in the Separation Agreement.

 

(b)           For the purposes of this Agreement, the following terms shall have the following meanings:

 

Affiliate” means with respect to any Person (a “Principal”) (a) any directly or indirectly wholly-owned subsidiary of such Principal, (b) any Person that directly or indirectly owns 100% of the voting stock of such Principal or (c) a Person that controls, is controlled by or is under common control with such Principal.  As used herein, “control” of any entity means the possession, directly or indirectly, through one or more intermediaries, of the power to direct or cause the direction of the management or policies of such entity, whether through ownership of voting securities or other interests, by contract or otherwise.  Furthermore, with respect to any Person that is partially owned by such Principal and does not otherwise constitute an Affiliate (a “Partially-Owned Person”), such Partially-Owned Person shall be considered an Affiliate of such Principal for purposes of this Agreement if such Principal can, after making a good faith effort to do so, legally bind such Partially-Owned Person to this Agreement.

 

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Agreement” means this Support Services Agreement, including the Schedules hereto and any SOWs entered into pursuant to Section 2(b).

 

Distribution Date” means the effective date of the Distribution.

 

Fully Allocated Cost” means, with respect to provision of a Service, the all-in cost of the Providing Party’s provision of such Service, including a share of direct charges of the function providing such Service, and including allocable amounts to reflect compensation and benefits, technology expenses, occupancy and equipment expense, and third-party payments incurred in connection with the provision of such Service, but shall not include any Taxes payable as a result of performance of such Service.

 

Providing Party” means a party in its capacity of providing a Service hereunder.

 

Receiving Party” means a party in its capacity of receiving a Service hereunder.

 

Services” means the services set forth on Schedule I and the SOWs related thereto.

 

SOW” means a statement of work entered into between the parties on an as-needed basis to describe a particular service that is not covered specifically in a schedule hereto, but has been agreed to be provided pursuant to the terms of this Agreement except as otherwise set forth in such SOW.

 

Term” means, collectively, the Initial Term and any Renewal Term hereof.

 

2.             Provision of Services.

 

(a)           Generally.  Subject to the terms and conditions of this Agreement, ALTISOURCE shall provide, or cause to be provided, to AAMC and the AAMC Group, solely for the benefit of the AAMC Business in the ordinary course of business, the Services for periods commencing on the Distribution Date through the respective period specified in Schedule I (the “Service Period”), unless such period is earlier terminated in accordance with Section 5.

 

(b)           Statements of Work.  In addition to the services provided as set forth on Schedule I, from time to time during the term of this Agreement the parties shall have the right to enter into SOWs to set forth the terms of any related or additional services to be performed hereunder.  Any SOW shall be agreed to by each party, shall be in writing and (I) shall contain: (i) the identity of each of the Providing Party and the Receiving Party; (ii) a description of the Services to be performed thereunder; (iii) the applicable performance standard for the provision of such Service, if different from the Performance Standard; (iv) the amount, schedule and method of compensation for provision of such Service, which shall reflect the Fully Allocated Cost of such Service; and (II) may contain (i) the Receiving Party’s standard operating procedures for receipt of services similar to such Service, including operations, compliance requirements and related training schedules; (ii) information technology support requirements of the Receiving Party with respect to such Service; and (iii) training and support commitments with respect to such Service.  For the avoidance of doubt, the terms and conditions of this Agreement shall apply to any SOW.

 

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(c)           The Services shall be performed on Business Days during hours that constitute regular business hours for each of ALTISOURCE and AAMC, unless otherwise agreed. No Receiving Party, nor any member of its respective Group, shall resell, subcontract, license, sublicense or otherwise transfer any of the Services to any Person whatsoever or permit use of any of the Services by any Person other than by the Receiving Party and its Affiliates directly in connection with the conduct of the Receiving Party’s respective business in the ordinary course of business.

 

(d)           Notwithstanding anything to the contrary in this Section 2 (but subject to the second succeeding sentence), the Providing Party shall have the exclusive right to select, employ, pay, supervise, administer, direct and discharge any of its employees who will perform Services.  The Providing Party shall be responsible for paying such employees’ compensation and providing to such employees any benefits. With respect to each Service, the Providing Party shall use commercially reasonable efforts to have qualified individuals participate in the provision of such Service; provided, however, that (i) the Providing Party shall not be obligated to have any individual participate in the provision of any Service if the Providing Party determines that such participation would adversely affect the Providing Party or its Affiliates; and (ii) none of the Providing Party or its Affiliates shall be required to continue to employ any particular individual during the applicable Service Period.

 

(e)           Each of ALTISOURCE and AAMC acknowledges that the purpose of this Agreement is to enable it to receive the applicable Services on an interim basis.  Accordingly, at all times from and after the Distribution Date, each of ALTISOURCE and the ALTISOURCE Group, on the one hand, and AAMC and the AAMC Group, on the other hand, shall use commercially reasonable efforts to make or obtain, or cause to be made or obtained, any filings, registrations, approvals, permits or licenses; implement, or cause to be implemented, any systems; purchase, or cause to be purchased, any equipment; and take, or cause to be taken, any and all other actions, in each case necessary or advisable to enable it to provide for the Services for itself as soon as reasonably practical, and in any event prior to the expiration of the relevant Service Periods. For the avoidance of doubt, no Providing Party shall be required to provide any Service for a period longer than the applicable Service Period.

 

3.             Standard of Performance.

 

(a)           The Providing Party shall use commercially reasonable efforts to provide, or cause to be provided, to the Receiving Party and the Receiving Party’s Group, each Service in a manner generally consistent with the manner and level of care with which such Service was provided to the AAMC Business immediately prior to the Distribution Date (or, with respect to any Service not provided prior to the Distribution Date, generally consistent with the manner and level of care with which such Service is performed by the Providing Party for its own behalf) (the “Performance Standard”), unless otherwise specified in this Agreement.  Notwithstanding the foregoing, no Providing Party shall have any obligation hereunder to provide to any Receiving Party (i) any improvements, upgrades, updates, substitutions, modifications or enhancements to any of the Services unless otherwise specified in Schedule I, or (ii) any Service to the extent that the need for such Service arises, directly or indirectly, from the acquisition by the Receiving Party or any member of its Group, outside the ordinary course of business, of any assets of, or any equity interest in, any Person. The Receiving Party acknowledges and agrees

 

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that the Providing Party may be providing services similar to the Services provided hereunder and/or services that involve the same resources as those used to provide the Services to its and its Affiliates’ business units and other third parties, and, accordingly, the Providing Party reserves the right to modify any of the Services or the manner in which any of the Services are provided in the ordinary course of business; provided, however, that no such modification shall materially diminish the Services or have a materially adverse effect on the business of the Receiving Party.

 

(b)           The Providing Party will use commercially reasonable efforts not to establish priorities, as between the Providing Party and its Affiliates, on the one hand, and the Receiving Party and its Affiliates, on the other hand, as to the provision of any Service, and will use commercially reasonable efforts to provide the Services within a time frame so as not to materially disrupt the business of the Receiving Party.  Notwithstanding the foregoing, the Receiving Party acknowledges and agrees that, due to the nature of the Services, the Providing Party shall have the right to establish reasonable priorities as between the Providing Party and its Affiliates, on the one hand, and the Receiving Party and its Affiliates, on the other hand, as to the provision of any Service if the Providing Party determines that such priorities are necessary to avoid any adverse effect to the Providing Party and its Affiliates.  If any such priorities are established, the Providing Party shall advise the Receiving Party as soon as possible of any Services that will be delayed as a result of such prioritization, and will use commercially reasonable efforts to minimize the duration and impact of such delays.

 

4.             Fees for Services.

 

(a)           As compensation for a particular Service, the Receiving Party agrees to pay to the Providing Party the Fully Allocated Cost of providing the Services in accordance with this Agreement or, with respect to any SOW, the amount set forth therein.

 

(b)           The Providing Party shall submit statements of account to the Receiving Party on a monthly basis with respect to all amounts payable by the Receiving Party to the Providing Party hereunder (the “Invoiced Amount”), setting out the Services provided, and the amount billed to the Receiving Party as a result of providing such Services (together with, in arrears, any Commingled Invoice Statement (as defined below) and any other invoices for Services provided by third parties, in each case setting out the Services provided by the applicable third parties).  The Receiving Party shall pay the Invoiced Amount to the Providing Party by wire transfer of immediately available funds to an account or accounts specified by the Providing Party, or in such other manner as specified by the Providing Party in writing, or otherwise reasonably agreed to by the Parties, within 30 days of the date of delivery to the Receiving Party of the applicable statement of account; provided, that, in the event of any dispute as to an Invoiced Amount, the Receiving Party shall pay the undisputed portion, if any, of such Invoiced Amount in accordance with the foregoing, and shall pay the remaining amount, if any, promptly upon resolution of such dispute.

 

(c)           The Providing Party may engage third-party contractors, at a reasonable cost, to perform any of the Services, to provide professional services related to any of the Services, or to provide any secretarial, administrative, telephone, e-mail or other services necessary or ancillary to the Services (collectively, the “Ancillary Services”) (all of which may

 

4



 

be contracted for separately by the Providing Party on behalf of the Receiving Party) after giving notice to the Receiving Party, reasonably in advance of the commencement of such Services and Ancillary Services to be so provided by such contractors, of the identity of such contractors, each Service and Ancillary Service to be provided by such contractors and a good faith estimate of the cost (or formula for determining the cost) of the Services and Ancillary Services to be so provided by such contractors.  The Receiving Party may, in its sole discretion, decline to accept any such Services or Ancillary Services to be provided by any such contractors by giving prompt written notice to the Providing Party, provided that, if the Receiving Party so declines any Service or Ancillary Service from any such contractors, then thereafter, notwithstanding anything in this Agreement to the contrary, the Providing Party shall be excused from any obligation to provide such Service or Ancillary Service.

 

(d)           The Providing Party may cause any third party to which amounts are payable by or for the account of the Receiving Party in connection with Services or Ancillary Services to issue a separate invoice to the Receiving Party for such amounts.  The Receiving Party shall pay or cause to be paid any such separate third party invoice in accordance with the payment terms thereof. Any third party invoices that aggregate Services or Ancillary Services for the benefit of the Receiving Party and its Group, on the one hand, with services not for the benefit of Receiving Party and its Group, on the other hand (each, a “Commingled Invoice”), shall be separated by the Providing Party.  The Providing Party shall prepare a statement indicating that portion of the invoiced amount of such Commingled Invoice that is attributable to Services or the Ancillary Services rendered for the benefit of Receiving Party and its Group (the “Commingled Invoice Statement”).  The Providing Party shall deliver such Commingled Invoice Statement and a copy of the Commingled Invoice to Receiving Party.  The Receiving Party shall, within 30 days after the date of delivery to the Receiving Party of such Commingled Invoice Statement, pay or cause to be paid the amount set forth on such Commingled Invoice Statement to the third party, and shall deliver evidence of such payment to the Providing Party.  The Providing Party shall not be required to use its own funds for payments to any third party providing any of the Services or Ancillary Services or to satisfy any payment obligation of the Receiving Party or any of its Affiliates to any third party provider; provided, however, that in the event the Providing Party does use its own funds for any such payments to any third party, the Receiving Party shall reimburse the Providing Party for such payments as invoiced by the Providing Party within 30 days following the date of delivery of such invoice from the Providing Party.

 

(e)           The Providing Party may, in its discretion and without any liability, suspend any performance under this Agreement upon failure of the Receiving Party to make timely any payments required under this Agreement beyond the applicable cure date specified in Section 5(c)(8) of this Agreement.

 

(f)            In the event that the Receiving Party does not make any payment required under the provisions of this Agreement to the Providing Party when due in accordance with the terms hereof, the Providing Party may, at its option, charge the Receiving Party interest on the unpaid amount at the rate of 2% per annum above the prime rate charged by JPMorgan Chase Bank, N.A. (or its successor). In addition, the Receiving Party shall reimburse the Providing Party for all costs of collection of overdue amounts, including any reimbursement required under Section 4(d) and any reasonable attorneys’ fees.

 

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(g)           The Receiving Party acknowledges and agrees that it shall be responsible for any interest or other amounts in respect of any portion of any Commingled Invoice that the Receiving Party is required to pay pursuant to any Commingled Invoice Statement.

 

5.             Term; Termination.

 

(a)       Initial Term.  The initial term of this Agreement shall commence on the Distribution Date and shall continue in full force and effect subject to Section 5(c) hereof until the date that is two (2) years from the Distribution Date (the “Initial Term”), or the earlier date upon which this Agreement has been otherwise terminated in accordance with Section 5(c) hereof.

 

(b)           Renewal Term. This Agreement will automatically renew for successive terms of one (1) year (each, a “Renewal Term”) unless either Party decides that it does not wish to renew this Agreement or any particular Service or Additional Services set forth on a SOW hereunder before the expiration of the Initial Term or any Renewal Term, as applicable, by notifying the other Party in writing at least six (6) months before the completion of the Initial Term or Renewal Term, as applicable.

 

(c)           Termination.  During the term of this Agreement, this Agreement (or, with respect to items (1), (3), (4), (5), (7) and (8) below, the particular SOW only) may be terminated:

 

(1)         by a Receiving Party, if the Receiving Party is prohibited by law from receiving such Services from the Providing Party;

 

(2)         by a Receiving Party, in the event of a material breach of any covenant or representation and warranty contained herein or otherwise directly relating to or affecting the Services to be provided hereunder of the Providing Party that cannot be or has not been cured by the 30th day from the Receiving Party’s giving of written notice of such breach to the Providing Party;

 

(3)         by a Receiving Party, if the Providing Party fails to comply with all applicable regulations to which the Providing Party is subject directly relating to or affecting the Services to be performed hereunder, which failure cannot be or has not been cured by the 30th day from the Receiving Party’s giving of written notice of such failure to the Providing Party;

 

(4)         by a Receiving Party, if the Providing Party or any member of its Group providing Services hereunder is cited by a Governmental Authority for materially violating any law governing the performance of a Service, which violation cannot be or has not been cured by the 30th day from the Receiving Party’s giving of written notice of such citation to the Providing Party;

 

(5)         by a Receiving Party, if the Providing Party fails to meet any Performance Standard for a period of three consecutive months, which failure cannot be or has not been cured by the 30th day from the Receiving Party’s giving of written notice of such failure to the Providing Party;

 

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(6)         by either party, if the other party (A) becomes insolvent, (B) files a petition in bankruptcy or insolvency, is adjudicated bankrupt or insolvent or files any petition or answer seeking reorganization, readjustment or arrangement of its business under any law relating to bankruptcy or insolvency, or if a receiver, trustee or liquidator is appointed for any of the property of the other party and within 60 days thereof such party fails to secure a dismissal thereof or (C) makes any assignment for the benefit of creditors;

 

(7)         by a Receiving Party, in the event of any material infringement of such Receiving Party’s Intellectual Property (as defined in the Intellectual Property Agreement) by the Providing Party, which infringement cannot be or has not been cured by the 30th day from the Receiving Party’s giving of written notice of such event to the Providing Party;

 

(8)         by a Providing Party, if the Receiving Party fails to make any payment for any portion of Services the payment of which is not being disputed in good faith by the Receiving Party, which payment remains unmade by the 30th day from the Providing Party’s giving of written notice of such failure to the Receiving Party; and

 

(9)         by a Receiving Party, upon 60 days prior notice to the Providing Party, if the Receiving Party has determined to perform the respective Service or SOW on its own behalf.

 

(d)           Upon the early termination of any Service pursuant to Section 5(c)(9) or upon the expiration of the applicable Service Period, following the effective time of the termination, the Providing Party shall no longer be obligated to provide such Service; provided that the Receiving Party shall be obligated to reimburse the Providing Party for any reasonable out-of-pocket expenses or costs attributable to such termination.

 

(e)           No termination, cancellation or expiration of this Agreement shall prejudice the right of either party hereto to recover any payment due at the time of termination, cancellation or expiration (or any payment accruing as a result thereof), nor shall it prejudice any cause of action or claim of either party hereto accrued or to accrue by reason of any breach or default by the other party hereto.

 

(f)            Notwithstanding any provision herein to the contrary, Sections 4, 6 and 9 through 17 of this Agreement shall survive the termination of this Agreement.

 

6.             Miscellaneous.  Except as otherwise expressly set forth in this Agreement, the provisions in Article X of the Separation Agreement (which Article X addresses counterparts, entire agreement, corporate power, governing law, third party beneficiaries, notices, severability, expenses, headings, survival of covenants, waivers of default, specific performance, amendments, interpretation, jurisdiction and service of process) other than the provisions thereof relating to assignability and publicity, shall apply mutatis mutandis to this Agreement.

 

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7.             Intellectual Property.  Subject to the terms of the Intellectual Property Agreement, the Receiving Party grants to the Providing Party and its Affiliates a limited, non-exclusive, fully paid-up, nontransferable, revocable license, without the right to sublicense, for the term of this Agreement to use all intellectual property owned by or, to the extent permitted by the applicable license, licensed to the Receiving Party solely to the extent necessary for the Providing Party to perform its obligations hereunder.

 

8.             Cooperation; Access.

 

(a)           The Receiving Party shall, and shall cause its Group to, permit the Providing Party and its employees and representatives access, on Business Days during hours that constitute regular business hours for the Receiving Party and upon reasonable prior request, to the premises of the Receiving Party and its Group and such data, books, records and personnel designated by the Receiving Party and its Group as involved in receiving or overseeing the Services as the Providing Party may reasonably request for the purposes of providing the Services.  The Providing Party shall provide the Receiving Party, upon reasonable prior written notice, such documentation relating to the provision of the Services as the Receiving Party may reasonably request for the purposes of confirming any Invoiced Amount or other amount payable pursuant to any Commingled Invoice Statement or otherwise pursuant to this Agreement. Any documentation so provided to the Providing Party pursuant to this Section will be subject to the confidentiality obligations set forth in Section 9 of this Agreement.

 

(b)           Each party hereto shall designate a relationship manager (each, a “Relationship Executive”) to report and discuss issues with respect to the provision of the Services and successor relationship executives in the event that a designated Relationship Executive is not available to perform such role hereunder.  The initial Relationship Executive designated by ALTISOURCE shall be William B. Shepro and the initial Relationship Executive designated by AAMC shall be Ashish Pandey.  Either party may replace its Relationship Executive at any time by providing written notice thereof to the other party hereto.

 

9.             Confidentiality.  This Agreement and the information provided to each party hereunder shall be subject to the confidentiality provisions set forth in Sections 6.07 and 6.08 of the Separation Agreement.

 

10.          Dispute Resolution.  All disputes, controversies and claims directly or indirectly arising out of or in relation to this Agreement or the validity, interpretation, construction, performance, breach or enforceability of this Agreement shall be finally, exclusively and conclusively settled in accordance with the provisions of Article VII of the Separation Agreement, which shall apply mutatis mutandis to this Agreement.

 

11.          Warranties; Limitation of Liability; Indemnity.

 

(a)           The Receiving Party acknowledges that the Providing Party is not engaged in the business of providing services of the type being provided hereunder and that the Services and Ancillary Services to be provided by the Providing Party to the Receiving Party and the Receiving Party’s Group are being provided as an accommodation to the Receiving Party and the

 

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Receiving Party’s Group in connection with the transactions contemplated by the Separation Agreement.  All Services and Ancillary Services are provided “as is”.

 

(b)           Other than the statements expressly made by the Providing Party in this Agreement, the Providing Party makes no representation or warranty, express or implied, with respect to the Services and Ancillary Services and, except as provided in Subsection (c) of this Section 11, the Receiving Party hereby waives, releases and renounces all other representations, warranties, obligations and liabilities of the Providing Party, and any other rights, claims and remedies of the Receiving Party against the Providing Party, express or implied, arising by law or otherwise, with respect to any nonconformance, error, omission or defect in any of the Services or Ancillary Services, including (i) any implied warranty of merchantability or fitness for a particular purpose, (ii) any implied warranty of non-infringement or arising from course of performance, course of dealing or usage of trade and (iii) any obligation, liability, right, claim or remedy in tort, whether or not arising from the negligence of the Providing Party.

 

(c)           None of the Providing Party or any of its Affiliates or any of its or their respective officers, directors, employees, agents, attorneys-in-fact, contractors or other representatives shall be liable for any action taken or omitted to be taken by the Providing Party or such person under or in connection with this Agreement, except that the Providing Party shall be liable for direct damages or losses incurred by the Receiving Party or the Receiving Party’s Group arising out of the gross negligence or willful misconduct of the Providing Party or any of its Affiliates or any of its or their respective officers, directors, employees, agents, attorneys-in-fact, contractors or other representatives in the performance or nonperformance of the Services or Ancillary Services.

 

(d)           In no event shall the aggregate amount of all such damages or losses for which the Providing Party may be liable under this Agreement exceed the aggregate total sum received by the Providing Party for the Services; provided, that, no such cap shall apply to liability for damages or losses arising from or relating to breaches of Section 9 (relating to confidentiality), infringement of Intellectual Property or fraud or criminal acts.  Except as provided in Subsection (c) of this Section 11, none of the Providing Party or any of its Affiliates or any of its or their respective officers, directors, employees, agents, attorneys-in-fact, contractors or other representatives shall be liable for any action taken or omitted to be taken by, or the negligence, gross negligence or willful misconduct of, any third party.

 

(e)           Notwithstanding anything to the contrary herein, none of the Providing Party or any of its Affiliates or any of its or their respective officers, directors, employees, agents, attorneys-in-fact, contractors or other representatives shall be liable for damages or losses incurred by the Receiving Party or any of the Receiving Party’s Affiliates for any action taken or omitted to be taken by the Providing Party or such other person under or in connection with this Agreement to the extent such action or omission arises from actions taken or omitted to be taken by, or the negligence, gross negligence or willful misconduct of, the Receiving Party or any of the Receiving Party’s Affiliates.

 

(f)            No party hereto or any of its Affiliates or any of its or their respective officers, directors, employees, agents, attorneys-in-fact, contractors or other representatives shall in any event have any obligation or liability to the other party hereto or any such other person

 

9



 

whether arising in contract (including warranty), tort (including active, passive or imputed negligence) or otherwise for consequential, incidental, indirect, special or punitive damages, whether foreseeable or not, arising out of the performance of the Services or Ancillary Services or this Agreement, including any loss of revenue or profits, even if a party hereto has been notified about the possibility of such damages; provided, however , that the provisions of this Subsection (f) shall not limit the indemnification obligations hereunder of either party hereto with respect to any liability that the other party hereto may have to any third party not affiliated with any member of the Providing Party’s Group or the Receiving Party’s Group for any incidental, consequential, indirect, special or punitive damages.

 

(g)           The Receiving Party shall indemnify and hold the Providing Party and its Affiliates and any of its or their respective officers, directors, employees, agents, attorneys-in-fact, contractors or other representatives harmless from and against any and all damages, claims or losses that the Providing Party or any such other person may at any time suffer or incur, or become subject to, as a result of or in connection with this Agreement or the Services or Ancillary Services provided hereunder, except those damages, claims or losses incurred by the Providing Party or such other person arising out of the gross negligence or willful misconduct by the Providing Party or such other person.

 

(h)           Neither party hereto may bring an action against the other under this Agreement (whether for breach of contract, negligence or otherwise) more than six months after that party becomes aware of the cause of action, claim or event giving rise to the cause of action or claim or one year after the termination of this Agreement, whichever is shorter.

 

12.          Taxes.  Each party hereto shall be responsible for the cost of any sales, use, privilege and other transfer or similar taxes imposed upon that party as a result of the transactions contemplated hereby. Any amounts payable under this Agreement are exclusive of any goods and services taxes, value added taxes, sales taxes or similar taxes (“Sales Taxes”) now or hereinafter imposed on the performance or delivery of Services, and an amount equal to such taxes so chargeable shall, subject to receipt of a valid receipt or invoice as required below in this Section 12, be paid by the Receiving Party to the Providing Party in addition to the amounts otherwise payable under this Agreement.  In each case where an amount in respect of Sales Tax is payable by the Receiving Party in respect of a Service provided by the Providing Party, the Providing Party shall furnish in a timely manner a valid Sales Tax receipt or invoice to the Receiving Party in the form and manner required by applicable law to allow the Receiving Party to recover such tax to the extent allowable under such law.  Additionally, if the Providing Party is required to pay ‘gross-up’ on withholding taxes with respect to provision of the Services, such taxes shall be billed separately as provided above and shall be owing and payable by the Receiving Party.  Any applicable property taxes resulting from provision of the Services shall be payable by the party owing or leasing the asset subject to such tax.

 

13.          Public Announcements.  No party to this Agreement shall make, or cause to be made, any press release or public announcement or otherwise communicate with any news media in respect of this Agreement or the transactions contemplated by this Agreement without the prior written consent of the other party hereto unless otherwise required by law, in which case the party making the press release, public announcement or communication shall give the other party reasonable opportunity to review and comment on such and the parties shall

 

10



 

cooperate as to the timing and contents of any such press release, public announcement or communication.

 

14.          Assignment.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. No party hereto may assign either this Agreement or any of its rights, interests or obligations hereunder without the prior written approval of the other party hereto; provided, however, that either party may assign this Agreement without the consent of the other party to any third party that acquires, by any means, including by merger or consolidation, all or substantially all the consolidated assets of such party. Any purported assignment in violation of this Section 14 shall be void and shall constitute a material breach of this Agreement.

 

15.          Relationship of the Parties.  The parties hereto are independent contractors and none of the parties hereto is an employee, partner or joint venturer of the other.  Under no circumstances shall any of the employees of a party hereto be deemed to be employees of the other party hereto for any purpose.  Except as expressly provided in Section 4(d), none of the parties hereto shall have the right to bind the others to any agreement with a third party or to represent itself as a partner or joint venturer of the other by reason of this Agreement.

 

16.          Force Majeure.  Neither party hereto shall be in default of this Agreement by reason of its delay in the performance of, or failure to perform, any of its obligations hereunder if such delay or failure is caused by strikes, acts of God, acts of the public enemy, acts of terrorism, riots or other events that arise from circumstances beyond the reasonable control of that party.  During the pendency of such intervening event, each of the parties hereto shall take all reasonable steps to fulfill its obligations hereunder by other means and, in any event, shall upon termination of such intervening event, promptly resume its obligations under this Agreement.

 

17.          Waiver of Jury Trial.  EACH PARTY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO THE EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.

 

* * * * *

 

11



 

IN WITNESS WHEREOF, the parties have caused this Support Services Agreement to be executed as of the date first written above by their duly authorized representatives.

 

 

 

ALTISOURCE SOLUTIONS S.À R.L.

 

 

 

 

 

 

By

 

 

 

Name:

William B. Shepro

 

 

Title:

Manager

 

 

 

 

 

 

 

 

ALTISOURCE ASSET MANAGEMENT CORPORATION

 

 

 

 

 

 

 

By

 

 

 

Name:

 

 

Title:

 

[SUPPORT SERVICES AGREEMENT - AAMC]

 



 

SCHEDULE I

 

SERVICES

 

Services Provided

 

Service Period
(months)

 

Service Fee

FINANCE AND ACCOUNTING

Services Provided:

·      Corporate Accounting

·      Accounting Services and Reporting

·      Accounts Payables

·      Accounts Receivables

·      Corporate Secretary Support

·      Financial Reporting

·      Payroll Services

·      Tax

·      Treasury

 

24

 

Fully Allocated Cost of providing services.

HUMAN RESOURCES

Services Provided:

·      Benefits Administration

·      Employee and Contractor On-boarding

·      Employee Engagement

·      HR Administration

·      HR Strategy and Consulting

·      HRIS Administration and Reporting

·      Performance Management Platforms

·      Personnel Files

·      Recruiting

·      Salary Administration

·      Training and Compliance Support

 

24

 

Fully Allocated Cost of providing services.

 



 

Services Provided

 

Service Period
(months)

 

Service Fee

LAW

Services Provided:

·      Contract Review Services

·      Corporate Governance Services

·      Intellectual Property Maintenance Services

·      License Maintenance Services

·      Litigation Management

·      Regulatory Compliance Services

 

24

 

Fully allocated cost of providing services.

RISK MANAGEMENT AND SIX SIGMA

Services Provided:

·      Internal Audit

·      SOX Compliance and SAS 70

·      Business Continuity and Disaster Recovery Planning

·      Information Security

·      Loan Quality

·      Quality Assurance

·      Risk Management

·      Six Sigma

 

24

 

Fully Allocated Cost of providing services.

CONSUMER PSYCHOLOGY

Services Provided:

·      Scripting Support

·      Staffing Models

·      Training Development

·      User and Task Analysis

 

24

 

Fully Allocated Cost of providing services.

 



 

Services Provided

 

Service Period
(months)

 

Service Fee

CORPORATE SERVICES

Services Provided:

·      Facilities Management

·      Mailroom Support

·      Physical Security

·      Travel Services

 

24

 

Fully Allocated Cost of providing services.

VENDOR MANAGEMENT OPERATIONS

Services Provided:

·      Contract Negotiation

·      Vendor Compliance

·      Vendor Management Services

·      Insurance Risk Management

 

24

 

Fully Allocated Cost of providing services.

OTHER OPERATIONS SUPPORT

·      Capital Markets

·      Modeling

·      Quantitative Analytics

·      General Business Consulting

 

24

 

Fully Allocated Cost of providing services

 


EXHIBIT 10.2

 

 

 

TAX MATTERS AGREEMENT

 

By and Between

 

ALTISOURCE SOLUTIONS S.À R.L.

 

and

 

ALTISOURCE ASSET MANAGEMENT CORPORATION

 

Dated as of [    ], 2012

 

 

 



 

TABLE OF CONTENTS

 

 

Page

ARTICLE I DEFINITION OF TERMS

1

ARTICLE II ALLOCATION OF TAX LIABILITIES

5

SECTION 2.01 General Rule

5

SECTION 2.02 Allocations of Taxes

6

ARTICLE III PREPARATION AND FILING OF TAX RETURNS

6

SECTION 3.01 General

6

SECTION 3.02 Altisource’s Responsibility

6

SECTION 3.03 AAMC’s Responsibility

6

SECTION 3.04 Tax Accounting Practices

6

SECTION 3.05 Right to Review Tax Returns

7

SECTION 3.06 AAMC Carrybacks and Claims for Refund

7

SECTION 3.07 Apportionment of Earnings and Profits and Tax Attributes

8

ARTICLE IV TAX PAYMENTS

8

SECTION 4.01 Payment of Taxes With Respect to Tax Returns Reflecting Taxes of the Other Company

8

SECTION 4.02 Indemnification Payments

9

ARTICLE V TAX BENEFITS

9

SECTION 5.01 Tax Refunds in General

9

SECTION 5.02 Timing Differences and Reverse Timing Differences

9

SECTION 5.03 AAMC Carrybacks

10

ARTICLE VI ASSISTANCE AND COOPERATION

11

SECTION 6.01 Assistance and Cooperation

11

SECTION 6.02 Income Tax Return Information

11

SECTION 6.03 Reliance

12

ARTICLE VII TAX RECORDS

12

SECTION 7.01 Retention of Tax Records

12

SECTION 7.02 Access to Tax Records

12

ARTICLE VIII TAX CONTESTS

13

SECTION 8.01 Notice

13

SECTION 8.02 Control of Tax Contests

13

 

i



 

TABLE OF CONTENTS

(continued)

 

 

Page

ARTICLE IX EFFECTIVE DATE; TERMINATION OF PRIOR INTERCOMPANY TAX ALLOCATION AGREEMENTS

13

ARTICLE X SURVIVAL OF OBLIGATIONS

14

ARTICLE XI TREATMENT OF PAYMENTS; TAX GROSS UP

14

SECTION 11.01 Treatment of Tax Indemnity and Tax Benefit Payments

14

SECTION 11.02 Tax Gross Up

14

SECTION 11.03 Interest under This Agreement

14

ARTICLE XII DISAGREEMENTS

15

ARTICLE XIII LATE PAYMENTS

15

ARTICLE XIV EXPENSES

16

ARTICLE XV GENERAL PROVISIONS

16

SECTION 15.01 Addresses and Notices

16

SECTION 15.02 Binding Effect

16

SECTION 15.03 Waiver

16

SECTION 15.04 Severability

16

SECTION 15.05 Authority

17

SECTION 15.06 Further Action

17

SECTION 15.07 Integration

17

SECTION 15.08 Construction

17

SECTION 15.09 No Double Recovery

17

SECTION 15.10 Counterparts

17

SECTION 15.11 Governing Law; Jurisdiction

18

SECTION 15.12 Amendment

18

SECTION 15.13 AAMC Subsidiaries

18

SECTION 15.14 Successors

19

SECTION 15.15 Injunctions

19

 

ii



 

TAX MATTERS AGREEMENT (this “Agreement”) entered into as of [    ], 2012, by and between ALTISOURCE SOLUTIONS S.À R.L., a private limited liability company organized under the laws of the Grand Duchy of Luxembourg (including its parent, “Altisource”) and ALTISOURCE ASSET MANAGEMENT CORPORATION, a corporation organized under the laws of the U.S. Virgin Islands and a wholly-owned subsidiary of Altisource (“AAMC”).

 

WHEREAS, the board of directors of Altisource has determined that it is in the best interests of Altisource and its shareholders to separate the AAMC Business (as defined below) from Altisource.

 

WHEREAS, as of the date hereof, Altisource is the common parent of an affiliated group of corporations, including AAMC;

 

WHEREAS, Altisource and AAMC have entered into the Separation Agreement (as defined below).

 

WHEREAS, Altisource intends to distribute to shareholders of Altisource all the outstanding shares of AAMC Capital Stock (as defined below); and

 

WHEREAS the Companies (as defined below) desire to provide for and agree upon the allocation between the Companies of liabilities for Taxes (as defined below) arising prior to, as a result of, and subsequent to the Distribution (as defined below), and to provide for and agree upon other matters relating to Taxes.

 

NOW, THEREFORE, in consideration of the mutual agreements contained herein, the Companies hereby agree as follows:

 

ARTICLE I

 

Definition of Terms

 

For purposes of this Agreement (including the recitals hereof), the following terms have the following meanings, and capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Separation Agreement:

 

AAMC” shall have the meaning provided in the first sentence of this Agreement.

 

AAMC Business” means the asset management business, as defined in the Separation Agreement.

 

AAMC Capital Stock” means all classes or series of capital stock of AAMC, including (i) the AAMC Common Stock, and (ii) all options, warrants and other rights to acquire such capital stock.

 

AAMC Carryback” means any net operating loss, net capital loss, excess tax credit or other similar Tax item of any member of the AAMC Group that may or must be carried from one Tax Period to another prior Tax Period under the Code or other applicable Tax Law.

 



 

AAMC Common Stock” has the meaning set forth in the Separation Agreement.

 

AAMC Group” means AAMC and its Subsidiaries, if any, as determined immediately after the Distribution.

 

AAMC Separate Return” means any Separate Return of AAMC or any member of the AAMC Group.

 

Accountant” shall have the meaning set forth in Section 6.02(b).

 

Adjusted Party” shall have the meaning set forth in Section 5.02(b).

 

Adjustment Request” means any formal or informal claim or request filed with any Tax Authority, or with any administrative agency or court, for the adjustment, refund or credit of Taxes, including (a) any amended Tax Return claiming adjustment to the Taxes as reported on the Tax Return or, if applicable, as previously adjusted, (b) any claim for equitable recoupment or other offset and (c) any claim for refund or credit of Taxes previously paid.

 

Affiliate” means any entity that is directly or indirectly “controlled” by either the person in question or an Affiliate of such person.  For purposes of the definition of “Affiliate,” “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting securities, by contract or otherwise.

 

Agreement” shall have the meaning provided in the first sentence of this Agreement.

 

Altisource” shall have the meaning provided in the first sentence of this Agreement.

 

Altisource Group” means Altisource and its Subsidiaries, excluding any entity that is a member of the AAMC Group.

 

Altisource Separate Return” means any Separate Return of Altisource or any member of the Altisource Group.

 

Ancillary Agreements” means the Transition Services Agreement, the Tax Matters Agreement, the Services Agreement and any instruments, assignments and other documents and agreements executed in connection with the implementation of the transactions contemplated by the Separation Agreement, including Article II.

 

Base Rate” shall be the rate as set forth in Article XIII.

 

Closing Date” means the date of the Distribution.

 

Code” means the U.S. Internal Revenue Code of 1986, as amended.

 

2



 

Companies” means Altisource and AAMC, collectively, and “Company,” as the context requires, means either Altisource or AAMC.

 

Distribution” has the meaning set forth in the Separation Agreement.

 

Distribution-Related Proceeding” means any Tax Contest in which the IRS, another Tax Authority or any other party asserts a position that could reasonably be expected to increase the tax cost to Altisource or its shareholders of the Distribution.

 

Final Determination” means the final resolution of liability for any Tax, which resolution may be for a specific issue or adjustment or for a taxable period, (a) by IRS Form 870 or 870-AD (or any successor forms thereto), on the date of acceptance by or on behalf of the taxpayer, or by a comparable form under the laws of a State, local, or foreign taxing jurisdiction, except that a Form 870 or 870-AD or comparable form shall not constitute a Final Determination to the extent that it reserves (whether by its terms or by operation of law) the right of the taxpayer to file a claim for refund or the right of the Tax Authority to assert a further deficiency in respect of such issue or adjustment or for such taxable period (as the case may be); (b) by a decision, judgment, decree or other order by a court of competent jurisdiction, which has become final and unappealable; (c) by a closing agreement or accepted offer in compromise under Sections 7121 or 7122 of the Code, or a comparable agreement under the laws of a State, local or foreign taxing jurisdiction; (d) by any allowance of a refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods during which such refund may be recovered (including by way of offset) by the jurisdiction imposing such Tax; (e) by a final settlement resulting from a treaty-based competent authority determination; or (f) by any other final disposition, including by reason of the expiration of the applicable statute of limitations or by mutual agreement of the parties.

 

Group” means the Altisource Group or the AAMC Group, or both, as the context requires.

 

High-Level Dispute” means any dispute or disagreement in which the amount of the liability in dispute exceeds $2 million.

 

Indemnitee” shall have the meaning set forth in Section 11.03.

 

Indemnitor” shall have the meaning set forth in Section 11.03.

 

IRS” means the United States Internal Revenue Service.

 

Past Practices” shall have the meaning set forth in Section 3.04(a).

 

Payment Date” means (i) with respect to any Altisource income tax return, the due date for any required installment of estimated taxes determined under Section 6655 of the Code, the due date (determined without regard to extensions) for filing the return determined under Section 6072 of the Code, and the date the return is filed, and (ii) with respect to any other Tax Return, the corresponding dates determined under the applicable Tax Law.

 

3



 

Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof, without regard to whether any entity is treated as disregarded for U.S. Federal income tax purposes.

 

Post-Closing Period” means any Tax Period that, to the extent it relates to a member of the AAMC Group, begins after the Closing Date.

 

Pre-Closing Period” means any Tax Period that, to the extent it relates to a member of the AAMC Group, ends on or before the Closing Date.

 

Responsible Company” means, with respect to any Tax Return, the Company having responsibility for preparing and filing such Tax Return under this Agreement.

 

Separate Return” means (a) in the case of any Tax Return of any member of the AAMC Group (including any consolidated, combined or unitary return), any such Tax Return that does not include any member of the Altisource Group and (b) in the case of any Tax Return of any member of the Altisource Group (including any consolidated, combined or unitary return), any such Tax Return that does not include any member of the AAMC Group.

 

Separation Agreement” means the Separation Agreement by and between Altisource and AAMC dated as of [    ], 2012.

 

Signing Group” shall have the meaning set forth in Section 6.03.

 

Supplier Group” shall have the meaning set forth in Section 6.03.

 

Tax” or “Taxes” means any income, gross income, gross receipts, profits, capital stock, franchise, withholding, payroll, social security, workers compensation, unemployment, disability, property, ad valorem, stamp, excise, severance, occupation, service, sales, use, license, lease, transfer, import, export, value added, alternative minimum, estimated or other tax (including any fee, assessment or other charge in the nature of or in lieu of any tax) imposed by any governmental entity or political subdivision thereof, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

 

Tax Advisor” means a United States tax counsel or accountant of recognized national standing.

 

Tax Arbitrator” shall have the meaning set forth in Article XII.

 

Tax Arbitrator Dispute” shall have the meaning set forth in Article XII.

 

Tax Attribute” or “Attribute” means a net operating loss, net capital loss, unused investment credit, unused foreign tax credit, excess charitable contribution, general business credit, Tax basis or any other Tax Item that could reduce a Tax.

 

4



 

Tax Authority” means, with respect to any Tax, the governmental entity or political subdivision thereof that imposes such Tax, and the agency (if any) charged with the collection of such Tax for such entity or subdivision.

 

Tax Benefit” means any refund, credit or other reduction in otherwise required Tax payments.

 

Tax Contest” means an audit, review, examination or other administrative or judicial proceeding with the purpose or effect of redetermining Taxes (including any administrative or judicial review of any claim for refund).

 

Tax Detriment” means any increase in required Tax payments (or, without duplication, the reduction in any refund or credit).

 

Tax Item” means, with respect to any income Tax, any item of income, gain, loss, deduction or credit.

 

Tax Law” means the law of any governmental entity or political subdivision thereof relating to any Tax.

 

Tax Period” means, with respect to any Tax, the period for which the Tax is reported as provided under the Code or other applicable Tax Law.

 

Tax Records” means Tax Returns, Tax Return workpapers, documentation relating to any Tax Contests and any other books of account or records required to be maintained under the Code or other applicable Tax Laws or under any record retention agreement with any Tax Authority.

 

Tax Return” or “Return” means any report of Taxes due, any claim for refund of Taxes paid, any information return with respect to Taxes, or any other similar report, statement, declaration or document required to be filed under the Code or other Tax Law, including any attachments, exhibits or other materials submitted with any of the foregoing, and including any amendments or supplements to any of the foregoing.

 

Transactions” means the Distribution and the other transactions contemplated by the Separation Agreement.

 

ARTICLE II

 

Allocation of Tax Liabilities

 

SECTION 2.01    General Rule.  (a) Altisource Liability.  Altisource shall be liable for, and shall indemnify and hold harmless the AAMC Group from and against any liability for, Taxes that are allocated to Altisource under this Article II.

 

(b)           AAMC Liability.  AAMC shall be liable for, and shall indemnify and hold harmless the Altisource Group from and against any liability for, Taxes that are allocated to AAMC under this Article II.

 

5



 

SECTION 2.02    Allocations of Taxes.  Taxes shall be allocated as follows:

 

(a)           Allocation of Taxes to Altisource.  Altisource shall be responsible for any and all Taxes due or required to be reported on any Altisource Separate Return (including any increase in such Tax as a result of a Final Determination) and all Taxes of Altisource and its direct or indirect Subsidiaries (including the consolidated tax group for U.S. Federal income tax purposes for which Altisource Portfolio Solutions Inc. is the parent) for the Pre-Closing Taxes Period.

 

(b)           Allocation of Taxes to AAMC.  AAMC shall be responsible for any and all Taxes due or required to be reported on any AAMC Separate Return (including any increase in such Tax as a result of a Final Determination).

 

ARTICLE III

 

Preparation and Filing of Tax Returns

 

SECTION 3.01    General.  Except as otherwise provided in this Article III, Tax Returns shall be prepared and filed when due (including extensions) by the person obligated to file such Tax Returns under the Code or applicable Tax Law.  The Companies shall provide, and shall cause their Affiliates to provide, assistance and cooperation to one another in accordance with Article VI with respect to the preparation and filing of Tax Returns, including providing information required to be provided in Article VI.

 

SECTION 3.02    Altisource’s Responsibility.  Altisource has the exclusive obligation and right to prepare and file, or to cause to be prepared and filed:

 

(a)           Altisource income tax returns for all Tax Periods; and

 

(b)           Altisource Separate Returns and AAMC Separate Returns that Altisource reasonably determines are required to be filed by the Companies or any of their Affiliates for Tax Periods ending on, before or after the Closing Date (limited, in the case of AAMC Separate Returns, to such Returns as are filed on or prior to the Closing Date).

 

SECTION 3.03    AAMC’s Responsibility.  AAMC shall prepare and file, or shall cause to be prepared and filed, all AAMC Separate Returns other than those Tax Returns filed on or prior to the Closing Date.

 

SECTION 3.04    Tax Accounting Practices.  (a) General Rule.  Except as provided in Section 3.04(b), with respect to any Tax Return that AAMC has the obligation and right to prepare and file, or cause to be prepared and filed, under Section 3.03, for any Pre-Closing Period (and the portion, ending on the Closing Date, of any Tax Period that includes but does not end on the Closing Date), such Tax Return shall be prepared in accordance with past practices, accounting methods, elections or conventions (“Past Practices”) used by Altisource and its Subsidiaries with respect to the Tax Returns in question (unless there is no reasonable basis for the use of such Past Practices) solely to the extent a change in such Past Practice could reasonably be expected to cause Altisource to incur a Tax Detriment, and to the extent any items are not covered by Past Practices (or in the event that there is no reasonable basis for the use of

 

6



 

such Past Practices), in accordance with reasonable Tax accounting practices.  Except as provided in Section 3.04(b), Altisource shall prepare any Tax Return that it has the obligation and right to prepare and file, or cause to be prepared and filed, under Section 3.02, in accordance with reasonable Tax accounting practices selected by Altisource.

 

(b)           Reporting of Transaction Tax Items.  AAMC and Altisource shall file all Tax Returns consistent with the Tax treatment (including the value of AAMC) of the Transactions as determined by Altisource, unless there is no reasonable basis for such Tax treatment.

 

(c)           Detrimental Tax Positions.  Neither AAMC nor Altisource shall take a position on any Tax Return that is reasonably expected to cause a Tax Detriment to the other party without the consent of such party, not to be unreasonably withheld or delayed.

 

SECTION 3.05    Right to Review Tax Returns.  (a) General.  The Responsible Company with respect to any material Tax Return shall make such Tax Return and related workpapers available for review by the other Company, if requested, to the extent (i) such Tax Return relates to Taxes for which the requesting party would reasonably be expected to be liable, (ii) the requesting party would reasonably be expected to be liable in whole or in part for any additional Taxes owing as a result of adjustments to the amount of such Taxes reported on such Tax Return, (iii) such Tax Return relates to Taxes for which the requesting party would reasonably be expected to have a claim for Tax Benefits under this Agreement or (iv) the requesting party reasonably determines that it must inspect such Tax Return to confirm compliance with the terms of this Agreement.  The Responsible Company shall use reasonable best efforts to make such Tax Return available for review, including by delivering such materials to the requesting party at the requesting party’s expense, as required under this paragraph sufficiently in advance of the due date (including extensions) for filing of such Tax Return to provide the requesting party with a meaningful opportunity to analyze and comment on such Tax Return.

 

(b)           Execution of Returns Prepared by Other Party.  In the case of any Tax Return that is required to be prepared and filed by the Responsible Company under this Agreement and that is required by law to be signed by the other Company (or by its authorized representative), the Company that is legally required to sign such Tax Return shall be required to sign such Tax Return unless there is no reasonable basis for the Tax treatment of an item reported on the Tax Return or the Tax treatment of an item reported on the Tax Return should, in the opinion (reasonably acceptable in form and substance to the Responsible Company) of a Tax Advisor, subject the other Company (or its authorized representatives) to material penalties.

 

SECTION 3.06    AAMC Carrybacks and Claims for Refund.  (a) AAMC hereby agrees that, unless Altisource consents in writing, no Adjustment Request with respect to any Tax Return for the Pre-Closing Period shall be filed; provided, however, that upon the reasonable request of AAMC, Altisource shall use reasonable best efforts to make, at AAMC’s expense, an Adjustment Request claiming a refund of Taxes for the Pre-Closing Period with respect to an AAMC Carryback arising in a Post-Closing Period related to U.S. Federal or State Taxes (any such Adjustment Request to be prepared and filed by Altisource) where, in Altisource’s reasonable discretion, such Adjustment Request will not materially impair the ability of

 

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Altisource to use Tax Attributes.  Altisource shall not take any action that would impair the use of any Tax Attribute by a member of the AAMC Group without the prior written consent of AAMC.

 

(b)           AAMC, upon the request of Altisource, agrees to repay the amount paid over to AAMC (plus any penalties, interest or other charges imposed by the relevant Tax Authority) in the event Altisource is required to repay such refund to such Tax Authority.

 

SECTION 3.07    Apportionment of Earnings and Profits and Tax Attributes.  Altisource shall in good faith advise AAMC in writing of the portion, if any, of any earnings and profits, Tax Attributes or other consolidated, combined or unitary attributes that Altisource determines shall be allocated or apportioned to the AAMC Group under applicable law.  AAMC and all members of the AAMC Group shall prepare all Tax Returns in accordance with such written notice.  As soon as practicable after receipt of a written request from AAMC, Altisource shall provide copies of any studies, reports and workpapers supporting such allocations and apportionments.  In the event of a subsequent adjustment by the applicable Tax Authority to such allocations and apportionments, Altisource shall promptly notify AAMC in writing of such adjustment.  For the avoidance of doubt, Altisource shall not be liable to any member of the AAMC Group for any failure of any determination under this Section 3.07 to be accurate under applicable Tax Law.

 

ARTICLE IV

 

Tax Payments

 

SECTION 4.01    Payment of Taxes With Respect to Tax Returns Reflecting Taxes of the Other Company.  In the case of any Tax Return reflecting Taxes allocated hereunder to the Company that is not the Responsible Company:

 

(a)           Computation and Payment of Tax Due.  At least 3 business days prior to any Payment Date for any Tax Return, the Responsible Company shall compute the amount of Tax required to be paid to the applicable Tax Authority (taking into account the requirements of Section 3.04 relating to consistent accounting practices) with respect to such Tax Return on such Payment Date.  The Responsible Company shall pay such amount to such Tax Authority on or before such Payment Date (and provide notice and proof of payment to the other Company).

 

(b)           Computation and Payment of Liability With Respect to Tax Due.  Within 30  days following the earlier of (i) the due date (including extensions) for filing any such Tax Return (excluding any Tax Return with respect to payment of estimated Taxes or Taxes due with a request for extension of time to file) or (ii) the date on which such Tax Return is filed, if Altisource is the Responsible Company, then AAMC shall pay to Altisource the amount allocable to the AAMC Group under the provisions of Article II, and if AAMC is the Responsible Company, then Altisource shall pay to AAMC the amount allocable to the Altisource Group under the provisions of Article II, in each case, plus interest computed at the Base Rate on the amount of the payment based on the number of days from the earlier of (A) the due date of the Tax Return (including extensions) or (B) the date on which such Tax Return is filed to the date of payment.

 

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(c)           Adjustments Resulting in Underpayments.  In the case of any adjustment pursuant to a Final Determination with respect to any such Tax Return, the Responsible Company shall pay to the applicable Tax Authority when due any additional Tax due with respect to such Tax Return required to be paid as a result of such adjustment pursuant to a Final Determination.  The Responsible Company shall compute the amount attributable to the AAMC Group in accordance with Article II and AAMC shall pay to Altisource any amount due Altisource (or Altisource shall pay AAMC any amount due AAMC) under Article II within 30  days from the later of (i) the date the additional Tax was paid by the Responsible Company or (ii) the date of receipt of a written notice and demand from the Responsible Company for payment of the amount due, accompanied by evidence of payment and a statement detailing the Taxes paid and describing in reasonable detail the particulars relating thereto.  Any payments required under this Section 4.01(c) shall include interest computed at the Base Rate based on the number of days from the date the additional Tax was paid by the Responsible Company to the date of the payment under this Section 4.01(c).

 

SECTION 4.02    Indemnification Payments.  All indemnification payments under this Agreement shall be made by Altisource directly to AAMC and by AAMC directly to Altisource; provided, however, that if the Companies mutually agree with respect to any such indemnification payment, any member of the Altisource Group, on the one hand, may make such indemnification payment to any member of the AAMC Group, on the other hand, and vice versa.

 

ARTICLE V

 

Tax Benefits

 

SECTION 5.01  Tax Refunds in General.  Except as set forth below, Altisource shall be entitled to any refund (and any interest thereon received from the applicable Tax Authority) of Taxes for which Altisource is liable hereunder, AAMC shall be entitled to any refund (and any interest thereon received from the applicable Tax Authority) of Taxes for which AAMC is liable hereunder and a Company receiving a refund to which another Company is entitled hereunder shall pay over such refund to such other Company within 30 days after such refund is received (together with interest computed at the Base Rate based on the number of days from the date the refund was received to the date the refund was paid over).

 

SECTION 5.02    Timing Differences and Reverse Timing Differences.  (a) If as a result of an adjustment pursuant to a Final Determination to any Taxes for which a member of the Altisource Group is liable hereunder (or Tax Attribute of a member of the Altisource Group) a member of the AAMC Group could realize a current or future Tax Benefit that it could not realize but for such adjustment (determined on a with and without basis), or if as a result of an adjustment pursuant to a Final Determination to any Taxes for which a member of the AAMC Group is liable hereunder (or Tax Attribute of a member of the AAMC Group) a member of the Altisource Group could realize a current or future Tax Benefit that it could not realize but for such adjustment (determined on a with and without basis), AAMC or Altisource, as the case may be, shall make a payment to either Altisource or AAMC, as appropriate, within 30 days following the date of a written notice and demand from Altisource or AAMC, as appropriate, for payment of the amount due, accompanied by evidence of such adjustment and describing in reasonable detail the particulars relating thereto.  Any payment required under this Section

 

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5.02(a) shall include interest on such payment computed at the Base Rate based on the number of days from the date of such written notice to the date of payment under this Section 5.02(a).  In the event that Altisource or AAMC disagrees with any such calculation described in this Section 5.02(a), Altisource or AAMC shall so notify the other Company in writing within 30 days of receiving the written calculation set forth above in this Section 5.02(a).  Altisource and AAMC shall endeavor in good faith to resolve such disagreement.

 

(b)           If a member of the AAMC Group actually realizes in cash pursuant to a Final Determination any Tax Detriment as a result of an adjustment pursuant to a Final Determination to any Taxes for which a member of the Altisource Group is liable hereunder (or Tax Attribute of a member of the Altisource Group) (in such circumstance, Altisource being the “Adjusted Party”) and such Tax Detriment would not have arisen but for such adjustment (determined on a with and without basis), or if a member of the Altisource Group actually realizes in cash pursuant to a Final Determination any Tax Detriment as a result of an adjustment pursuant to a Final Determination to any Taxes for which a member of the AAMC Group is liable hereunder (or Tax Attribute of a member of the AAMC Group) (in such circumstance, AAMC being the “Adjusted Party”) and such Tax Detriment would not have arisen but for such adjustment (determined on a with and without basis), the Adjusted Party shall make a payment to the other party within 30 days following the later of such actual realization of the Tax Detriment and the Adjusted Party’s actual realization of the corresponding Tax Benefit, in an amount equal to the lesser of such Tax Detriment actually realized in cash and the Tax Benefit, if any, actually realized in cash by the Adjusted Party pursuant to such adjustment (which would not have arisen but for such adjustment), plus interest on such amount computed at the Base Rate based on the number of days from the later of the date of such actual realization of the Tax Detriment and the Adjusted Party’s actual realization of the corresponding Tax Benefit to the date of payment of such amount under this Section 5.02(b).  No later than 30 days after a Tax Detriment described in this Section 5.02(b) is actually realized in cash by a member of the Altisource Group or a member of the AAMC Group, Altisource (if a member of the Altisource Group actually realizes such Tax Detriment) or AAMC (if a member of the AAMC Group actually realizes such Tax Detriment) shall provide the other Company with a written calculation of the amount payable pursuant to this Section 5.02(b).  In the event that Altisource or AAMC disagrees with any such calculation described in this Section 5.02(b), Altisource or AAMC shall so notify the other Company in writing within 30 days of receiving the written calculation set forth above in this Section 5.02(b).  Altisource and AAMC shall endeavor in good faith to resolve such disagreement.

 

SECTION 5.03    AAMC Carrybacks.  AAMC shall be entitled to any refund actually received in cash that is attributable to, and would not have arisen but for (determined on a with and without basis), an AAMC Carryback pursuant to the proviso set forth in Section 3.06, provided that the refund is a refund of Taxes for the Tax Period to which the AAMC Carryback is carried or the first or second immediately following Tax Periods.  Any such payment of such refund made by Altisource to AAMC pursuant to this Section 5.03 shall be recalculated in light of any Final Determination (or any other facts that may arise or come to light after such payment is made, such as a carryback or carryforward of an Altisource Group Tax Attribute to a Tax Period in respect of which such refund is received) that would affect the amount to which AAMC is entitled, and an appropriate adjusting payment shall be made by AAMC to Altisource such that the aggregate amounts paid pursuant to this Section 5.03 equals such recalculated

 

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amount (with interest computed at the Base Rate based on the number of days from the date of the actual receipt of such refund to the date of payment of such amount under this Section 5.03).

 

ARTICLE VI

 

Assistance and Cooperation

 

SECTION 6.01    Assistance and Cooperation.  (a) After the Distribution, the Companies shall cooperate (and cause their respective Affiliates to cooperate) with each other and with each other’s agents, including accounting firms and legal counsel, in connection with Tax matters relating to the Companies and their Affiliates including (i) preparation and filing of Tax Returns, (ii) determining the liability for and amount of any Taxes due (including estimated Taxes) or the right to and amount of any refund of Taxes, (iii) examinations of Tax Returns and (iv) any administrative or judicial proceeding in respect of Taxes assessed or proposed to be assessed.  Such cooperation shall include making all information and documents in their possession relating to the other Company and its Affiliates available to such other Company as provided in Article VII.  Each of the Companies shall also make available to the other, as reasonably requested and available, personnel (including officers, directors, employees and agents of the Companies or their respective Affiliates) responsible for preparing, maintaining and interpreting information and documents relevant to Taxes, and personnel reasonably required as witnesses or for purposes of providing information or documents in connection with any administrative or judicial proceedings relating to Taxes.

 

(b)           Any information or documents provided under this Article VI shall be kept confidential by the Company receiving the information or documents, except as may otherwise be necessary in connection with the filing of Tax Returns or in connection with any administrative or judicial proceedings relating to Taxes.

 

SECTION 6.02    Income Tax Return Information.  AAMC and Altisource acknowledge that time is of the essence in relation to any request for information, assistance or cooperation made by Altisource or AAMC pursuant to Section 6.01 or this Section 6.02.  AAMC and Altisource acknowledge that failure to conform to the deadlines set forth herein or reasonable deadlines otherwise set by Altisource or AAMC could cause irreparable harm.

 

(a)           Each Company shall provide to the other Company information and documents relating to its Group required by the other Company to prepare Tax Returns.  Any information or documents the Responsible Company requires to prepare such Tax Returns shall be provided in such form as the Responsible Company reasonably requests and in sufficient time for the Responsible Company to file such Tax Returns on a timely basis.

 

(b)           In the event that a party fails to provide any information requested by the other party pursuant to Section 6.01 or this Section 6.02, within the deadlines as set forth herein, a party shall have the right to engage a nationally recognized public accounting firm of its choice (the “Accountant”), in its sole and absolute discretion, to gather such information directly from the other party.  The parties agree, and will cause all other members of their Group to agree, upon 10 business days’ notice, in the case of a failure to provide information pursuant to Section 6.01 or this Section 6.02, to permit any such Accountant full access to all records or other

 

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information requested by such Accountant during reasonable business hours.  Such other party agrees promptly pay all reasonable costs and expenses incurred by the requesting party in connection with the engagement of such Accountant.

 

SECTION 6.03    Reliance.  If any member of one Group (the “Supplier Group”) supplies information to a member of the other Group (the “Signing Group”) in connection with a Tax liability and an officer of a member of the Signing Group signs a statement or other document under penalties of perjury in reliance upon the accuracy of such information, then upon the written request of such member of the Signing Group identifying the information being so relied upon, the chief financial officer of the Supplier Group (or any officer of the Supplier Group as designated by the chief financial officer of the Supplier Group) shall certify in writing that to his or her knowledge (based upon consultation with appropriate employees) the information so supplied is accurate and complete.  The Company that is a member of the Supplier Group agrees to indemnify and hold harmless each member of the Signing Group and its directors, officers and employees from and against any fine, penalty or other cost or expense of any kind attributable to a member of the Supplier Group having supplied, pursuant to this Article VI, a member of the Signing Group with inaccurate or incomplete information in connection with a Tax liability.

 

ARTICLE VII

 

Tax Records

 

SECTION 7.01    Retention of Tax Records.  Each Company shall preserve and keep all Tax Records exclusively relating to the assets and activities of its Group for Pre-Closing Periods (and the portion, ending on the Closing Date, of any Tax Period that includes but does not end on the Closing Date), and Altisource shall preserve and keep all other Tax Records relating to Taxes of the Groups for Pre-Closing Periods until the later of (i) the expiration of any applicable statutes of limitation, and (ii) 7 years after the Closing Date.  After such earlier date, each Company may dispose of such records upon 90 days’ prior written notice to the other Company.  If, prior to the expiration of the applicable statute of limitation or such seven-year period, a Company reasonably determines that any Tax Records that it would otherwise be required to preserve and keep under this Article VII are no longer material in the administration of any matter under the Code or other applicable Tax Law and the other Company agrees, then such first Company may dispose of such records upon 90 days’ prior notice to the other Company.  Any notice of an intent to dispose given pursuant to this Section 7.01 shall include a list of the records to be disposed of describing in reasonable detail each file, book or other record accumulation being disposed.  The notified Company shall have the opportunity, at its cost and expense, to copy or remove, within such 90-day period, all or any part of such Tax Records.

 

SECTION 7.02    Access to Tax Records.  The Companies and their respective Affiliates shall make available to each other for inspection and copying  (or delivery, at the requesting party’s expense) during normal business hours upon reasonable notice all Tax Records in their possession to the extent reasonably required by the other Company in connection with the preparation of Tax Returns, audits, litigation or the resolution of items under this Agreement.

 

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ARTICLE VIII

 

Tax Contests

 

SECTION 8.01    Notice.  Each of the parties shall provide prompt notice to the other party of any written communication from a Tax Authority regarding any pending or threatened Tax audit, assessment or proceeding or other Tax Contest of which it becomes aware related to Taxes for Tax Periods for which it is indemnified by the other party hereunder.  Such notice shall attach copies of the pertinent portion of any written communication from a Tax Authority and contain factual information (to the extent known) describing any asserted Tax liability in reasonable detail and shall be accompanied by copies of any notice and other documents received from any Tax Authority in respect of any such matters.

 

SECTION 8.02    Control of Tax Contests.  (a) Altisource Returns.  In the case of any Tax Contest with respect to any Altisource income tax return, Altisource shall have exclusive control over the Tax Contest, including exclusive authority with respect to any settlement of Tax liability arising from such Tax Contest.  Altisource shall keep AAMC informed in a timely manner regarding such Tax Contests to the extent relating to the AAMC Business, the AAMC Group or the assets transferred to AAMC pursuant to the Transactions insofar as such Tax Contests would reasonably be expected to affect the AAMC Group.

 

(b)           AAMC Separate Returns.  In the case of any Tax Contest with respect to an AAMC Separate Return, AAMC shall have exclusive control over the Tax Contest, including exclusive authority with respect to any settlement of Tax liability arising from such Tax Contest.

 

(c)           Distribution-Related Proceedings.  In the event of any Distribution-Related Proceeding as a result of which AAMC could reasonably be expected to become liable for any amounts that Altisource is entitled to control under this Article VIII, (A) Altisource shall consult with AAMC reasonably in advance of taking any significant action in connection with such Distribution-Related Proceeding, (B) Altisource shall consult with AAMC and offer AAMC a reasonable opportunity to comment before submitting any written materials prepared or furnished in connection with such Distribution-Related Proceeding, (C) Altisource shall defend such Distribution-Related Proceeding diligently and in good faith and (D) Altisource shall provide AAMC copies of any written materials relating to such Distribution-Related Proceeding received from the relevant Tax Authority.

 

ARTICLE IX

 

Effective Date; Termination of Prior Intercompany Tax Allocation Agreements

 

This Agreement shall be effective as of the date hereof.  As of the date hereof, all prior intercompany Tax allocation agreements or arrangements relating to one or more members of the Altisource Group, on the one hand, and one or more members of the AAMC Group, on the other hand, shall be terminated, and no member of any Group shall have any right or obligation in respect of any member of the other Group thereunder.

 

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ARTICLE X

 

Survival of Obligations

 

The representations, warranties, covenants and agreements set forth in this Agreement shall be unconditional and absolute and shall remain in effect without limitation as to time.

 

ARTICLE XI

 

Treatment of Payments; Tax Gross Up

 

SECTION 11.01    Treatment of Tax Indemnity and Tax Benefit Payments.  In the absence of any change in Tax treatment under applicable Tax Law:

 

(a)           any Tax indemnity payments made by a Company under Article IV shall be reported for Tax purposes by the payor and the recipient as distributions or capital contributions, as appropriate, occurring immediately before the Distribution or as payments of an assumed or retained liability, and

 

(b)           any Tax Benefit payments made by a Company under Article V, shall be reported for Tax purposes by the payor and the recipient as distributions or capital contributions, as appropriate, occurring immediately before the Distribution or as payments of an assumed or retained liability.

 

SECTION 11.02    Tax Gross Up.  If, notwithstanding the manner in which Tax indemnity payments and Tax Benefit payments were reported, there is an adjustment to the Tax liability of a Company as a result of its receipt of a payment pursuant to this Agreement, such payment shall be appropriately adjusted so that the amount of such payment, reduced by the amount of all income Taxes payable with respect to the receipt thereof (but taking into account all correlative Tax Benefits resulting from the payment of such income Taxes), shall equal the amount of the payment that the Company receiving such payment would otherwise be entitled to receive pursuant to this Agreement.

 

SECTION 11.03    Interest under This Agreement.  Anything herein to the contrary notwithstanding, to the extent one Company (“Indemnitor”) makes a payment of interest to another Company (“Indemnitee”) under this Agreement with respect to the period from the date that the Indemnitee made a payment of Tax to a Tax Authority to the date that the Indemnitor reimbursed the Indemnitee for such Tax payment, the interest payment shall be treated as interest expense to the Indemnitor (deductible to the extent provided by law) and as interest income by the Indemnitee (includible in income to the extent provided by law).  The amount of the payment shall not be adjusted under Section 11.02 to take into account any associated Tax Benefit to the Indemnitor or Tax Detriment to the Indemnitee.

 

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ARTICLE XII

 

Disagreements

 

The Companies mutually desire that collaboration will continue between them.  Accordingly, they will try, and they will cause their respective Group members to try, to resolve in an amicable manner all disagreements and misunderstandings connected with their respective rights and obligations under this Agreement, including any amendments hereto.  In furtherance thereof, in the event of any dispute or disagreement (other than a High-Level Dispute) (a “Tax Arbitrator Dispute”) between the Companies as to the interpretation of any provision of this Agreement or the performance of obligations hereunder, the Tax departments of the Companies shall negotiate in good faith to resolve the Tax Arbitrator Dispute.  If such good faith negotiations do not resolve the Tax Arbitrator Dispute, then the matter, upon written request of either Company, will be referred to a tax lawyer or accountant acceptable to each of the Companies (the “Tax Arbitrator”).  The Tax Arbitrator may, in its discretion, obtain the services of any third-party appraiser, accounting firm or consultant that the Tax Arbitrator deems necessary to assist it in resolving such disagreement.  The Tax Arbitrator shall furnish written notice to the Companies of its resolution of any such Tax Arbitrator Dispute as soon as practical, but in any event no later than 45 days after its acceptance of the matter for resolution.  Any such resolution by the Tax Arbitrator will be conclusive and binding on the Companies.  Following receipt of the Tax Arbitrator’s written notice to the Companies of its resolution of the Tax Arbitrator Dispute, the Companies shall each take or cause to be taken any action necessary to implement such resolution of the Tax Arbitrator.  In accordance with Article XIV, each Company shall pay its own fees and expenses (including the fees and expenses of its representatives) incurred in connection with the referral of the matter to the Tax Arbitrator.  All fees and expenses of the Tax Arbitrator in connection with such referral shall be shared equally by the Companies.  Any High-Level Dispute shall be resolved pursuant to the procedures set forth in [Article VII] of the Separation Agreement.  Nothing in this Article XII will prevent either Company from seeking injunctive relief if any delay resulting from the efforts to resolve the Tax Arbitrator Dispute through the Tax Arbitrator (or any delay resulting from the efforts to resolve any High-Level Dispute through the procedures set forth in [Article VII] of the Separation Agreement) could result in serious and irreparable injury to either Company.

 

ARTICLE XIII

 

Late Payments

 

Any amount owed by one party to another party under this Agreement that is not paid when due shall bear interest at three (3) month London Interbank Offer Rate (LIBOR), compounded semiannually, from the due date of the payment to the date paid.  To the extent interest required to be paid under this Article XIII duplicates interest required to be paid under any other provision of this Agreement, interest shall be computed at the higher of the interest rate provided under this Article XIII or the interest rate provided under such other provision.

 

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ARTICLE XIV

 

Expenses

 

Except as otherwise provided in this Agreement, each party and its Affiliates shall bear their own expenses incurred in connection with preparation of Tax Returns, Tax Contests, and other matters related to Taxes under the provisions of this Agreement.

 

ARTICLE XV

 

General Provisions

 

SECTION 15.01    Addresses and Notices.  All notices or other communications under this Agreement shall be in writing and shall be deemed to be duly given when (a) delivered in person or (b) deposited in the United States mail or private express mail, postage prepaid, addressed as follows:

 

If to Altisource, to:

Altisource Solutions S.à r.l.

291, Route d’Arlon

L-1150 Luxembourg

Attn:  Corporate Secretary

Fax No.:  352-2744-9499

 

If to AAMC to:

Altisource Asset Management Corporation

402 Strand St.

Frederiksted, VI 00840-3531

Attn:  Corporate Secretary

Fax No.:  [    ]

 

Either party may, by notice to the other party, change the address to which such notices are to be given.

 

SECTION 15.02    Binding Effect.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns.

 

SECTION 15.03    Waiver.  Waiver by any party hereto of any default by any other party hereto of any provision of this Agreement shall not be deemed a waiver by the waiving party of any subsequent or other default.

 

SECTION 15.04    Severability.  If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially

 

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adverse to either party.  Upon any such determination, the parties shall negotiate in good faith in an effort to agree upon a suitable and equitable provision to effect the original intent of the parties.

 

SECTION 15.05    Authority.  Each of the parties represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate or other action, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equity principles.

 

SECTION 15.06    Further Action.  The parties shall execute and deliver all documents, provide all information, and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement, including the execution and delivery to the other parties and their Affiliates and representatives of such powers of attorney or other authorizing documentation as is reasonably necessary or appropriate in connection with Tax Contests (or portions thereof) under the control of such other parties in accordance with Article VIII.

 

SECTION 15.07    Integration.  This Agreement, together with each of the exhibits and schedules appended hereto, constitutes the final agreement between the parties, and is the complete and exclusive statement of the parties’ agreement on the matters contained herein.  All prior and contemporaneous negotiations and agreements between the parties with respect to the matters contained herein are superseded by this Agreement, as applicable.  In the event of any inconsistency between this Agreement and the Separation Agreement, or any other agreements relating to the transactions contemplated by the Separation Agreement, with respect to matters addressed herein, the provisions of this Agreement shall control.

 

SECTION 15.08    Construction.  The language in all parts of this Agreement shall in all cases be construed according to its fair meaning and shall not be strictly construed for or against any party.  The captions, titles and headings included in this Agreement are for convenience only, and do not affect this Agreement’s construction or interpretation.  Unless otherwise indicated, all “Section” and “Article” references in this Agreement are to sections and articles of this Agreement.

 

SECTION 15.09    No Double Recovery.  No provision of this Agreement shall be construed to provide an indemnity or other recovery for any costs, damages, or other amounts for which the damaged party has been fully compensated under any other provision of this Agreement or under any other agreement or action at law or equity.  Unless expressly required in this Agreement, a party shall not be required to exhaust all remedies available under other agreements or at law or equity before recovering under the remedies provided in this Agreement.

 

SECTION 15.10    Counterparts.  The parties may execute this Agreement in multiple counterparts, each of which constitutes an original as against the party that signed it, and all of which together constitute one agreement.  This Agreement is effective upon delivery of

 

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one executed counterpart from each party to the other party.  The signatures of both parties need not appear on the same counterpart.  The delivery of signed counterparts by facsimile or email transmission that includes a copy of the sending party’s signature is as effective as signing and delivering the counterpart in person.

 

SECTION 15.11    Governing Law; Jurisdiction.

 

(a)           This Agreement and, unless expressly provided therein, each Ancillary Agreement, shall be governed by and construed and interpreted in accordance with the internal laws of the State of New York applicable to contracts made and to be performed wholly in such State and irrespective of the choice of law principles of the State of New York, as to all matters (other than with respect to the corporate action of the Altisource board of directors attendant to the declaration and payment of the dividend of the AAMC Common Shares, which shall be governed by the law of Luxembourg).

 

(b)           Any action or proceeding arising out of or relating to this Agreement or any Ancillary Agreement shall be brought in the courts of the State of New York located in the County of New York or in the United States District Court for the Southern District of New York (if any party to such action or proceeding has or can acquire jurisdiction), and each of the parties hereto or thereto irrevocably submits to the exclusive jurisdiction of each such court in any such action or proceeding, waives any objection it may now or hereafter have to venue or to convenience of forum, agrees that all claims in respect of the action or proceeding shall be heard and determined only in any such court and agrees not to bring any action or proceeding arising out of or relating to this Agreement or any Ancillary Agreement in any other court.  The parties to this Agreement or any Ancillary Agreement agree that any of them may file a copy of this paragraph with any court as written evidence of the knowing, voluntary and bargained agreement between the parties hereto and thereto irrevocably to waive any objections to venue or to convenience of forum.  Process in any action or proceeding referred to in the first sentence of this Section 15.11 may be served on any party to this Agreement or any Ancillary Agreement anywhere in the world.

 

(c)           Notwithstanding the foregoing, (i) in the event that a court of competent jurisdiction determines that the choice of New York law in accordance with Section 15.11(a) is unenforceable, this Agreement shall be governed by the laws of the U.S. Virgin Islands and (ii) in the event that a court of competent jurisdiction determines that the choice of New York jurisdiction in accordance with Section 15.11(b) is unenforceable, any action or proceeding arising out of or relating to this Agreement or any Ancillary Agreement shall be brought in the courts of the U.S. Virgin Islands.

 

SECTION 15.12    Amendment.  No provisions of this Agreement shall be deemed waived, amended, supplemented or modified by any party hereto, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the party against whom it is sought to enforce such waiver, amendment, supplement or modification.

 

SECTION 15.13    AAMC Subsidiaries.  If, at any time, AAMC or Altisource, respectively, acquires or creates one or more subsidiaries that are includable in the AAMC

 

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Group or the Altisource Group, respectively, they shall be subject to this Agreement and all references to the AAMC Group or Altisource Group, respectively, herein shall thereafter include a reference to such subsidiaries.

 

SECTION 15.14    Successors.  This Agreement shall be binding on and inure to the benefit of any successor by merger, acquisition of assets, or otherwise, to any of the parties hereto, to the same extent as if such successor had been an original party to this Agreement.

 

SECTION 15.15    Injunctions.  The parties acknowledge that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with its specific terms or were otherwise breached.  The parties hereto shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in any court having jurisdiction, such remedy being in addition to any other remedy to which they may be entitled at law or in equity.

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives as of the date set forth above.

 

 

ALTISOURCE SOLUTIONS S.À R.L.

 

 

 

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

 

 

 

ALTISOURCE ASSET MANAGEMENT CORPORATION

 

 

 

 

 

 

By

 

 

 

Name:

 

 

Title:

 

[TAX MATTERS AGREEMENT - AAMC]

 


EXHIBIT 10.3

 

ASSET MANAGEMENT AGREEMENT (the “Agreement”), dated as of [    ], 2012, among ALTISOURCE RESIDENTIAL CORPORATION, a Maryland corporation (“Residential”), ALTISOURCE RESIDENTIAL, L.P., a Delaware limited partnership (the “Partnership”), and ALTISOURCE ASSET MANAGEMENT CORPORATION, a U.S. Virgin Islands corporation (the “Asset Manager”).

 

RECITALS

 

WHEREAS, Residential and the Partnership desire to retain the Asset Manager as their exclusive provider of asset management and corporate governance services, on the terms and conditions hereinafter set forth, and the Asset Manager wishes to be retained to provide such services.

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the parties hereby agree as follows:

 

1.             Duties of the Asset Manager.

 

(a)           Residential and the Partnership, each hereby employs the Asset Manager to provide asset management and corporate governance services to Residential and the Partnership, subject to the supervision of the Board of Directors of Residential (the “Board of Directors”) and the general partner of the Partnership (the “General Partner”), for the period and upon the terms herein set forth, in each case, (x) in accordance with the investment objectives, policies and restrictions set forth by the Board of Directors and the General Partner, and (y) in accordance with all other applicable federal, state and territorial laws, rules and regulations. Without limiting the generality of the foregoing, the Asset Manager shall, during the term and subject to the provisions of this Agreement, (i) determine the composition of Residential’s and the Partnership’s portfolio of Real Estate Assets (as defined herein), the nature and timing of the changes therein and the manner of implementing such changes (including through the sale or purchase of Real Estate Assets); (ii) identify, evaluate and negotiate the structure of the investments in Real Estate Assets made by Residential and the Partnership; (iii) perform due diligence on prospective investments in Real Estate Assets; (iv) monitor Residential’s and the Partnership’s investments in Real Estate Assets; (v) provide corporate governance services to Residential and the Partnership; and (vi) provide Residential with such other research and related services as Residential may, from time to time, reasonably require. In the event that Residential determines to acquire debt or other financing for the purpose of any investment in Real Estate Assets, the Asset Manager will arrange for such financing on Residential’s behalf, subject to the oversight and approval of the Board of Directors and the General Partner. If it is necessary for the Asset Manager to make investments in Real Estate Assets on behalf of Residential or the Partnership through a special purpose vehicle, the Asset Manager shall have authority to create or arrange for the creation of such special purpose vehicle and to make such investments in Real Estate Assets through such special purpose vehicle.  For purposes of this Agreement, the term “Real Estate Assets” shall include the following asset classes: (A) single-family residential properties for rental, (B) non-performing residential mortgage loans, (C) title insurance and reinsurance, and (D) any other similar assets or investments as may be agreed to between the parties.

 



 

(b)           The Asset Manager hereby accepts such employment and agrees during the term hereof to render the services described herein for the compensation provided herein.

 

(c)           The Asset Manager shall for all purposes herein provided be deemed to be an independent contractor and, except as expressly provided or authorized herein, shall have no authority to act for or represent Residential or the Partnership in any way or otherwise be deemed an agent of Residential or the Partnership.

 

(d)           The Asset Manager shall keep and preserve for the period required by Residential and the General Partner any books and records relevant to the provision of its asset management and corporate governance services to Residential or the Partnership and shall specifically maintain all books and records with respect to Residential’s or the Partnership’s portfolio transactions and shall render to Residential such periodic and special reports as Residential or the General Partner may reasonably request. The Asset Manager agrees that all records that it maintains for Residential and the General Partner are the property of Residential and/or the Partnership and will surrender promptly to Residential or the Partnership, as applicable, any such records upon Residential’s or the General Partner’s request, provided that the Asset Manager may retain a copy of such records.

 

(e)           The Asset Manager is the sole holder of common stock of NewSource Reinsurance Company Ltd. (“NewSource”). The Asset Manager shall vote its shares of common stock in NewSource independently of its obligations under this Agreement and without regard to the effects of such vote on Residential or the Partnership.  Residential and the Partnership hereby confirm that the Asset Manager has no duty to consider their views or interests in voting the NewSource shares of common stock and will not request the Asset Manager to vote such shares in any particular way.

 

2.             Devotion of Time; Additional Activities.

 

(a)           So long as Residential and the Partnership, in the aggregate, have on hand the Minimum Capital Amount, the Asset Manager will not contract or engage with any other party to provide the same or substantially similar services as set forth herein without the prior written consent of Residential and the Partnership, which may be withheld by Residential and the Partnership in their sole discretion. For purposes of this Section 2(a), “Minimum Capital Amount” means, as of the applicable measurement date, an average of $50,000,000 of capital available for investment over the previous two fiscal quarters.

 

(b)           The Asset Manager and its affiliates will provide Residential and the Partnership with a management team, including a chief executive officer, a chief financial officer, a general counsel and other appropriate support personnel. The Asset Manager is not obligated to dedicate any of its personnel exclusively to Residential or the Partnership, nor is the Asset Manager or its personnel obligated to dedicate any specific portion of its or their time to Residential or the Partnership.

 

(c)           Managers, partners, officers, employees, personnel and agents of the Asset Manager or affiliates of the Asset Manager may serve as directors, officers, employees, personnel, agents, nominees or signatories for Residential and/or the Partnership, to the extent

 

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permitted by their governing documents or by any resolutions duly adopted by the Board of Directors pursuant to Residential’s governing documents or approval by the General Partner in accordance with the Partnership’s governing documents. When executing documents or otherwise acting in such capacities for Residential or the Partnership, such persons shall use their respective titles in Residential or the Partnership.

 

3.             Reimbursement of Expenses. Residential shall reimburse the Asset Manager on a monthly basis for (a) direct and indirect expenses it incurs or payments in makes on behalf of Residential, the Partnership or any other respective subsidiaries thereof, including, but not limited to, the allocable compensation and routine overhead expenses of all employees and staff of the Asset Manager, when and to the extent engaged in providing asset management and corporate governance services hereunder, (b) all other necessary or appropriate expenses allocable to Residential, the Partnership or any other respective subsidiaries thereof or otherwise reasonably incurred by the Asset Manager in connection with the performance of the Asset Manager’s duties hereunder and (c) all costs and expenses incurred by the Asset Manager in connection with operations of Residential, the Partnership or any other respective subsidiaries thereof or any transactions in which Residential, the Partnership or any other respective subsidiaries thereof engage.  Without limiting the foregoing, Residential shall reimburse the Asset Manager (to the extent incurred by the Asset Manager) and retain all responsibility for those costs and expenses relating to: (i) the organization and corporate governance of Residential, the Partnership or any of the respective subsidiaries thereof; (ii) calculating the net asset value of Residential, the Partnership or any other respective subsidiaries thereof (including the cost and expenses of any independent valuation firm); (iii) fees and expenses payable to third parties, including agents, consultants or other advisors, in monitoring financial and legal affairs for Residential, the Partnership or any other respective subsidiaries thereof and in monitoring investments in Real Estate Assets held by any of the foregoing and performing due diligence on their prospective investments in Real Estate Assets; (iv) interest payable on debt, if any, incurred to finance investments in Real Estate Assets by Residential, the Partnership or any other respective subsidiaries thereof; (v) offerings of the equity or other securities of Residential, the Partnership or any of their respective subsidiaries; (vi) asset management and incentive fees payable to third parties; (vii) fees payable to third parties, including agents, consultants or other advisors, relating to, or associated with, evaluating and making investments in Real Estate Assets; (viii) transfer agent and custodial fees; (ix) federal, state and territorial registration fees; (x) all costs of registration and listing the capital stock or other securities of Residential, the Partnership or any other respective subsidiaries thereof on any securities exchange; (x) federal, state and local taxes; independent directors’ fees and expenses; (xi) costs of preparing and filing reports or other documents required by the Securities and Exchange Commission or any other cost of compliance with federal or state securities laws; (xii) costs of any reports, proxy statements or other notices to stockholders, including printing costs; (xiii) the portion of the directors and officers/errors and omissions liability insurance, and any other insurance premiums allocable to Residential, the Partnership or any other respective subsidiaries thereof; (xiv) direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors and outside legal costs; and (xv) all other expenses incurred by the Asset Manager in connection with administering the business of Residential, the Partnership or any subsidiary thereof.

 

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4.             Compensation of the Asset Manager.

 

(a)           On the last day of each fiscal quarter of Residential, Residential agrees to pay, and the Asset Manager agree to accept, as compensation for the services provided by the Asset Manager hereunder, an incentive fee (the “Incentive Fee”) as hereinafter set forth and by way of example on Exhibit I attached hereto:

 

(i)            first, 2% of the amount of cash dividends paid by Residential to its shareholders with respect to such cash during such fiscal quarter until the Quarterly Per Share Distribution Amount exceeds the First Threshold during such fiscal quarter, as such amount may be adjusted from time to time pursuant to Section 4(d) hereof;

 

(ii)           second, 15% of the amount of additional cash dividends paid by Residential to its shareholders with respect to such cash during such fiscal quarter until the Quarterly Per Share Distribution Amount exceeds the Second Threshold during such fiscal quarter, as such amount may be adjusted from time to time pursuant to Section 4(d) hereof;

 

(iii)          third, 25% of the amount of cash dividends paid by Residential to its shareholders with respect to such cash during such fiscal quarter until the Quarterly Per Share Distribution Amount exceeds the Third Threshold during such fiscal quarter, as such amount may be adjusted from time to time pursuant to Section 4(d) hereof; and

 

(iv)          thereafter, 50% of the amount of cash dividends paid by Residential to its shareholders with respect to such cash during such fiscal quarter.

 

Notwithstanding the foregoing, in the case of cash dividends of Cash From Capital Transactions paid by Residential to its shareholders, no Incentive Fee shall be paid to the Asset Manager in accordance with this Section 4(a) unless and until a hypothetical holder of one share of Class B Common Stock acquired on the Separation Date has received with respect to such share of Class B Common Stock, during the period since the Separation Date through such date, distributions of Available Cash that are deemed to be Cash From Capital Transactions in an aggregate amount equal to $12.74; provided that in calculating such amount, any dividends of Cash From Capital Transaction paid to holders of Class A Common Stock in preference to holders of Class B Common Stock shall be deemed have been distributed to all of Residential’s stockholders on a pari passu basis.

 

(b)           For purposes of this Agreement Residential shall be deemed to have made quarterly distributions to its shareholders of all of its Available Cash.

 

(c)           For purposes of this Section 4, the following terms shall have the following meanings:

 

(i)            “Available Cash” shall mean, with respect to any fiscal quarter:

 

A.                                    the sum of:

 

(1)                                 all cash receipts of Residential during such quarter from all sources (including, without limitation, distributions of cash received from the Partnership and cash proceeds from Capital Transactions); and

 

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(2)                                 any reduction in reserves with respect to such quarter from the level at the end of the prior quarter;

 

B.                                    less the sum of:

 

(1)                                 all cash disbursements of Residential during such quarter, including, without limitation, disbursements for operating expenses, taxes, if any, debt service (including, without limitation, the payment of principal, premium and interest), capital expenditures and contributions, if any, to the Partnership; and

 

(2)                                 any reserves established with respect to such quarter, and any increase in reserves established with respect to prior quarters, in such amounts as the Board of Directors determines in its reasonable discretion to be necessary or appropriate (x) to provide for the proper conduct of the business of Residential and its subsidiaries (including, without limitation, reserves for future capital expenditures) or (y) because the distribution of such amounts would be prohibited by applicable law or by any loan agreement, security agreement, mortgage, debt instrument or other agreement or obligation to which Residential or any of its subsidiaries is a party or by which any of them is bound or by which any of their assets are subject.

 

Notwithstanding the foregoing, “Available Cash” with respect to any fiscal quarter shall include any cash receipts (to the extent such cash receipts are attributable to transactions and operations during such quarter) received by Residential after the end of such quarter.

 

(ii)           “Capital Transactions” shall mean (a) borrowings, refinancings or refundings of indebtedness and sales of debt securities (other than for working capital purposes and other than for items purchased on open account in the ordinary course of business) by Residential or its subsidiaries, (b) sales of equity interests by Residential or its subsidiaries and (c) sales or other voluntary or involuntary dispositions of any assets of Residential or its subsidiaries (other than (x) sales or other dispositions of assets in the ordinary course of business, (y) sales or other dispositions of other current assets including, without limitation, receivables and accounts and (z) sales or other dispositions of assets as a part of normal retirements or replacements), in each case prior to the commencement of the dissolution and liquidation of Residential.  For the purposes of this definition, sales or other dispositions of assets in the ordinary course of business shall be deemed to include all sales or other dispositions of assets by Residential other than the sale or other disposition by Residential or its subsidiaries, in a single transaction or series of related transactions, of assets that have an aggregate value in excess of 50% of the aggregate value of all assets held by Residential and its subsidiaries on a consolidated basis immediately prior to the consummation of such transaction or, in the case of a series of related transactions, the first such transaction.

 

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(iii)          “Cash From Capital Transactions” shall mean, at any date, any proceeds received by Residential or its subsidiaries with respect to a Capital Transaction, net of any (i) reasonable transaction expenses incurred by Residential or its subsidiaries in connection therewith or (ii) payments or prepayments of principal and premium required by reason of loan agreements (including, without limitation, covenants and default provisions therein) or by lenders, in each case, in connection with such Capital Transaction; provided, that any payment or prepayment of principal, whether or not then due, shall be deemed, at the election and in the discretion of the Board of Directors to be refunded or refinanced by any indebtedness incurred or to be incurred by Residential or its subsidiaries simultaneously with or within 180 days prior to or after such payment or prepayment to the extent of the principal amount of such indebtedness so incurred.

 

(iv)          “Class A Common Stock” shall mean the Class A Common Stock, $0.01 par value per share, of Residential.

 

(v)           “Class B Common Stock” shall mean the Class B Common Stock, $0.01 par value per share, of Residential.

 

(vi)          “First Threshold” shall mean $0.161 per share.

 

(vii)         “Quarterly Per Share Distribution Amount” shall mean the aggregate amount of dividend distributions made during the applicable quarter divided by the average number of shares of common stock of Residential outstanding as of the applicable dividend distribution date.

 

(viii)        “Second Threshold” shall mean $0.193 per share.

 

(ix)          “Separation Date” shall have the meaning ascribed to such term in the Separation Agreement, dated [  ], by and between Residential and Altisource Portfolio Solutions S.A.

 

(x)           “Third Threshold” shall mean $0.257 per share.

 

(xi)          “Thresholds” shall mean each of the First Threshold, Second Threshold and Third Threshold.

 

(d)           Each of the Thresholds shall be adjusted from time to time as follows:

 

(i)            In the event of the payment of any dividend of Cash from Capital Transactions by Residential to its shareholders, each of the Thresholds shall be reduced to by an amount equal to the applicable Threshold multiplied by a fraction (i) the numerator of which shall be the amount of distributions of Available Cash that are deemed to be Cash From Capital Transactions that a hypothetical holder of one share of Class B Common Stock acquired on the Separation Date has received with respect to such share of Class B Common Stock, during the period since the Separation Date through such date, and (ii) denominator of which shall be $12.74; provided that in no event shall such fraction be greater than 1; provided further that in calculating the numerator of such fraction, any dividends of Cash From Capital Transactions

 

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paid to holders of Class A Common Stock in preference to holders of Class B Common Stock shall be deemed have been distributed to all of Residential’s stockholders on a pari passu basis.

 

(ii)           If Residential at any time subdivides (by any stock split, stock dividend, reclassification, recapitalization or other similar transaction) its common stock into a greater number of shares, the Thresholds shall be proportionately decreased.  If Residential at any time combines (by reverse stock split, reclassification, recapitalization or other similar transaction) its common stock into a smaller number of shares, the Thresholds shall be proportionately increased.

 

(e)           Residential shall make any payments due hereunder to the Asset Manager or to the Asset Manager’s designee as the Asset Manager may otherwise direct.

 

5.             Regulatory Matters.  Each of Residential and the Partnership acknowledges that the Asset Manager is not registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”) and that the parties do not anticipate that the Asset Manager shall be required to so register in connection with the provision of asset management services by the Asset Manager pursuant to this Agreement since the Asset Manager is not providing advice to Residential or the Partnership with respect to the purchase, sale or investment of securities as defined under the Advisers Act.  Notwithstanding anything contained herein to the contrary, each of the parties acknowledges and agrees that in the event the services to be provided by the Asset Manager pursuant to the terms of this Agreement are expanded, the Asset Manager may be required to register under the Advisers Act; provided, however, the Asset Manager shall not be required to perform any additional services pursuant to this Agreement if the Asset Manager determines in its sole discretion that the provision of such services will require the Asset Manager to register under the Advisers Act.  The Asset Manager agrees that its activities will at all times be in compliance in all material respects with all applicable federal, state and territorial laws governing its operations and investments.

 

6.             Employment of the Asset Manager.

 

(a)           The Asset Manager may engage in any other business or render similar or different services to others including, without limitation, the direct or indirect sponsorship or management of other investment based accounts or commingled pools of capital, however structured, having investment objectives similar to those of Residential or the Partnership, so long as its services to Residential and the Partnership hereunder are not impaired thereby, and nothing in this Agreement shall limit or restrict the right of any manager, partner, officer or employee of the Asset Manager to engage in any other business or to devote his or her time and attention in part to any other business, whether of a similar or dissimilar nature, or to receive any fees or compensation in connection therewith. The Asset Manager assumes no responsibility under this Agreement other than to render the services called for hereunder. It is understood that directors, officers, employees, partners and shareholders of Residential or the Partnership are or may become interested in the Asset Manager and its affiliates, as directors, officers, employees, partners, stockholders, members, asset managers or otherwise, and that the Asset Manager and directors, officers, employees, partners, stockholders, members and managers of the Asset Manager and its affiliates are or may become similarly interested in Residential or the Partnership as shareholders or partners or otherwise.

 

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(b)           During the term of this Agreement, (i) Residential shall hold all of its assets and investments through the Partnership, (ii) the Asset Manager shall be the exclusive provider of asset management and corporate governance services to Residential and the Partnership, and (iii) Residential and the Partnership shall not employ or contract with any other party to receive the same or substantially similar services as set forth herein without the prior written consent of the Asset Manager, which may be withheld by the Asset Manager in its sole discretion.

 

7.             Responsibility of Dual Directors, Officers and/or Employees.  If any person who is a manager, partner, officer or employee of the Asset Manager is or becomes a director, officer and/or employee of Residential or the Partnership and acts as such in any business of Residential or the Partnership, then such manager, partner, officer and/or employee of the Asset Manager shall be deemed to be acting in such capacity solely for Residential or the Partnership, as applicable, and not as a manager, partner, officer or employee of the Asset Manager or under the control or direction of the Asset Manager, even if paid by the Asset Manager.

 

8.             Limitation of Liability of the Asset Manager; Indemnification.  The Asset Manager (and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Asset Manager) shall not be liable to Residential or the Partnership for any action taken or omitted to be taken by the Asset Manager in connection with the performance of any of its duties or obligations under this Agreement or otherwise as an asset manager of Residential or the Partnership with respect to the receipt of compensation for services, and each of Residential and the Partnership shall indemnify, defend and protect the Asset Manager (and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Asset Manager, each of whom shall be deemed a third party beneficiary hereof) (collectively, the “Indemnified Parties”) and hold them harmless from and against all damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) incurred by the Indemnified Parties in or by reason of any pending, threatened or completed action, suit, investigation or other proceeding (including an action or suit by or in the right of the Partnership, its partners, or Residential or its shareholders) arising out of or otherwise based upon the performance of any of the Asset Manager’s duties or obligations under this Agreement or otherwise as an asset manager of Residential and the Partnership. Notwithstanding the preceding sentence of this Paragraph 8 to the contrary, nothing contained herein shall protect or be deemed to protect the Indemnified Parties against or entitle or be deemed to entitle the Indemnified Parties to indemnification in respect of, any liability to Residential or its shareholders, or the Partnership or its partners, to which the Indemnified Parties would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of the Asset Manager’s duties or by reason of the reckless disregard of the Asset Manager’s duties and obligations under this Agreement.

 

9.             No Joint Venture. Nothing in this Agreement shall be construed to make Residential, the Partnership and the Asset Manager partners or joint venturers or impose any liability as such on any of them.

 

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10.          Term; Termination.

 

(a)           This Agreement shall be in effect until [July     , 2027] (the “Initial Term”) and shall be automatically renewed for a one-year term each anniversary date thereafter (a “Renewal Term”) unless terminated by either party in accordance with this Section 10.

 

(b)           Subject to Section 11 below, neither Residential nor the Partnership may terminate this Agreement unless (i) in the case of a termination by the Partnership, the General Partner determines that there has been unsatisfactory performance by the Asset Manager that is materially detrimental to the Partnership or (ii) in the case of a termination by Residential, at least two-thirds of the Independent Directors (as defined herein) agree that (x) there has been unsatisfactory performance by the Asset Manager that is materially detrimental to Residential or (y) the compensation payable to the Asset Manager hereunder is unreasonable; provided that Residential shall not have the right to terminate this Agreement under clause (ii)(y) above if the Asset Manager agrees to continue to provide the services under this Agreement at a reduced fee that at least two-thirds of the Independent Directors determines to be reasonable pursuant to the procedure set forth below. If Residential or the Partnership elects not to renew this Agreement at the expiration of the Initial Term or any Renewal Term as set forth above, Residential or the Partnership, as applicable (the “Terminating Party”), shall deliver to the Asset Manager prior written notice (the “Termination Notice”) of such Terminating Party’s intention not to renew this Agreement based upon the terms set forth in this Section 10(a) not less than 180 days prior to the expiration of the then existing term. If the Terminating Party so elects not to renew this Agreement, such Terminating Party shall designate the date (the “Effective Termination Date”), not less than 180 days from the date of the notice, on which the Asset Manager shall cease to provide services under this Agreement, and this Agreement shall terminate on such date; provided, however, that in the event that such Termination Notice is given in connection with a determination that the compensation payable to the Asset Manager is unfair, the Asset Manager shall have the right to renegotiate such compensation by delivering to Residential, no fewer than 45 days prior to the prospective Effective Termination Date, written notice (any such notice, a “Notice of Proposal to Negotiate”) of its intention to renegotiate its compensation under this Agreement. Thereupon, Residential (represented by the Independent Directors) and the Asset Manager shall endeavor to negotiate in good faith the revised compensation payable to the Asset Manager under this Agreement. Provided that the Asset Manager and at least two-thirds of the Independent Directors agree to the terms of the revised compensation to be payable to the Asset Manager within 45 days following the receipt of the Notice of Proposal to Negotiate, the Termination Notice shall be deemed of no force and effect and this Agreement shall continue in full force and effect on the terms stated in this Agreement, except that the compensation payable to the Asset Manager hereunder shall be the revised compensation then agreed upon by the parties to this Agreement. Each of the parties agrees to execute and deliver an amendment to this Agreement setting forth such revised compensation promptly upon reaching an agreement regarding same. In the event that Residential and the Asset Manager are unable to agree to the terms of the revised compensation to be payable to the Asset Manager during such 45-day period, this Agreement shall terminate, such termination to be effective on the date which is the later of (A) 10 days following the end of such 45-day period and (B) the Effective Termination Date originally set forth in the Termination Notice.  For purposes of this Agreement, “Independent Directors” shall mean the members of the Board of Directors who are not officers or employees of the Asset Manager or any person or entity directly or indirectly controlling or controlled by the Asset Manager, and who are otherwise “independent” in accordance with Residential’s organizational documents.  Notwithstanding the foregoing, neither Residential nor

 

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the Partnership may terminate this Agreement pursuant to this Section 10 during the first twenty-four (24) months of the Initial Term.

 

(c)           In recognition of the level of the upfront effort required by the Asset Manager to structure and acquire the assets of Residential and the Partnership and the commitment of resources by the Asset Manager, in the event that this Agreement is terminated in accordance with the provisions of Section 10(a) of this Agreement, Residential shall pay to the Asset Manager, on the date on which such termination is effective, a termination fee (the “Termination Fee”) equal to three (3) times the sum of the average annual Incentive Fee during the 24-month period immediately preceding the date of such termination, calculated as of the end of the most recently completed fiscal quarter prior to the date of termination. The obligation of Residential to pay the Termination Fee shall survive the termination of this Agreement.

 

(d)           No later than 180 days prior to the anniversary date of this Agreement of any year during the Initial Term or Renewal Term, the Asset Manager may deliver written notice to Residential informing it of the Asset Manager’s intention to decline to renew this Agreement, whereupon this Agreement shall not be renewed and extended and this Agreement shall terminate effective on the anniversary date of this Agreement next following the delivery of such notice. Residential is not required to pay to the Asset Manager the Termination Fee if the Asset Manager terminates this Agreement pursuant to this Section 10(c).

 

(e)           If this Agreement is terminated pursuant to Section 10, such termination shall be without any further liability or obligation of either party to the other, except as provided in Sections 1(d), 3, 10(b), 11(b), 11(c) and 12 of this Agreement. In addition, Sections 8 and 16 of this Agreement shall survive termination of this Agreement.

 

11.          Termination for Cause.

 

(a)           Residential or the General Partner may terminate this Agreement effective upon 30 days’ prior written notice of termination from the Board of Directors or the General Partner to the Asset Manager, without payment of any Termination Fee, if (i) the Asset Manager, its agents or its assignees materially breaches any provision of this Agreement and such breach shall continue for a period of 30 days after written notice thereof specifying such breach and requesting that the same be remedied in such 30-day period (or 60 days after written notice of such breach if the Asset Manager takes steps to cure such breach within 30 days of the written notice), (ii) the Asset Manager engages in any act of fraud, misappropriation of funds, or embezzlement against Residential or the Partnership, (iii) there is an event of any gross negligence on the part of the Asset Manager in the performance of its duties under this Agreement, (iv) there is a commencement of any proceeding relating to the Asset Manager’s bankruptcy or insolvency, including an order for relief in an involuntary bankruptcy case or the Asset Manager authorizing or filing a voluntary bankruptcy petition, or (v) there is a dissolution of the Asset Manager.

 

(b)           The Asset Manager may terminate this Agreement effective upon 60 days’ prior written notice of termination to Residential in the event that Residential shall default in the performance or observance of any material term, condition or covenant contained in this Agreement and such default shall continue for a period of 30 days after written notice thereof

 

10



 

specifying such default and requesting that the same be remedied in such 30-day period (or 60 days after written notice of such breach if Residential takes steps to cure such breach within 30 days of the written notice). Residential is required to pay to the Asset Manager the Termination Fee if the termination of this Agreement is made pursuant to this Section 11(b).

 

(c)           The Asset Manager may terminate this Agreement in the event Residential becomes regulated as an “investment company” under the Investment Company Act of 1940, as amended, with such termination deemed to have occurred immediately prior to such event. Residential shall pay to the Asset Manager the Termination Fee in the event that this Agreement is terminated pursuant to this Section 11(c).

 

12.          Action Upon Termination. From and after the effective date of termination of this Agreement, pursuant to Sections 10 or 11 of this Agreement, the Asset Manager shall not be entitled to compensation for further services under this Agreement, but shall be paid all compensation accruing to the date of termination and, if terminated pursuant to Sections 10(a), 11(b) or 11(c), the applicable Termination Fee. Upon such termination, the Asset Manager shall deliver to the Board of Directors all property and documents of Residential or the Partnership then in the custody of the Asset Manager.

 

13.          Notices.  Any notice under this Agreement shall be given in writing, addressed and delivered or mailed, postage prepaid, to the other party at its principal office.

 

14.          Amendments.  This Agreement may be amended by mutual consent of the parties.

 

15.          Entire Agreement; Governing Law.  This Agreement contains the entire agreement of the parties and supersedes all prior agreements, understandings and arrangements with respect to the subject matter hereof. This Agreement shall be construed in accordance with the laws of the State of New York.

 

[The remainder of this page intentionally left blank]

 

11



 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above by their duly authorized representatives.

 

 

 

 

ALTISOURCE RESIDENTIAL CORPORATION

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

ALTISOURCE RESIDENTIAL, L.P.

 

 

 

 

 

By: Altisource Residential GP, LLC, its general partner

 

 

By: Altisource Residential GP Member, LLC, its sole member

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

ALTISOURCE ASSET MANAGEMENT CORPORATION

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

[ASSET MANAGEMENT AGREEMENT]

 



 

EXHIBIT I

 

EXAMPLE OF CASH-FLOW DISTRIBUTION WATERFALL

 


EXHIBIT 10.4

 

This TRADEMARK LICENSE AGREEMENT (this “Agreement”), is entered into as of the [  ] day of [   ], 2012 (“Effective Date”), by and between ALTISOURCE SOLUTIONS S.À. R.L., a private limited liability company organized under the laws of the Grand Duchy of Luxembourg, with offices at 291, Route d’Arlon, L-1150 Luxembourg (“Altisource”), and ALTISOURCE ASSET MANAGEMENT CORPORATION, a corporation organized under the laws of the U.S. Virgin Islands, with offices at 402 Strand St., Frederiksted, VI 00840-3531 (“AAMC”), (each, a “Party,” and collectively, the “Parties”).

 

RECITALS

 

WHEREAS, Altisource has adopted, is using and is the owner of the Licensed Mark (as defined below) worldwide;

 

WHEREAS, pursuant to that certain Asset Management Agreement, by and between AAMC and Altisource Residential Corporation, a Maryland corporation (“Residential), AAMC is the asset manager of Residential;

 

WHEREAS, AAMC desires to use the Licensed Mark as part of the trade name Altisource Asset Management Corporation and in connection with the Licensed Activities (as defined below); and

 

WHEREAS, Altisource desires to license the Licensed Mark to AAMC to be used as part of the trade name Altisource Asset Management Corporation and in connection with the Licensed Activities subject to the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual agreements contained herein, the Parties hereby agree as follows:

 

ARTICLE 1

DEFINITIONS

 

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person or entity, whether through the ownership of voting securities, by contract or otherwise.

 

“Licensed Mark” means the mark ALTISOURCE.

 

“Licensed Trade Name” means the corporate name Altisource Asset Management Corporation and any variation thereof including the term ALTISOURCE that is used by Licensed Users.

 

“Licensed Activities” means the provision of asset management and corporate governance services by Licensed Users and the operation of Licensed Users’ respective businesses in the ordinary course.

 

“Licensed User” and “Licensed Users” means AAMC and its Subsidiaries, if any.

 

“Subsidiary” means any corporation, company or other legal entity: (i) more than fifty percent (50%) of whose shares or outstanding securities (representing the right to vote for the election of directors or other managing authority) are, now or hereafter, Controlled, directly or

 



 

indirectly by a Party hereto, but such entity shall be deemed to be a Subsidiary for the purposes of this Agreement only so long as such Control exists; or (ii) which does not have outstanding shares or securities, as may be the case in a partnership, joint venture, or unincorporated association, but more than fifty percent (50%) of whose ownership interest representing the right to make decisions for such entity is now or hereafter, Controlled, directly or indirectly by a Party hereto, but such entity shall be deemed to be a Subsidiary for the purposes of this Agreement only so long as such Control exists.

 

ARTICLE 2

LICENSE GRANT AND CONDITIONS OF LICENSED USE

 

Section 2.1. Altisource hereby grants Licensed Users a nonexclusive, nontransferable, nonsublicensable, royalty-free license to use and display the Licensed Trade Name and the Licensed Mark worldwide solely in connection with the Licensed Activities.

 

Section 2.2. All use of the Licensed Mark by Licensed Users, and all goodwill associated with such use, shall inure to the benefit of Altisource.

 

Section 2.3. Licensed Users shall use the Licensed Mark in a form which is in accordance with sound trademark practice so as not to weaken the value of the Licensed Mark. Licensed Users shall use the Licensed Mark in a manner that does not derogate, based on an objective business standard, Altisource’s rights in the Licensed Mark or the value of the Licensed Mark, and shall take no action that would, based on an objective standard, interfere with, diminish or tarnish those rights or value.

 

Section 2.4. The Licensed Mark shall remain the exclusive property of Altisource and nothing in this Agreement shall give Licensed Users any right or interest in the Licensed Mark except the licenses expressly granted in this Agreement.

 

Section 2.5. All of Altisource’s rights in and to the Licensed Mark, including, but not limited to, the right to use and to grant others the right to use the Licensed Mark, are reserved by Altisource.

 

Section 2.6. No license, right, or immunity is granted by either Party to the other, either expressly or by implication, or by estoppel, or otherwise with respect to any trademarks, copyrights, or trade dress, or other property right, other than with respect to the Licensed Trade Name and the Licensed Mark in accordance with Section 2.1.

 

Section 2.7. Licensed Users acknowledge that Altisource is the sole owner of all right, title and interest in and to the Licensed Mark, and that Licensed Users have not acquired, and shall not acquire, any right, title or interest in or to the Licensed Mark except the right to use the Licensed Mark in accordance with the terms of this Agreement.

 

Section 2.8. Licensed Users shall not register the Licensed Mark in any jurisdiction without Altisource’s express prior written consent, and Altisource shall retain the exclusive right to apply for and obtain registrations for the Licensed Mark throughout the world.

 



 

Section 2.9. Licensed Users shall not challenge the validity of the Licensed Mark, nor shall Licensed Users challenge Altisource’s ownership of the Licensed Mark or the enforceability of Altisource’s rights therein.

 

Section 2.10. Licensed Users shall designate the first or a prominent use of the Licensed Mark in all promotional materials, documents, brochures, and/or manuals with the symbol “SM”.

 

Section 2.11. Licensed Users agree to cooperate with Altisource’s preparation and filing of any applications, renewals or other documentation necessary or useful to protect and/or enforce Altisource’s intellectual property rights in the Licensed Mark.

 

(a)     Licensed Users shall notify Altisource promptly of any actual or threatened infringements, imitations or unauthorized uses of the Licensed Mark of which Licensed Users become aware.

 

(b)     Altisource shall have the sole right, though it is under no obligation, to bring any action for any past, present and future infringements of its intellectual property rights in the Licensed Mark.

 

(c)      Licensed Users shall cooperate with Altisource, at Altisource’s expense for any out-of-pocket costs incurred by Licensed Users, in any efforts by Altisource to enforce its rights in the Licensed Mark or to prosecute third party infringers of the Licensed Mark.

 

(d)     Altisource shall be entitled to retain any and all damages and other monies awarded or otherwise paid in connection with any such action.

 

Section 2.12 Quality Control. In order to promote the goodwill symbolized by the Licensed Mark, Licensed Users will insure that the Licensed Activities shall be of the same high quality as the services marketed or otherwise provided by Altisource.

 

(a)     Licensed Users shall use the Licensed Mark only in connection with services that meet or exceed generally accepted industry standards of quality and performance.

 

(b)     Altisource shall have the right to monitor the quality of the services provided and promotional materials used by Licensed Users, and Licensed Users shall use reasonable efforts to assist Altisource in monitoring the quality of the services provided and promotional materials used by Licensed Users.

 

(c)      From time to time and upon Altisource’s request, Licensed Users shall submit to Altisource samples of all materials bearing the Licensed Mark, including, without limitation, any advertising, packaging and other publicly disseminated materials.

 

(d)     If Altisource discovers any improper use of the Licensed Mark on any such submission and delivers a writing describing in detail the improper use to Licensed Users, Licensed Users shall remedy the improper use immediately.

 

ARTICLE 3

TERM AND TERMINATION

 

Section 3.1. Either Party may terminate this Agreement by giving the other Party thirty (30) days’ prior written notice.

 



 

Section 3.2. In the event that AAMC loses Control of a Subsidiary, all rights and licenses granted to the former Subsidiary under this Agreement shall immediately terminate.

 

Section 3.3. Upon termination of this agreement, Licensed Users shall immediately cease use of the Licensed Trade Name and Licensed Mark as soon as practicable, but no longer than thirty (30) days, after termination.

 

ARTICLE 4

GENERAL PROVISIONS

 

Section 4.1. Indemnification. Licensed Users, at Licensed Users’ own expense, shall indemnify, hold harmless and defend Altisource, its affiliates, successors and assigns, and its and their directors, officers, employees and agents, against any claim, demand, cause of action, debt, expense or liability (including attorneys’ fees and costs), to the extent that the foregoing (a) is based on a claim resulting solely from any service provided or offered by Licensed Users, (b) results from a material breach, or is based on a claim that, if true, would be a material breach, of this Agreement by Licensed Users, or (c) is based upon Licensed Users’ unauthorized or improper use of the Licensed Mark.

 

Section 4.2 LIMITATION OF WARRANTY AND LIABILITY. ALTISOURCE DOES NOT MAKE WARRANTIES OF ANY KIND, WHETHER EXPRESS, IMPLIED, RELATED TO OR ARISING OUT OF THE LICENSED MARK OR THIS AGREEMENT.

 

(a)     ALTISOURCE SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT, AND/OR TITLE, AND ALL OTHER WARRANTIES THAT MAY OTHERWISE ARISE FROM COURSE OF DEALING, USAGE OF TRADE OR CUSTOM.

 

(b)     IN NO EVENT SHALL ALTISOURCE OR ANY OF ITS DIRECTORS, OFFICERS, EMPLOYEES, LICENSORS, SUPPLIERS OR OTHER REPRESENTATIVES BE LIABLE FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, OR DAMAGES FOR LOSS OF PROFITS, BUSINESS INTERRUPTION, LOSS OF GOODWILL, COMPUTER FAILURE OR MALFUNCTION OR OTHERWISE, ARISING FROM OR RELATING TO THIS AGREEMENT OR THE LICENSED MARK, EVEN IF ALTISOURCE IS EXPRESSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. The foregoing limitation of liability and exclusion of certain damages shall apply regardless of the failure of essential purpose of any remedies available to either party.

 

Section 4.3 Non-Transferable Agreement. Licensed Users may not assign this Agreement and/or any rights and/or obligations hereunder without the prior written consent of Altisource and any such attempted assignment shall be void.

 

Section 4.4 Remedies. Licensed Users acknowledge that a material breach of Licensed Users’ obligations under this Agreement would cause Altisource irreparable damage. Accordingly, Licensed Users agree that in the event of such breach or threatened breach, in addition to remedies at law, Altisource shall have the right to enjoin Licensed Users from the

 



 

unlawful and/or unauthorized use of the Licensed Trade Name and/or the Licensed Mark and other equitable relief to protect Altisource’s rights in the Licensed Mark.

 

Section 4.5 Integration. This Agreement contains the entire agreement of the Parties. No promise, inducement, representation or agreement, other than as expressly set forth herein, has been made to or by the Parties hereto. All prior agreements and understandings related to the subject matter hereof, whether written or oral, are expressly superseded hereby and are of no further force or effect.

 

Section 4.6 Binding Agreement. This Agreement shall be binding upon the Parties’ permitted assigns and successors and references to each Party shall include such assigns and successors.

 

Section 4.7 Amendment. This Agreement cannot be altered, amended or modified in any respect, except by a writing duly signed by both Parties.

 

Section 4.8 No Strict Construction. The normal rule of construction to the effect that any ambiguities are to be resolved against the drafting Party shall not be employed in the interpretation of this Agreement. Headings are for reference and shall not affect the meaning of any of the provisions of this Agreement.

 

Section 4.9 Waiver. At no time shall any failure or delay by either party in enforcing any provisions, exercising any option, or requiring performance of any provisions, be construed to be a waiver of same.

 

Section 4.10 Governing Law and Jurisdiction. The provisions of this Agreement shall be governed by and construed in accordance with the laws of the State of New York (excluding any conflict of law rule or principle that would refer to the laws of another jurisdiction). Each Party hereto irrevocably submits to the jurisdiction of the state and federal courts located in New York in any action or proceeding arising out of or relating to this Agreement, and each Party hereby irrevocably agrees that all claims in respect of any such action or proceeding must be brought and/or defended in any such court; provided, however, that matters which are under the exclusive jurisdiction of the federal courts shall be brought in the Federal District Court for the District of New York. Each Party hereto consents to service of process by any means authorized by the applicable law of the forum in any action brought under or arising out of this Agreement, and each Party irrevocably waives, to the fullest extent each may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.  Notwithstanding the foregoing, (i) in the event that a court of competent jurisdiction determines that the choice of New York law in accordance with this Section 4.10 is unenforceable, this Agreement shall be governed by the laws of the U.S. Virgin Islands and (ii) in the event that a court of competent jurisdiction determines that the choice of New York jurisdiction in accordance with this Section 4.10 is unenforceable, any action or proceeding arising out of or relating to this Agreement shall be brought in the courts of the U.S. Virgin Islands.

 

Section 4.11 Attorney’s Fees. In the event any suit or other legal proceeding is brought for the enforcement of any of the provisions of this Agreement, the Parties hereto agree that the prevailing party shall be entitled to recover from the other party upon final judgment on the merits reasonable attorneys’ fees (and sales taxes thereon, if any), including attorneys’ fees for any appeal, and costs incurred in bringing such suit or proceeding.

 



 

Section 4.12 Relationship of the Parties. Nothing in this Agreement will be construed as creating a joint venture, partnership, or employment relationship between Altisource and any Licensed User. Neither Party will have the right, power or implied authority to create any obligation or duty on behalf of the other Party.

 

Section 4.13 Notices. Unless otherwise specified in this Agreement, all notices shall be in writing and delivered personally, mailed, first class mail, postage prepaid, or delivered by confirmed electronic or digital means, to the addresses set forth at the beginning of this Agreement and to the attention of the undersigned. Either Party may change the addresses or addressees for notice by giving notice to the other. All notices shall be deemed given on the date personally delivered, when placed in the mail as specified or when electronic or digital confirmation is received.

 

Section 4.14 Counterparts. This Agreement may be executed in counterparts, by manual or facsimile signature, each of which will be deemed an original and all of which together will constitute one and the same instrument.

 

[SIGNATURE PAGE FOLLOWS]

 



 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives as of the date set forth above.

 

ALTISOURCE SOLUTIONS S.À. R.L.

 

ALTISOURCE ASSET MANAGEMENT CORPORATION

 

 

 

 

 

 

 

 

 

(Signature)

 

(Signature)

 

 

 

 

 

 

 

 

 

(Print)

 

(Print)

 

 

 

 

 

 

 

 

 

Title

 

Title

 

 

 

 

 

 

 

 

 

Date

 

Date

 

[TRADEMARK LICENSE AGREEMENT — AAMC]

 


EXHIBIT 10.5

 

ASSET MANAGEMENT AGREEMENT (the “Agreement”), dated as of [    ], 2012, between NEWSOURCE REINSURANCE COMPANY LTD., a company organized under the laws of Bermuda (the “Company”), and ALTISOURCE ASSET MANAGEMENT CORPORATION, a U.S. Virgin Islands corporation (the “Asset Manager”).

 

RECITALS

 

WHEREAS, the Company desires to retain the Asset Manager as its exclusive provider of asset management and corporate governance services, on the terms and conditions hereinafter set forth, and the Asset Manager wishes to be retained to provide such services.

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the parties hereby agree as follows:

 

1.                                       Duties of the Asset Manager.

 

(a)                                  The Company hereby employs the Asset Manager to provide asset management and corporate governance services to the Company, subject to the supervision of the Board of Directors of the Company (the “Board of Directors”), for the period and upon the terms herein set forth, in each case, (x) in accordance with the investment objectives, policies and restrictions set forth by the Board of Directors, and (y) in accordance with all other applicable federal, state and territorial laws, rules and regulations. Without limiting the generality of the foregoing, the Asset Manager shall, during the term and subject to the provisions of this Agreement, (i) assist the Company in its evaluation of the acquisition of one or more title insurance companies licensed to do business in the United States (individually or collectively, “TitleCo”), (ii) provide continuing administrative services to the Company, (iii) provide administrative oversight of Marsh IAS Management Services (Bermuda) Ltd. and its Management Agreement with the Company, (iv) assist with the selection and quarterly evaluation of the Company’s investment manager, (v) advise the Company regarding its tax and expense allocations relating to its operations (vi) provide corporate governance services to the Company and (vii) provide the Company with such other research and related services as the Company may, from time to time, reasonably require.

 

(b)                                 The Asset Manager hereby accepts such employment and agrees during the term hereof to render the services described herein for the compensation provided herein.

 

(c)                                  The Asset Manager shall for all purposes herein provided be deemed to be an independent contractor and, except as expressly provided or authorized herein, shall have no authority to act for or represent the Company in any way or otherwise be deemed an agent of the Company.

 

(d)                                 The Asset Manager shall keep and preserve for the period required by the Company any books and records relevant to the provision of its asset management and corporate governance services to the Company and shall specifically maintain all books and records with respect to the Company’s portfolio transactions and shall render to the Company such periodic and special reports as the Company may reasonably request. The Asset Manager agrees that all records that it maintains for the Company are the property of the Company and will surrender

 



 

promptly to the Company any such records upon the Company’s request, provided that the Asset Manager may retain a copy of such records.

 

(e)                                  The Asset Manager is the sole holder of common stock of the Company. The Asset Manager shall vote its shares of common stock in the Company independently of its obligations under this Agreement and without regard to the effects of such vote on the Company.

 

2.                                       Devotion of Time; Additional Activities.  Managers, partners, officers, employees, personnel and agents of the Asset Manager or affiliates of the Asset Manager may serve as directors, officers, employees, personnel, agents, nominees or signatories for the Company, to the extent permitted by their governing documents or by any resolutions duly adopted by the Board of Directors pursuant to the Company’s governing documents. When executing documents or otherwise acting in such capacities for the Company, such persons shall use their respective titles in the Company.

 

3.                                       The Company’s Responsibilities and Expenses Payable by the Company. All employees of the Asset Manager and its staff, when and to the extent engaged in providing asset management and corporate governance services hereunder, and the compensation and routine overhead expenses of such personnel allocable to such services, will be provided and paid for by the Asset Manager and not by the Company. The Company will bear all other costs and expenses of its operations and transactions, including (without limitation) those relating to: (i) formation and qualification; (ii) fees and expenses incurred by the Asset Manager payable to third parties, including agents, consultants or other advisors, in monitoring financial and legal affairs for the Company and in performing due diligence on its prospective investments; (iii) interest payable on debt, if any, incurred to finance the Company’s investments; (iv) asset management fees; (v) fees payable to third parties, including agents, consultants or other advisors, relating to, or associated with, evaluating and making investments; (vi) federal, state and territorial registration fees, if any; (vii) the Company’s allocable portion of the directors and officers/errors and omissions liability insurance, and any other insurance premiums; direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors and outside legal costs and (viii) all other expenses incurred by the Company in connection with administering the Company’s business.

 

4.                                       Compensation of the Asset Manager.

 

(a)                                  The Company agrees to pay, and the Asset Manager agrees to accept, as compensation for the services provided by the Asset Manager hereunder, an annual management fee (the “Management Fee”) on each anniversary of the date hereof equal to $840,000; provided that the Management Fee shall be increased on each such anniversary date in an amount equal to the product of (i) $840,000 and (ii) the percentage increase, if any, in the CPI over the immediately preceding 12-month period.  For purposes of this Agreement, “CPI” shall mean the Consumer Price Index, All Urban Consumers, United States, All Items (1982 - 1984 = 100), as published by the Bureau of Labor Statistics of the United States Department of Labor, or any successor index thereto.

 

(b)                                 The Company shall make any payments due hereunder to the Asset Manager or to the Asset Manager’s designee as the Asset Manager may otherwise direct.

 

5.                                       Regulatory Matters.  The Company acknowledges that the Asset Manager is not registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”) and that the parties do not anticipate that the Asset Manager shall be required to so register in connection with the provision of asset management services by the Asset Manager

 

2



 

pursuant to this Agreement since the Asset Manager is not providing advice to the Company with respect to the purchase, sale or investment of securities as defined under the Advisers Act.  Notwithstanding anything contained herein to the contrary, each of the parties acknowledges and agrees that in the event the services to be provided by the Asset Manager pursuant to the terms of this Agreement are expanded, the Asset Manager may be required to register under the Advisers Act; provided, however, the Asset Manager shall not be required to perform any additional services pursuant to this Agreement if the Asset Manager determines in its sole discretion that the provision of such services will require the Asset Manager to register under the Advisers Act.  The Asset Manager agrees that its activities will at all times be in compliance in all material respects with all applicable federal, state and territorial laws governing its operations and investments.

 

6.                                       Employment of the Asset Manager.

 

(a)                                  The Asset Manager may engage in any other business or render similar or different services to others including, without limitation, the direct or indirect sponsorship or management of other investment based accounts or commingled pools of capital, however structured, having investment objectives similar to those of the Company, so long as its services to the Company hereunder are not impaired thereby, and nothing in this Agreement shall limit or restrict the right of any manager, partner, officer or employee of the Asset Manager to engage in any other business or to devote his or her time and attention in part to any other business, whether of a similar or dissimilar nature, or to receive any fees or compensation in connection therewith. The Asset Manager assumes no responsibility under this Agreement other than to render the services called for hereunder. It is understood that directors, officers, employees, partners and shareholders of the Company are or may become interested in the Asset Manager and its affiliates, as directors, officers, employees, partners, stockholders, members, asset managers or otherwise, and that the Asset Manager and directors, officers, employees, partners, stockholders, members and managers of the Asset Manager and its affiliates are or may become similarly interested in the Company as shareholders or otherwise.

 

(b)                                 During the term of this Agreement, (i) the Asset Manager shall be the exclusive provider of asset management and corporate governance services to the Company, and (ii) the Company shall not employ or contract with any other party to receive the same or substantially similar services as set forth herein without the prior written consent of the Asset Manager, which may be withheld by the Asset Manager in its sole discretion.

 

7.                                       Responsibility of Dual Directors, Officers and/or Employees.  If any person who is a manager, partner, officer or employee of the Asset Manager is or becomes a director, officer and/or employee of the Company and acts as such in any business of the Company, then such manager, partner, officer and/or employee of the Asset Manager shall be deemed to be acting in such capacity solely for the Company, and not as a manager, partner, officer or employee of the Asset Manager or under the control or direction of the Asset Manager, even if paid by the Asset Manager.

 

8.                                       Limitation of Liability of the Asset Manager; Indemnification.  The Asset Manager (and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Asset Manager) shall not be liable to the

 

3



 

Company for any action taken or omitted to be taken by the Asset Manager in connection with the performance of any of its duties or obligations under this Agreement or otherwise as an asset manager of the Company with respect to the receipt of compensation for services, and the Company shall indemnify, defend and protect the Asset Manager (and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Asset Manager, each of whom shall be deemed a third party beneficiary hereof) (collectively, the “Indemnified Parties”) and hold them harmless from and against all damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) incurred by the Indemnified Parties in or by reason of any pending, threatened or completed action, suit, investigation or other proceeding (including an action or suit by or in the right of the Company or its shareholders) arising out of or otherwise based upon the performance of any of the Asset Manager’s duties or obligations under this Agreement or otherwise as an asset manager of the Company. Notwithstanding the preceding sentence of this Paragraph 8 to the contrary, nothing contained herein shall protect or be deemed to protect the Indemnified Parties against or entitle or be deemed to entitle the Indemnified Parties to indemnification in respect of, any liability to the Company or its shareholders, to which the Indemnified Parties would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of the Asset Manager’s duties or by reason of the reckless disregard of the Asset Manager’s duties and obligations under this Agreement.

 

9.                                       No Joint Venture. Nothing in this Agreement shall be construed to make the Company and the Asset Manager partners or joint venturers or impose any liability as such on either of them.

 

10.                                 Term; Termination.

 

(a)                                  Until this Agreement is terminated in accordance with its terms, this Agreement shall be in effect until [    , 2027] (the “Initial Term”) and shall be automatically renewed for a one-year term each anniversary date thereafter (a “Renewal Term”) unless at least two-thirds of the Independent Directors (as defined herein) agree that (x) there has been unsatisfactory performance by the Asset Manager that is materially detrimental to the Company or (y) the compensation payable to the Asset Manager hereunder is unreasonable; provided that the Company shall not have the right to terminate this Agreement under clause (y) above if the Asset Manager agrees to continue to provide the services under this Agreement at a reduced fee that at least two-thirds of the Independent Directors determines to be reasonable pursuant to the procedure set forth below. If the Company elects not to renew this Agreement at the expiration of the Initial Term or any Renewal Term as set forth above, the Company (the “Terminating Party”), shall deliver to the Asset Manager prior written notice (the “Termination Notice”) of the Terminating Party’s intention not to renew this Agreement based upon the terms set forth in this Section 10(a) not less than 180 days prior to the expiration of the then existing term. If the Terminating Party so elects not to renew this Agreement, the Terminating Party shall designate the date (the “Effective Termination Date”), not less than 180 days from the date of the notice, on which the Asset Manager shall cease to provide services under this Agreement, and this Agreement shall terminate on such date; provided, however, that in the event that such Termination Notice is given in connection with a determination that the compensation payable to the Asset Manager is unfair, the Asset Manager shall have the right to renegotiate such compensation by delivering to the Company, no fewer than 45 days prior to the prospective

 

4



 

Effective Termination Date, written notice (any such notice, a “Notice of Proposal to Negotiate”) of its intention to renegotiate its compensation under this Agreement. Thereupon, the Company (represented by the Independent Directors) and the Asset Manager shall endeavor to negotiate in good faith the revised compensation payable to the Asset Manager under this Agreement. Provided that the Asset Manager and at least two-thirds of the Independent Directors agree to the terms of the revised compensation to be payable to the Asset Manager within 45 days following the receipt of the Notice of Proposal to Negotiate, the Termination Notice shall be deemed of no force and effect and this Agreement shall continue in full force and effect on the terms stated in this Agreement, except that the compensation payable to the Asset Manager hereunder shall be the revised compensation then agreed upon by the parties to this Agreement. Each of the parties agrees to execute and deliver an amendment to this Agreement setting forth such revised compensation promptly upon reaching an agreement regarding same. In the event that the Company and the Asset Manager are unable to agree to the terms of the revised compensation to be payable to the Asset Manager during such 45-day period, this Agreement shall terminate, such termination to be effective on the date which is the later of (A) 10 days following the end of such 45-day period and (B) the Effective Termination Date originally set forth in the Termination Notice.  For purposes of this Agreement, “Independent Directors” shall mean the members of the Board of Directors who are not officers or employees of the Asset Manager or any person or entity directly or indirectly controlling or controlled by the Asset Manager, and who are otherwise “independent” in accordance with the Company’s organizational documents.

 

(b)                                 In recognition of the level of the upfront effort required by the Asset Manager to structure and acquire the assets of the Company and the commitment of resources by the Asset Manager, in the event that this Agreement is terminated in accordance with the provisions of Section 10(a) of this Agreement, the Company shall pay to the Asset Manager, on the date on which such termination is effective, a termination fee (the “Termination Fee”) equal to five (5) times the Management Fee. The obligation of the Company to pay the Termination Fee shall survive the termination of this Agreement.

 

(c)                                  No later than 180 days prior to the anniversary date of this Agreement of any year during the Initial Term or Renewal Term, the Asset Manager may deliver written notice to the Company informing it of the Asset Manager’s intention to decline to renew this Agreement, whereupon this Agreement shall not be renewed and extended and this Agreement shall terminate effective on the anniversary date of this Agreement next following the delivery of such notice. The Company is not required to pay to the Asset Manager the Termination Fee if the Asset Manager terminates this Agreement pursuant to this Section 10(c).

 

(d)                                 If this Agreement is terminated pursuant to Section 10, such termination shall be without any further liability or obligation of either party to the other, except as provided in Sections 1(d), 3, 10(b), 11(b), 11(c) and 12 of this Agreement. In addition, Sections 8 and 16 of this Agreement shall survive termination of this Agreement.

 

11.                                 Termination for Cause.

 

(a)                                  The Company may terminate this Agreement effective upon 30 days’ prior written notice of termination from the Board of Directors to the Asset Manager, without payment of any Termination Fee, if (i) the Asset Manager, its agents or its assignees materially breaches

 

5



 

any provision of this Agreement and such breach shall continue for a period of 30 days after written notice thereof specifying such breach and requesting that the same be remedied in such 30-day period (or 60 days after written notice of such breach if the Asset Manager takes steps to cure such breach within 30 days of the written notice), (ii) the Asset Manager engages in any act of fraud, misappropriation of funds, or embezzlement against the Company, (iii) there is an event of any gross negligence on the part of the Asset Manager in the performance of its duties under this Agreement, (iv) there is a commencement of any proceeding relating to the Asset Manager’s bankruptcy or insolvency, including an order for relief in an involuntary bankruptcy case or the Asset Manager authorizing or filing a voluntary bankruptcy petition, or (v) there is a dissolution of the Asset Manager.

 

(b)                                 The Asset Manager may terminate this Agreement effective upon 60 days’ prior written notice of termination to the Company in the event that the Company shall default in the performance or observance of any material term, condition or covenant contained in this Agreement and such default shall continue for a period of 30 days after written notice thereof specifying such default and requesting that the same be remedied in such 30-day period (or 60 days after written notice of such breach if the Company takes steps to cure such breach within 30 days of the written notice). The Company is required to pay to the Asset Manager the Termination Fee if the termination of this Agreement is made pursuant to this Section 11(b).

 

(c)                                  The Asset Manager may terminate this Agreement in the event the Company becomes regulated as an “investment company” under the Investment Company Act of 1940, as amended, with such termination deemed to have occurred immediately prior to such event. The Company shall pay to the Asset Manager the Termination Fee in the event that this Agreement is terminated pursuant to this Section 11(c).

 

12.                                 Action Upon Termination. From and after the effective date of termination of this Agreement, pursuant to Sections 10 or 11 of this Agreement, the Asset Manager shall not be entitled to compensation for further services under this Agreement, but shall be paid all compensation accruing to the date of termination and, if terminated pursuant to Sections 10(a), 11(b) or 11(c), the applicable Termination Fee. Upon such termination, the Asset Manager shall deliver to the Board of Directors all property and documents of the Company then in the custody of the Asset Manager.

 

13.                                 Notices.  Any notice under this Agreement shall be given in writing, addressed and delivered or mailed, postage prepaid, to the other party at its principal office.

 

14.                                 Amendments.  This Agreement may be amended by mutual consent of the parties.

 

15.                                 Entire Agreement; Governing Law.  This Agreement contains the entire agreement of the parties and supersedes all prior agreements, understandings and arrangements with respect to the subject matter hereof. This Agreement shall be construed in accordance with the laws of Bermuda.

 

[The remainder of this page intentionally left blank]

 

6



 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above by their duly authorized representatives.

 

 

NEWSOURCE REINSURANCE COMPANY LTD

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

ALTISOURCE ASSET MANAGEMENT CORPORATION

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

[ASSET MANAGEMENT AGREEMENT]

 


EXHIBIT 10.6

 

SHAREHOLDERS’ AGREEMENT (the “Agreement”), dated as of [    ], 2012, among ALTISOURCE ASSET MANAGEMENT CORPORATION, a U.S. Virgin Islands corporation (“AAMC”), ALTISOURCE RESIDENTIAL, L.P., a Delaware limited partnership (“ARLP”) (AAMC and ARLP are hereinafter sometimes referred to collectively as the “Shareholders” and individually as a “Shareholder”), and NEWSOURCE REINSURANCE COMPANY LTD., a company organized under the laws of Bermuda (the “Company”).

 

RECITALS

 

WHEREAS, as of the date hereof, the Company is authorized to issue [    ] common shares, par value US$0.01 per share (the “Common Shares”) and [    ] preferred shares, par value US$0.01 per share (the “Preferred Shares”), and all of the issued and outstanding Common Shares, consisting of 2,000,000 Common Shares, are held by AAMC, and all of the issued and outstanding Preferred Shares, consisting of 18,000,000 Preferred Shares, are held by ARLP.

 

NOW, THEREFORE, in consideration of the mutual promises of the parties hereto and of the mutual benefits to be gained by the performance thereof and for other good and valuable consideration, the receipt, adequacy and sufficiency of which is hereby acknowledged, the parties hereto for themselves, their heirs, executors, administrators, successors and assigns do hereby agree as follows:

 

1.                                      ADMISSION OF ADDITIONAL SHAREHOLDERS.

 

1.1.         Notwithstanding anything contained in this Agreement to the contrary, this Agreement shall not be amended to include any additional shareholders without the prior written consent of AAMC at its sole discretion.  The Company may not grant rights to any shareholder that are substantially similar to the rights granted to the Shareholders under this Agreement.

 

2.                                      DISPOSITION OF SHARES.

 

2.1.         Transfers Generally.  No Shareholder shall Transfer any Company Securities without the prior written consent of AAMC and, if required, prior approval of the Exchange Control Division of the Bermuda Monetary Authority, except as otherwise provided pursuant to this Article 2.

 

2.2.         Transfers to Affiliates.  A Shareholder shall be free at any time to Transfer shares of Company Securities to a Person who is an Affiliate of such Shareholder.  A Shareholder also may Transfer Company Securities involuntarily by operation of law.  Unless the Company and each of the Shareholders otherwise agree in writing, a transferee of any such permitted Transfer shall acquire and hold the transferred Company Securities, as the case may be, subject to any rights, restrictions and obligations of the transferor and shall be otherwise subject to the terms of this Agreement.

 

2.3.         Tag-Along Rights.

 

(a)           If AAMC proposes to Transfer any or all of its shares of Company Securities to one or more party(ies) (the “Tag Purchaser”), AAMC shall provide not less than forty-five (45) days prior written notice (the “Tag Notice”) to ARLP of such

 



 

proposed sale, stating (i) AAMC’s bona fide intention to Transfer such Company Securities (the “Initial Tag Securities”), (ii) the number of Initial Tag Securities to be Transferred, and (iii) the price and terms, if any, upon which it proposes to Transfer the Initial Tag Securities.  Upon receipt of a Tag Notice, ARLP may elect to exercise its tag along rights to sell Company Securities to the Tag Purchaser (up to an amount calculated in accordance with paragraph (b) below) at any time within three (3) days following the determination of the Per Share Fair Market Value of the Additional Tag Securities (as defined below) by delivering a written notice of acceptance (the “Notice of Acceptance”) stating the number of Company Securities that it desires to sell.  If the price at which the Initial Tag Securities are to be sold under this Section 2.3 is changed after ARLP has elected to be included in such Transfer, AAMC shall promptly give written notice to ARLP, and ARLP shall have a period of five (5) days from its receipt of such notice to notify AAMC that it has elected to revoke its election to participate in such sale.

 

(b)           Upon the written request of ARLP in accordance with Section 2.3(a) above, AAMC covenants and agrees to include in such Transfer, and ARLP shall be entitled to sell to such Tag Purchaser, upon terms and conditions that are the same as the terms and conditions under which AAMC proposes to Transfer the Initial Tag Securities and a per share price equal to the Per Share Fair Market Value, that number of Preferred Shares (“Additional Tag Securities”) up to the product of (i) the number of Preferred Shares held by ARLP immediately prior to the consummation of such Transfer and (ii) a fraction, the numerator of which is the number of Common Shares that the Tag Purchaser intends to purchase from AAMC and the denominator of which is the sum of the aggregate number of Common Shares owned, in the aggregate, by all Shareholders immediately prior to the consummation of such Transfer.

 

(c)           AAMC shall use its reasonable efforts to obtain the agreement of the Tag Purchaser to the participation of ARLP in the Transfer, and AAMC shall not consummate the proposed Transfer of the Initial Tag Securities to the Tag Purchaser unless (i) the Tag Purchaser agrees to the participation of ARLP as contemplated by this Agreement, or (ii) AAMC agrees to purchase the Additional Tag Securities on the same terms as ARLP would have been entitled to sell them to the Tag Purchaser for under this Section 2.3.  The number of Initial Tag Securities sold by AAMC to the Tag Purchaser shall be reduced by the number of Common Shares having an aggregate purchase price (as such price is set forth in the Tag Notice) equal to the purchase price for the Additional Tag Securities to be paid by the Tag Purchaser to ARLP pursuant to this Section 2.3.

 

2.4.         Drag-Along Rights.

 

(a)           Subject to Section 2.5 hereto, if any Person (or group of Persons) that is not a Shareholder or an Affiliate thereof makes a bona fide offer to engage in any transaction or series of transactions that would result in a Change of Control, and such transaction or transactions are approved by AAMC (such transaction or transactions, a “Drag-Along Sale”, AAMC shall have the right (a “Drag-Along Right”), but not the obligation, to require ARLP (the “Dragged Person”) to tender for purchase to the proposed Transferee, on the same terms and conditions as apply to AAMC and a per share price equal to the Per Share Fair Market Value, that number of Preferred Shares up

 



 

to the product of (i) the number of Preferred Shares held by ARLP immediately prior to the consummation of such Drag-Along Sale and (ii) a fraction, the numerator of which is the number of Common Shares being sold by all holders of Common Shares in such Drag-Along Sale and the denominator of which is the sum of the aggregate number of Common Shares owned, in the aggregate, by all Shareholders immediately prior to the consummation of such Drag-Along Sale; provided, the Dragged Person, in its capacity as a Shareholder, shall also vote in favor of any Drag-Along Sale to the extent such transaction(s) requires the approval of the Shareholders, provided the terms of the Drag-Along Sale are consistent with this Section 2.4 and Section 2.5 below.

 

(b)           If AAMC elects to exercise its Drag-Along Right under this Section 2.4, AAMC shall give the Dragged Person, at least forty-five (45) days prior to the proposed Drag-Along Sale, a written notice (a “Drag-Along Notice”) containing (i) the number of Company Securities proposed to be Transferred in such Drag-Along Sale (with warrants, options, convertible securities and other common equivalents counted on an as-converted or as-exercised basis) (the “Drag-Along Terms”), (ii) the name and address of the proposed Transferee and (iii) the consideration for which the Transfer is proposed to be made (subject to the determination of the Per Share Fair Market Value of the Preferred Shares proposed to be Transferred in the Drag-Along Sale), and all other material terms and conditions of the Drag-Along Terms, including the form of the proposed agreement, if any.  Upon the receipt of a Drag-Along Notice and the determination of the Per Share Fair Market Value of the Preferred Shares to be Transferred in the Drag-Along Sale, the Dragged Person shall be obligated to sell such Preferred Shares held by the Dragged Person.

 

(c)           No later than five (5) Business Days prior to the proposed closing for the Drag-Along Sale, the Dragged Person shall deliver to the Company (or its designated agent) (i) the certificate or certificates, if any, representing the Company Securities of the Dragged Person to be included in the Drag-Along Sale, together with a limited power-of-attorney authorizing AAMC to Transfer such Company Securities on the terms set forth in the Drag-Along Notice or, in the case of Company Securities held in book-entry form or through direct registration, shall make other delivery arrangements reasonably satisfactory to the Company and (ii) wire transfer instructions for payment of the purchase price for the Company Securities to be sold in such Drag-Along Sale.  If the Dragged Person fails to make the deliveries described in this paragraph within the prescribed time, the Company shall have the right, but not the obligation, to redeem, immediately prior to the consummation of the Drag-Along Sale, the Company Securities of the Dragged Person at a redemption price equal to the consideration set forth in the Drag-Along Notice, payable upon the terms and subject to the conditions contained in the Drag-Along Notice.

 

(d)           AAMC shall Transfer, on behalf of itself and the Dragged Person, the Company Securities subject to the Drag-Along Sale at the same time and, except as permitted in Section 2.5(a) below, on the same terms and conditions as set forth in the Drag-Along Notice.  Concurrently with the consummation of the Drag-Along Sale, (i) AAMC shall notify the Dragged Person thereof (including identifying the manner of delivery for any non-cash consideration) and (ii) the total consideration due to the

 



 

Dragged Person shall be remitted to such party, with the cash portion of the purchase price paid by wire transfer of immediately available funds in accordance with the wire transfer instructions of the Dragged Person.  Promptly after the consummation of such Drag-Along Sale, AAMC shall furnish such other evidence of the completion and the date of completion of such Transfer as may be reasonably requested by the Dragged Person.

 

(e)           If AAMC has not completed the Transfer of all such Company Securities on the same terms and conditions as set forth in the Drag-Along Notice (except as permitted in Section 2.5(a) below) within 90 calendar days of the date of the Drag-Along Notice (which 90 calendar day period shall be extended if any of the transactions contemplated by the Drag-Along Sale are subject to regulatory approval until the expiration of five (5) Business Days after all such approvals have been received, but in no event later than 180 calendar days from the date of the Drag-Along Notice), (i) the Company (or its designated agent) shall return to the Dragged Person, to the extent previously provided, the limited power-of-attorney (and all copies thereof) together with all Company Securities, including the certificates representing the Company Securities, if any, that the Dragged Person delivered for Transfer pursuant to this Section 2.4 and any other documents executed by the Dragged Person in connection with the proposed Drag-Along Sale and (ii) AAMC shall not conduct any Transfer of Company Securities prior to the return to the Dragged Person of all documents referred to in clause (i) and without again complying with this Section 2.4.

 

(f)            The Company shall, and shall cause its employees, accountants and other advisors, representatives and agents to, use its and their commercially reasonable efforts to take all reasonable and necessary action to assist AAMC in its efforts to effect a Drag-Along Sale, including permitting bona fide prospective purchasers to conduct customary due diligence of the Company in a reasonable manner, during regular business hours and upon reasonable advance notice, subject to (i) the execution and delivery of a customary confidentiality agreement with the Company and (ii) the Company’s and the compliance of the board of directors of the Company (the “Board of Directors”) with applicable laws, rules, regulations and orders and any restrictions or commitments in any contracts or agreements to which the Company or any of its subsidiaries is a party or by which it or any of them is bound.

 

2.5.         Additional Conditions to Drag-Along Sales.  Notwithstanding anything contained in Section 2.4 hereto, the obligations of Shareholders to participate in a Drag-Along Sale are subject to the following conditions:

 

(a)           upon the consummation of such Drag-Along Sale, each holder of each class or series of the Company Securities will receive the same form of consideration for their shares of such class or series as is received by other holders in respect of their shares of such same class or series of Company Securities;

 

(b)           subject to Section 2.5(a) requiring the same form of consideration to be available to the holders of any single class or series of Company Securities, if any holders of any Company Securities are given an option as to the form and amount of

 



 

consideration to be received as a result of the Drag-Along Sale, all holders of such Company Securities will be given the same option; provided, however, that nothing in this Section 2.5(b) shall entitle any holder to receive any form of consideration that such holder would be ineligible to receive as a result of such holder’s failure to satisfy any condition, requirement or limitation that is generally applicable to the Company’s shareholders.

 

(c)           no Person shall be obligated pursuant to this Agreement to pay any expenses incurred in connection with any unconsummated Drag-Along Sale and each Shareholder shall be obligated to pay only its pro rata share (based on the number of Company Securities Transferred) of expenses incurred in connection with a consummated Drag-Along Sale; and

 

(d)           the Dragged Person shall (i) make such representations, warranties and covenants and enter into such definitive agreements as are customary for transactions of the nature of the proposed Transfer and as are the same as those applicable to AAMC; provided that, if the Dragged Person is required to provide any representations or indemnities in connection with such Transfer (other than representations and indemnities concerning the Dragged Person’s title to the Company Securities and authority, power and right to enter into and consummate the Transfer without contravention of any law or agreement), liability for misrepresentation or indemnity shall (as to the Dragged Person) be expressly stated to be several but not joint and the Dragged Person shall not be liable for more than the net proceeds received by such Shareholder in connection with such Transfer; provided, further that, the Dragged Person shall not be required to provide any representations or warranties other than with respect to each such Shareholder’s title to the shares of Company Securities and authority, power and right to enter into and consummate the Transfer without contravention of any law or agreement (the “Non-Title Representations”), but each Shareholder may be required to bear its proportionate share of any indemnity, escrow, holdback or adjustment in purchase price in connection with any Non-Title Representations; provided, further that, no Shareholder will be required or deemed to have agreed to any noncompete, nonsolicitation or any other nonfinancial terms without its express written consent, (ii) be subject to and benefit from all of the same provisions of the definitive agreements as AAMC, and (iii) be required to bear their proportionate share of any escrows, holdbacks or adjustments in purchase price.

 

3.                                      CONFIDENTIAL INFORMATION

 

Each Shareholder (and for the purposes of this Article 3, each Shareholder shall be deemed to include shareholders, members or owners of Shareholders) shall keep Business Information confidential, and shall not use or disclose Business Information in any manner whatsoever, in whole or in part, without the Company’s prior written consent, or, in the event the Company has dissolved, the prior written consent of each of the Shareholders of the Company at the time of its dissolution, unless such confidential information (a) is known or becomes known to the public in general (other than as a result of a breach of this Article 3 by the Shareholders), (b) is or has been independently developed or conceived by the Shareholders without use of the Company’s confidential information, or (c) is or has been made known or disclosed to the Purchasers by a third party without a breach of any obligation of confidentiality such third party

 



 

may have to the Company; provided, however, that each Shareholder may disclose confidential information (i) to its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company, (ii) to any prospective purchaser of any shares of Company Securities of the Company, if such prospective purchaser agrees to be bound by the provisions of this Article 3, (iii) to any Affiliate, member, or wholly owned subsidiary of the Shareholder in the ordinary course of business, provided that the Shareholder informs such Person that such information is confidential and directs such Person to maintain the confidentiality of such information, or (iv) as may otherwise be required by law, provided that the Shareholder promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure.

 

4.                                      MISCELLANEOUS PROVISIONS.

 

4.1.         Termination.  This Agreement shall terminate upon the earlier to occur of (i) the consummation of a Qualified IPO or (ii) the execution of a written agreement by each of the Shareholders to terminate this Agreement.

 

4.2.         Insurance.  The Company shall obtain, within ninety (90) days of the date hereof, from financially sound and reputable insurers, Directors and Officers Liability and Errors and Omissions insurance (the “D&O Policy”) in an amount satisfactory to the Board of Directors, and will cause the D&O Policy to be maintained during the term of this Agreement.

 

4.3.         Amendment.  This Agreement may only be amended by written instrument executed by all of the Shareholders.

 

4.4.         Application of Bermuda Law.  This Agreement, including its application and interpretation, shall be governed exclusively by the laws of Bermuda.

 

4.5.         Execution of Additional Instruments.  Each Shareholder hereby agrees to execute such other and further statements of interest and holdings, designations, powers of attorney and other instruments necessary to comply with any laws, rules or regulations.

 

4.6.         Construction.  Whenever the singular form is used in this Agreement, if required by the context, the same shall include the plural, and vice versa. Whenever the masculine gender is used in this Agreement, if required by the context, the same shall include the feminine and neuter genders, and vice versa.

 

4.7.         Headings.  The headings in this Agreement are inserted for convenience only and are in no way intended to describe, interpret, define, or limit the scope, extent or intent of the Agreement or any provision hereof.

 

4.8.         Waivers.  No waiver by any party hereto of any breach of covenant, condition or term hereof, whether intentional or not, shall be deemed to extend to any prior or subsequent breach of any covenant, condition or term hereof or affect in any way any rights arising by virtue of any such prior or subsequent occurrence.

 

4.9.         Rights and Remedies Cumulative.  The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party shall not

 



 

preclude or waive the right of such party to use any or all other available remedies. Such rights and remedies are given in addition to any other rights the parties may have by law, statute, ordinance or otherwise.

 

4.10.       Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.

 

4.11.       Further Assurances.  The Shareholders each agree to cooperate, and to execute and deliver in a timely fashion any and all additional documents necessary to effectuate the purposes of the Company and this Agreement.

 

4.12.       Notices.  All notices, consents, requests and other communications hereunder shall be in writing and shall be sent by hand delivery, by certified or registered mail (return-receipt requested) or by a recognized national overnight courier service.  Notices delivered pursuant to this Section shall be deemed given: at the time delivered, if personally delivered; three (3) business days after being deposited in the mail, if mailed; and one (1) business day after timely delivery to the courier, if by overnight courier service.  Any party may change the address to which notice is to be sent by written notice to the other parties hereto in accordance with this Section 4.12.

 

4.13.       Entire Agreement.  This Agreement and any exhibits, schedules and appendices hereto contain the entire agreement between the parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the parties with respect to the subject matter hereof other than those set forth or referred to herein.

 

4.14.       Independence/No Duty.  AAMC shall vote its Common Shares independently of its obligations under any contractual agreement with ARLP and without regard to the effects of such vote on ARLP.  ARLP hereby confirms that AAMC has no duty to consider the views or interests of ARLP in voting its Common Shares and will not request that AAMC vote such shares in any particular way.

 

5.                                      DEFINITIONS.

 

As used herein, the following terms shall have the following meanings:

 

Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

 

Business Day” means a day other than Saturday, Sunday or any day on which banks in New York, New York or Bermuda are authorized or obligated to close.

 

Business Information” shall mean any confidential or non-public information about the business of the Company, including, without limitation, information relating to customer contacts, business plans, financial information, contracts, records, notes or analyses or the ownership of the Company or any of its Affiliates.

 



 

Change of Control” shall mean (a) the sale, exclusive license or other disposition of all or substantially all of the assets of the Company in any single transaction or series of related transactions, other than to an Affiliate, (b) the sale of all of the Common Shares held by AAMC, or (c) any merger, amalgamation, reorganization, consolidation or other transaction or series of transactions (other than with an Affiliate) involving the Company which results in the holders of Common Shares outstanding immediately prior to such transaction(s) failing to continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the combined voting power of the voting securities of the Company or the surviving entity outstanding immediately after such transaction(s).

 

Company Securities” means (a) Common Shares and Preferred Shares (whether now outstanding or hereafter issued in any context), and (b) Common Shares or Preferred Shares issued or issuable upon exercise or conversion, as applicable, of stock options, warrants or other convertible securities of the Company, in each case now owned or subsequently acquired.

 

Control” of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.

 

Per Share Fair Market Value” shall mean the fair market value as determined by (i) an independent appraiser acceptable to AAMC and ARC, or, if AAMC and ARC cannot agree on such an appraiser, (ii) an independent appraiser selected by each of them in which case the fair market value shall be the median of the appraisals made by such appraisers, and in each case of (i) and (ii), as determined on a per share basis within thirty (30) days of delivery of the Tag Notice or Drag-Along Notice, as applicable.

 

Person” means an individual, partnership, corporation, business trust, joint stock company, estate, trust, unincorporated association, joint venture, Governmental Authority or other entity, of whatever nature.

 

Qualified IPO” means the Company’s first underwritten public offering of its Common Shares under the Securities Act resulting in proceeds to the Company or such corporate successor in excess of $20,000,000.

 

Securities Act” means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

Transfer” means, as a noun, any voluntary or involuntary transfer, sale, pledge, hypothecation, gift, or other disposition and, as a verb, voluntarily or involuntarily to transfer, sell, pledge, hypothecate, give, or otherwise dispose of.  A Transfer of Company Securities held by a Shareholder shall also include any Transfer of such Shareholder or any direct or indirect interest in a Shareholder that constitutes a direct or indirect change of control of the Shareholder.

 

Transferee” means the recipient of a Transfer.

 



 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their duly authorized representatives.

 

 

COMPANY:

 

 

 

 

NEWSOURCE REINSURANCE COMPANY LTD.

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

SHAREHOLDERS:

 

 

 

 

 

ALTISOURCE ASSET MANAGEMENT CORPORATION

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

ALTISOURCE RESIDENTIAL, L.P.

 

 

 

 

 

By:  Altisource Residential GP, LLC, its general partner

 

 

 

 

 

By:  Altisource Residential Corporation, its sole member

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

[SHAREHOLDERS’ AGREEMENT]

 


EXHIBIT 10.7

 

TITLE SERVICES AGREEMENT, dated as of [   ], 2012 (the “Effective Date”), between NEWSOURCE REINSURANCE COMPANY LTD., a private limited liability company organized under the laws of Bermuda together with its subsidiaries and affiliates (“NEWSOURCE”) and ATLTISOURCE SOLUTIONS S.À R.L., a private limited liability company organized under the laws of the Grand Duchy of Luxembourg (together with its subsidiaries and affiliates, “ALTISOURCE”).

 

RECITALS

 

WHEREAS, NEWSOURCE desires to engage ALTISOURCE to provide various Services and/or Additional Services to NEWSOURCE pursuant to the terms and conditions set forth herein, and ALTISOURCE desires to provide such Services and/or Additional Services to NEWSOURCE.

 

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, the parties agree as follows:

 

1.                                      Definitions.

 

For the purposes of this Agreement, the following terms shall have the following meanings:

 

“Action” means any demand, action, suit, countersuit, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority or any federal, state, local, foreign or international arbitration or mediation tribunal.

 

“Affiliate” means with respect to any Person (a “Principal”) (a) any directly or indirectly wholly-owned subsidiary of such Principal, (b) any Person that directly or indirectly owns 100% of the voting stock of such Principal or (c) a Person that controls, is controlled by or is under common control with such Principal. As used herein, “control” of any entity means the possession, directly or indirectly, through one or more intermediaries, of the power to direct or cause the direction of the management or policies of such entity, whether through ownership of voting securities or other interests, by contract or otherwise. Furthermore, with respect to any Person that is partially owned by such Principal and does not otherwise constitute an Affiliate (a “Partially-Owned Person”), such Partially-Owned Person shall be considered an Affiliate of such Principal for purposes of this Agreement if such Principal can, after making a good faith effort to do so, legally bind such Partially-Owned Person to this Agreement.

 

“Agreement” means this Title Services Agreement, including the Schedules hereto and any SOWs entered into pursuant to Section 2(b).

 

“BMA” means the Bermuda Monetary Authority.

 

“Fully Allocated Cost” means, with respect to provision of a Service and/or an Additional Service, the all-in actual cost of the provision of such Service and/or Additional Service by ALTISOURCE, including all amounts for compensation and benefits, technology expenses, occupancy, office and equipment expense, and third-party payments incurred in connection with the provision of such Service, plus applicable mark up agreed to by the parties,

 



 

including any Taxes payable as a result of performance of such Service and/or Additional Service.

 

“Governmental Authority” shall mean any federal, state, local, foreign or international court, government, department, commission, board, bureau, agency, official or other legislative, judicial, regulatory, administrative or governmental authority.

 

“Information” means information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, algorithms, computer programs or other software, marketing plans, customer names, communications by or to attorneys (including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), and other technical, financial, employee or business information or data.

 

“Intellectual Property” means all domestic and foreign patents, copyrights, trade names, domain names, trademarks, service marks, registrations and applications for any of the foregoing, databases, mask works, Information, inventions (whether or not patentable or patented), processes, know-how, procedures, computer applications, programs and other software, including operating software, network software, firmware, middleware, design software, design tools, systems documentation, manuals, and instructions, other proprietary information, and licenses from third parties granting the right to use any of the foregoing.

 

“Performance Fee” means an amount equal to 90% of NEWSOURCE’s income before taxes for each fiscal year (as determined in accordance with generally accepted accounting practices in the United States, applied consistently) minus all dividends paid or payable with respect to the holders of the preferred shares of NEWSOURCE which accrued during such fiscal year, payable in accordance with Section 4.

 

“Person” means an individual, a general or limited partnership, a corporation, a trust, a joint venture, an unincorporated organization, a limited liability entity, any other entity and any Governmental Authority.

 

“Services” means services that may be provided by ALTISOURCE to NEWSOURCE and set forth on Schedule I and any SOWs related thereto.

 

“SOW” means a statement of work entered into between the parties on an as-needed basis to describe an Additional Service to be performed hereunder. Any SOW shall be agreed to by each party, shall be in writing and (I) shall contain: (i) a description of the services to be performed thereunder; (ii) the applicable performance standard for the provision of such service, if different from the Performance Standard; (iii) the amount, schedule and method of compensation for provision of such service, which shall estimate the Fully Allocated Cost of such service; and (II) may contain (i) NEWSOURCE’s standard operating procedures for receipt of services similar to such service, including NEWSOURCE’s compliance requirements and related training schedules; (ii) information technology support requirements of NEWSOURCE

 



 

with respect to such service; and (iii) training and support commitments with respect to such service. For the avoidance of doubt, the terms and conditions of this Agreement shall apply to any SOW except to the extent of a conflict between a provision of this Agreement and the SOW, in which case, the terms of the SOW shall control.

 

2.                                      Provision of Services.

 

(a)                     Generally.  Subject to the terms and conditions of this Agreement, (i) ALTISOURCE shall provide, or cause to be provided, to NEWSOURCE, solely for the benefit of the NEWSOURCE business in the ordinary course of business, the Services, in each case for periods commencing on the Effective Date through the Initial Term or Renewal Term, as the case may be (the “Service Period”), unless such period is earlier terminated in accordance with Section 5.

 

(b)                     Additional Services.  In addition to the Services provided as set forth on Schedule I, from time to time during the term of this Agreement the parties shall have the right to enter into SOWs to set forth the terms of any related or additional services to be performed hereunder (the “Additional Services”).

 

(c)                      The Services and the Additional Services shall be performed on business days during hours that constitute regular business hours for each of NEWSOURCE and ALTISOURCE, unless otherwise agreed. NEWSOURCE, shall not resell, subcontract, license, sublicense or otherwise transfer any of the Services and/or Additional Services to any Person whatsoever or permit use of any of the Services and/or Additional Services by any Person other than by NEWSOURCE directly in connection with the conduct of NEWSOURCE’s respective business in the ordinary course of business.

 

(d)                     Unless agreed separately by the parties, ALTISOURCE shall have the exclusive right to select, employ, pay, supervise, administer, direct and discharge any of its employees who will perform Services and/or Additional Services. ALTISOURCE shall be responsible for paying such employees’ compensation and providing to such employees any benefits. With respect to each Service and/or Additional Service, ALTISOURCE shall use commercially reasonable efforts to have qualified individuals participate in the provision of such Service and/or Additional Service; provided, however, that (i) ALTISOURCE shall not be obligated to have any individual participate in the provision of any Service and/or Additional Service if ALTISOURCE determines that such participation would adversely affect ALTISOURCE or its Affiliates; and (ii) none of ALTISOURCE or its Affiliates shall be required to continue to employ any particular individual during the applicable Service Period.

 

(e)                      ALTISOURCE may engage third-party contractors, at a reasonable cost, to perform any of the Services and/or Additional Services, to provide professional services related to any of the Services and/or Additional Services, or to provide any secretarial, administrative, telephone, e-mail or other services necessary or ancillary to the Services (all of which may be contracted for separately by ALTISOURCE on behalf of NEWSOURCE). ALTISOURCE shall use reasonable commercial efforts to give notice to NEWSOURCE, reasonably in advance of the commencement of such Services and/or Additional Services to be so provided by such contractors, of the identity of such contractors, each Service and/or Additional Service to be provided by such

 



 

contractors and a good faith estimate of the cost (or formula for determining the cost) of the Services and/or Additional Services to be so provided by such contractors.

 

3.                                      Standard of Performance.

 

(a)                     ALTISOURCE shall use commercially reasonable efforts to provide, or cause to be provided, to NEWSOURCE, each Service and/or Additional Service in a manner generally consistent with the manner and level of care with which such Service and/or Additional Service is performed by ALTISOURCE for its own behalf (the “Performance Standard”), unless otherwise specified in this Agreement. Notwithstanding the foregoing, ALTISOURCE shall have no obligation hereunder to provide to NEWSOURCE any improvements, upgrades, updates, substitutions, modifications or enhancements to any of the Services and/or Additional Services unless otherwise specified in Schedule I. NEWSOURCE acknowledges and agrees that ALTISOURCE may be providing services similar to the Services and/or Additional Services provided hereunder and/or services that involve the same resources as those used to provide the Services and/or Additional Services to itself and its own Affiliates’ business units as well as other third parties, and, accordingly, ALTISOURCE reserves the right to modify any of the Services and/or Additional Services or the manner in which any of the Services and/or Additional Services are provided in the ordinary course of business; provided, however, that no such modification shall materially diminish the Services and/or Additional Services or have a materially adverse effect on the business of NEWSOURCE.

 

(b)                     ALTISOURCE will use commercially reasonable efforts to provide the Services and/or Additional Services within a time frame so as not to materially disrupt the business of NEWSOURCE.

 

(c)                      ALTISOURCE shall provide disaster recovery and data backup services related to the Services and/or Additional Services to NEWSOURCE, provided that such disaster recovery and data backup services are generally performed by ALTISOURCE for its own behalf in accordance with the Performance Standard. To the extent that such disaster recovery and data backup services are not performed by ALTISOURCE for its own behalf, ALTISOURCE shall not be obliged to perform such services for NEWSOURCE and shall provide NEWSOURCE with advance written notice of the date upon which such services will be provided.

 

4.                                      Fees, Invoicing and Payment.

 

(a)                     NEWSOURCE agrees to pay ALTISOURCE the Performance Fee as compensation for the Services and the Additional Services, subject to the capital restrictions of the BMA and the approval of the Board of Directors of NEWSOURCE, which approval will not unnecessarily be withheld or delayed.

 

(b)                     NEWSOURCE will provide ALTISOURCE with its unaudited monthly financial statements within 15 days of completion by its reinsurance manager.  Within 15 days after the delivery of the unaudited financial statements for any month, NEWSOURCE shall pay to ALTISOURCE eighty percent (80%) of the net income reflected on such financial statements as payment toward the Performance Fee (collectively, all such monthly payments for the annual period corresponding with the annual audited financial statements described below, the “Estimated

 



 

Performance Fee”), subject to this Section 4(b).  NEWSOURCE will provide ALTISOURCE with its audited annual financial statements within 15 days of completion of the annual audit and the approval of same by NEWSOURCE’S Board of Directors.  Within 15 days thereafter, NEWSOURCE shall deliver a statement showing the Performance Fee due ALTISOURCE for the corresponding year, including reasonable supporting documentation (the “Annual Performance Fee Statement”).  NEWSOURCE shall pay to ALTISOURCE or ALTISOUCE shall pay to NEWSOURCE, as the case may be, the difference between the Estimated Performance Fee and the Performance Fee as reflected on the Annual Performance Fee Statement (the “Performance Fee Settlement Payment”).  This payment adjustment provision of this Section 4(b) shall survive the expiration or any earlier termination of this Agreement.  The Performance Fee Settlement Payment shall be paid within 30 days after ALTISOURCE’S receipt of the Annual Performance Fee Statement provided that the payment of the Performance Fee Settlement Payment allows NewSource to maintain sufficient regulatory capital as set by the BMA.  All payments due hereunder shall be paid by wire transfer of immediately available funds to an account or accounts specified by the receiving party, or in such other manner as specified by the receiving party in writing, or otherwise reasonably agreed to by the parties; provided, that, in the event of any dispute as to the Performance Fee, NEWSOURCE shall pay the undisputed portion, if any, of the Performance Fee in accordance with the foregoing, and shall pay the remaining amount, if any, promptly upon resolution of such dispute.

 

(c)                      ALTISOURCE may cause any third party to which amounts are payable by or for the account of NEWSOURCE in connection with Services and/or Additional Services to issue a separate invoice to NEWSOURCE for such amounts. NEWSOURCE shall pay or cause to be paid any such separate third party invoice in accordance with the payment terms thereof. Any third party invoices that aggregate Services and/or Additional Services for the benefit of NEWSOURCE, on the one hand, with services not for the benefit of NEWSOURCE, on the other hand (each, a “Commingled Invoice”), shall be separated by ALTISOURCE. ALTISOURCE shall prepare a statement indicating that portion of the invoiced amount of such Commingled Invoice that is attributable to Services and/or the Additional Services rendered for the benefit of NEWSOURCE (the “Commingled Invoice Statement”). ALTISOURCE shall deliver such Commingled Invoice Statement and a copy of the Commingled Invoice to NEWSOURCE. NEWSOURCE shall, within 30 days after the date of delivery to NEWSOURCE of such Commingled Invoice Statement, pay or cause to be paid the amount set forth on such Commingled Invoice Statement to the third party, and shall deliver evidence of such payment to ALTISOURCE. ALTISOURCE shall not be required to use its own funds for payments to any third party providing any of the Services and/or Additional Services or to satisfy any payment obligation of NEWSOURCE or any of its Affiliates to any third party provider; provided, however, that in the event ALTISOURCE does use its own funds for any such payments to any third party, NEWSOURCE shall reimburse ALTISOURCE for such payments as invoiced by ALTISOURCE within 30 days following the date of delivery of such invoice from ALTISOURCE.

 

(d)                     ALTISOURCE may, in its discretion and without any liability, suspend any performance under this Agreement upon failure of NEWSOURCE to make timely any payments required under this Agreement beyond the applicable cure date specified in Section 5(c)(5).

 

(e)                      In the event that NEWSOURCE does not make any payment required under the provisions of this Agreement to ALTISOURCE when due in accordance with the terms hereof,

 



 

ALTISOURCE may, at its option, charge NEWSOURCE interest on the unpaid amount at the rate of 2% per annum above the prime rate charged by JPMorgan Chase Bank, N.A. (or its successor). In addition, NEWSOURCE shall reimburse ALTISOURCE for all costs of collection of overdue amounts, including any reimbursement required under Section 4(c) and any reasonable attorneys’ fees.

 

(f)                       NEWSOURCE acknowledges and agrees that it shall be responsible for any interest or other amounts with respect to any portion of any Commingled Invoice that NEWSOURCE is required to pay or ALTISOURCE pays on NEWSOURCE’ behalf pursuant to any Commingled Invoice Statement.