As filed with the Securities and Exchange Commission on December 5, 2012

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 


 

Amendment No. 4 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 RESIDENTIAL CORPORATION

 (Exact name of registrant as specified in its charter)

 

Maryland

 

46-0633510

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. employer

identification number)

 

c/o Altisource Asset Management Corporation

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(b) of the Act:

 

Title of each class

 

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

Class B Common Stock, par value $0.01 per share

 

New York Stock Exchange

 

Securities to be registered pursuant to Section 12(g) 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 definitions of “large accelerated filer,”

“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

 

Large accelerated filer o

 

Accelerated filer o

 

Non-accelerated filer o

(Do not check if a smaller reporting company)

 

Smaller reporting company x

 

 

 



 

ALTISOURCE RESIDENTIAL CORPORATION

 

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

 

Our information statement is filed 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 our 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”

 

 

 

 

 

1A.

 

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

 

See “Security Ownership of Certain Beneficial Owners”

 

 

 

 

 

5.

 

Directors and Executive Officers

 

See “Management”

 

 

 

 

 

6.

 

Executive Compensation

 

Not applicable

 

 

 

 

 

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 Shareholder Matters

 

See “The Separation, “Description of Capital Stock” and “Security Ownership of Certain Beneficial Owners”

 

 

 

 

 

10.

 

Recent Sales of Unregistered Securities

 

None

 

 

 

 

 

11.

 

Description of Registrant’s Securities to be Registered

 

See “Description of Capital Stock” and “Certain Provisions of our Charter and Bylaws”

 

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Item No.

 

Caption

 

Location in Information Statement

 

 

 

 

 

12.

 

Indemnification of Directors and Officers

 

See “Indemnification of Directors”

 

 

 

 

 

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

 

(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 Residential, L.P., 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 Residential Corporation and Altisource Portfolio Solutions S.A.

 

 

 

3.1**

 

Altisource Residential Corporation Articles of Amendment and Restatement.

 

 

 

3.2**

 

Bylaws of Altisource Residential Corporation.

 

 

 

8.1**

 

Tax Opinion of Kramer Levin Naftalis & Frankel LLP.

 

 

 

10.1*

 

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

 

 

 

10.2*

 

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

 

 

 

10.3*

 

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

 

 

 

10.4**^

 

Form of Master Services Agreement between Altisource Residential Corporation and Altisource Solutions S.à r.l.

 

 

 

10.5**^

 

Form of Servicing Agreement between Altisource Residential Corporation and Ocwen Loan Servicing, LLC.

 

 

 

10.6*

 

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

 

 

 

10.7*

 

Form of Shareholders’ Agreement among Altisource Residential Corporation, Altisource Asset

 

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Exhibit
Number

 

Exhibit Description

 

 

 

 

 

Management Corporation and NewSource Reinsurance Company Ltd.

 

 

 

10.8*

 

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

 

 

 

10.9**

 

Altisource Residential Corporation Conversion Option Plan.

 

 

 

10.10**

 

Altisource Residential Corporation Special Conversion Option Plan.

 

 

 

99.1**

 

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

 

 

 


 

 

*                 Previously filed.

**          Filed herewith.

^                  Portions of this exhibit have been redacted pursuant to a request for confidential treatment. The non-public information has been filed separately with the Securities and Exchange Commission.

 

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 Residential Corporation

 

 

 

 

 

By:

/s/ William C. Erbey

 

Name: William C. Erbey

 

Title: Chairman

 

 

Dated: December 5, 2012

 

 

v


EXHIBIT 3.1

 

ALTISOURCE RESIDENTIAL CORPORATION

ARTICLES OF AMENDMENT AND RESTATEMENT

 

FIRST: Altisource Residential Corporation, a corporation formed under the laws of the State of Maryland, desires to amend and restate its charter as currently in effect and as hereinafter amended.

 

SECOND: The following provisions are all of the provisions of the charter currently in effect and as hereinafter amended:

 

ARTICLE I

NAME

 

The name of the corporation (the “Corporation”) is:

 

Altisource Residential Corporation

 

ARTICLE II

PURPOSE

 

The purposes for which the Corporation is formed are to engage in any lawful act or activity (including, without limitation or obligation, engaging in business as a real estate investment trust under the Internal Revenue Code of 1986, as amended, or any successor statute (the “Code”)) for which corporations may be organized under the general laws of the State of Maryland as now or hereafter in force. For purposes of the charter of the Corporation (the “Charter”), “REIT” means a real estate investment trust under Sections 856 through 860 of the Code.

 

ARTICLE III

PRINCIPAL OFFICE IN STATE

 

The address of the principal office of the Corporation in the State of Maryland is c/o CSC-Lawyers Incorporating Service Company, 7 St. Paul Street, Suite 1660, Baltimore, MD 21202.

 

ARTICLE IV

RESIDENT AGENT

 

The name and address of the resident agent of the Corporation in the State of Maryland are CSC-Lawyers Incorporating Service Company, 7 St. Paul Street, Suite 1660, Baltimore, MD 21202.

 



 

ARTICLE V

PROVISIONS FOR DEFINING, LIMITING

AND REGULATING CERTAIN POWERS OF THE

CORPORATION AND OF THE STOCKHOLDERS AND DIRECTORS

 

Section 5.1 Number of Directors. The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. The number of directors of the Corporation is three, which number may be increased or decreased only by the Board of Directors pursuant to the Bylaws of the Corporation (the “Bylaws”), but shall never be less than the minimum number required by the Maryland General Corporation Law (the “MGCL”). The names of the directors who shall serve until the next annual meeting of stockholders and until their successors are duly elected and qualify are:

 

William C. Erbey

Stephen H. Gray

John P. Barrack

 

The Board of Directors may increase the number of directors and may fill any vacancy, whether resulting from an increase in the number of directors or otherwise, on the Board of Directors occurring before the first annual meeting of stockholders in the manner provided in the Bylaws.

 

The Corporation elects, at such time as it becomes eligible to make the election provided for under Section 3-804(c) of the MGCL, that, except as may be provided by the Board of Directors in setting the terms of any class or series of Preferred Stock (as hereinafter defined), any and all vacancies on the Board of Directors may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy shall serve for the remainder of the full term of the directorship in which such vacancy occurred and until a successor is elected and qualifies.

 

Section 5.2 Extraordinary Actions. Except as specifically provided in Section 5.8 (relating to removal of directors) and in the last sentence of Article VIII, notwithstanding any provision of law permitting or requiring any action to be taken or approved by the affirmative vote of the stockholders entitled to cast a greater number of votes, any such action shall be effective and valid if declared advisable by the Board of Directors and taken or approved by the affirmative vote of stockholders entitled to cast a majority of all the votes entitled to be cast on the matter.

 

Section 5.3 Authorization by Board of Stock Issuance. The Board of Directors may authorize the issuance from time to time of shares of stock of the Corporation of any class or series, whether now or hereafter authorized, or securities or rights convertible into shares of its stock of any class or series, whether now or hereafter authorized, for such consideration as the Board of Directors may deem advisable (or without consideration in the case of a stock split or stock dividend), subject to such restrictions or limitations, if any, as may be set forth in the Charter or the Bylaws.

 

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Section 5.4 Preemptive and Appraisal Rights. Except as may be provided by the Board of Directors in setting the terms of classified or reclassified shares of stock pursuant to Section 6.4 or as may otherwise be provided by a contract approved by the Board of Directors, no holder of shares of stock of the Corporation shall, as such holder, have any preemptive right to purchase or subscribe for any additional shares of stock of the Corporation or any other security of the Corporation which it may issue or sell. Holders of shares of stock shall not be entitled to exercise any rights of an objecting stockholder provided for under Title 3, Subtitle 2 of the MGCL or any successor statute unless the Board of Directors, upon the affirmative vote of a majority of the Board of Directors, shall determine that such rights apply, with respect to all or any classes or series of stock, to one or more transactions occurring after the date of such determination in connection with which holders of such shares would otherwise be entitled to exercise such rights.

 

Section 5.5 Right to Indemnification.  Each person who was or is made a party or is threatened to be made a party to or is otherwise involved (including involvement as a witness) in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “proceeding”), by reason of the fact that he or she is or was a director, officer or employee of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, manager, officer, employee or agent of another corporation or of a partnership, limited liability company, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer or other employee or in any other capacity while serving as a director, officer or employee, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by Maryland law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto), against all expense, liability and loss (including attorneys’ fees, judgments, fines, excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a director, manager, officer, employee or agent and shall inure to the benefit of the indemnitee’s heirs, legal representatives, executors and administrators.  The right to indemnification conferred in this Section 5.5 shall be a contract right and shall include the obligation of the Corporation to pay the expenses incurred in defending any such proceeding in advance of its final disposition (an “advance of expenses”); provided, however, that in any case an advance of expenses incurred by an indemnitee shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (a “final adjudication”) that such indemnitee is not entitled to be indemnified for such expenses under this Section 5.5 or otherwise.  The Corporation may, by action of its Board of Directors, provide indemnification to agents of the Corporation with the same or lesser scope and effect as the foregoing indemnification of directors, officers and employees.  Any director, officer or employee of the Corporation serving (i) another corporation, partnership, limited liability company, joint venture, trust or other enterprise of which a majority of the equity interests entitled to vote in the election of its directors or the equivalent thereof is controlled by the Corporation, or (ii) any employee benefit plan of the Corporation or any entity referred to in clause (i), in any capacity shall be deemed to be doing so at the request of the Corporation.

 

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Neither the amendment nor repeal of this Section, nor the adoption or amendment of any other provision of this Charter or the Bylaws inconsistent with this Section, shall apply to or affect in any respect the applicability of the preceding paragraph with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.

 

Section 5.6 Determinations by Board. The determination as to any of the following matters, made in good faith by or pursuant to the direction of the Board of Directors consistent with the Charter, shall be final and conclusive and shall be binding upon the Corporation and every holder of shares of its stock: the amount of the net income of the Corporation for any period and the amount of assets at any time legally available for the payment of dividends, redemption of its stock or the payment of other distributions on its stock; the amount of paid-in surplus, net assets, other surplus, annual or other cash flow, funds from operations, net profit, net assets in excess of capital, undivided profits or excess of profits over losses on sales of assets; the amount, purpose, time of creation, increase or decrease, alteration or cancellation of any reserves or charges and the propriety thereof (whether or not any obligation or liability for which such reserves or charges shall have been created shall have been paid or discharged); any interpretation of the terms, preferences, conversion or other rights, voting powers or rights, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption of any class or series of stock of the Corporation; the fair value, or any sale, bid or asked price to be applied in determining the fair value, of any asset owned or held by the Corporation or of any shares of stock of the Corporation; the number of shares of stock of any class of the Corporation; any matter relating to the acquisition, holding and disposition of any assets by the Corporation; or any other matter relating to the business and affairs of the Corporation or required or permitted by applicable law, the Charter or Bylaws or otherwise to be determined by the Board of Directors.

 

Section 5.7 REIT Qualification. If the Corporation elects to qualify for U.S. federal income tax treatment as a REIT, the Board of Directors shall use its reasonable best efforts to take such actions as are necessary or appropriate to preserve the qualification of the Corporation as a REIT; however, if the Board of Directors determines that it is no longer in the best interests of the Corporation to continue to be qualified as a REIT, the Board of Directors may authorize the Corporation to revoke or otherwise terminate its REIT election pursuant to Section 856(g) of the Code. The Board of Directors also may determine that compliance with any restriction or limitation on stock ownership and transfers set forth in Article VII is no longer required for REIT qualification.

 

Section 5.8 Removal of Directors. Subject to the rights of holders of one or more classes or series of Preferred Stock to elect or remove one or more directors, any director, or the entire Board of Directors, may be removed from office at any time, but only by the affirmative vote of stockholders entitled to cast at least two-thirds of all the votes entitled to be cast generally in the election of directors.

 

Section 5.9 Advisor Agreements. Subject to such conditions, if any, as may be required by any applicable statute, rule or regulation, the Board of Directors may authorize the execution and performance by the Corporation of one or more agreements with any person, corporation, association, company, trust, partnership (limited or general) or other organization whereby,

 

4



 

subject to the supervision and control of the Board of Directors, any such other person, corporation, association, company, trust, partnership (limited or general) or other organization shall render or make available to the Corporation managerial, investment, advisory and/or related services, office space and other services and facilities (including, if deemed advisable by the Board of Directors, the management or supervision of the investments of the Corporation) upon such terms and conditions as may be provided in such agreement or agreements (including, if deemed fair and equitable by the Board of Directors, the compensation payable thereunder by the Corporation).

 

ARTICLE VI

STOCK

 

Section 6.1 Authorized Shares. The Corporation has authority to issue 300,000,000 shares of stock, consisting of (i) 200,000,000 shares of Common Stock, $0.01 par value per share (the “Common Stock”), of which 100,000,000 are classified as shares of Class A Common Stock (the “Class A Common Stock”) and 100,000,000 are classified as shares of Class B Common Stock (the “Class B Common Stock”) and (ii) 100,000,000 shares of Preferred Stock, $0.01 par value per share (the “Preferred Stock”). The aggregate par value of all authorized shares of stock is $3,000,000. If shares of one class of stock are classified or reclassified into shares of another class of stock pursuant to Section 6.2, 6.3 or 6.4 of this Article VI, the number of authorized shares of the former class shall be automatically decreased and the number of shares of the latter class shall be automatically increased, in each case by the number of shares so classified or reclassified, so that the aggregate number of shares of stock of all classes that the Corporation has authority to issue shall not be more than the total number of shares of stock set forth in the first sentence of this paragraph. The Board of Directors, with the approval of a majority of the entire Board and without any action by the stockholders of the Corporation, may amend the Charter from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Corporation has authority to issue.

 

Section 6.2 Common Stock. Subject to the provisions of Article VII and except as may otherwise be specified in the terms of any class or series of Common Stock, each share of Common Stock shall entitle the holder thereof to one vote. The holders of shares of Class A Common Stock and Class B Common Stock shall vote together as a single class.  The Board of Directors may reclassify any unissued shares of Common Stock from time to time, into one or more classes or series of stock.

 

(a)           Class A Common Stock. The holders of the shares of Class A Common Stock shall be entitled to the following rights during the period beginning on the Initial Date (as such term is defined in Section 7.1) of the initial public offering of the shares of Class A Common Stock (the “Offering”), and ending on the third anniversary of the Initial Date (the “Priority Period”).  Notwithstanding the foregoing, the Priority Period shall not end until the holders of the shares of Class A Common Stock have received any accrued, but unpaid, Class A Distributions (as defined below).

 

(i)            The Dividend Priority.  The holders of the shares of Class A Common Stock shall be entitled to receive, prior to any distribution to the holders

 

5



 

of the shares of Class B Common Stock, cumulative dividends in an amount per share of Class A Common Stock equal to $0.644 per year, as such amount may be adjusted from time to time in accordance with this Section 6.2(a)(i) (the “Class A Distribution”).  After the holders of the shares of Class A Common Stock have received an amount per share of Class A Common Stock equal to the Class A Distribution, the holders of the shares of Class B Common Stock shall be entitled to receive, prior to any further distributions to the holders of the shares of Class A Common Stock, cumulative dividends in an amount per share of Class B Common Stock equal to $0.644 per year, as such amount may be adjusted from time to time in accordance with this Section 6.2(a)(i) (the “Class B Distribution”).  After the holders of the shares of Class B Common Stock have received an amount per share of Class B Common Stock equal to the Class B Distribution, the holders of the shares of Class A Common Stock shall be entitled to receive any further distributions on a pro rata basis with the holders of the shares of Class B Common Stock.  Notwithstanding the foregoing, (A) if the Corporation at any time subdivides (by any stock split, stock dividend, reclassification, recapitalization or other similar transaction) its Class A Common Stock or Class B Common Stock into a greater number of shares, the Class A Distribution or Class B Distribution, as applicable, shall be proportionately decreased, and (B) if the Corporation at any time combines (by reverse stock split, reclassification, recapitalization or other similar transaction) its Class A Common Stock or Class B Common Stock into a smaller number of shares, the Class A Distribution or Class B Distribution, as applicable, shall be proportionately increased.

 

No dividend will be declared or paid or other distribution of cash or other property declared or made directly by the Corporation or any person acting on behalf of the Corporation on any shares of beneficial interest that rank junior to the shares of Class A Common Stock or Class B Common stock, as applicable, as to the payment of dividends or amounts upon liquidation, dissolution and winding up unless full cumulative dividends have been declared and paid or are contemporaneously declared and funds sufficient for payment set aside on the shares of Class A Common Stock or Class B Common Stock, as applicable, for all prior and contemporaneous dividend periods; provided, however, that if accumulated and accrued dividends on the shares of Class A Common Stock or Class B Common Stock, as applicable, for all prior and contemporaneous dividend periods have not been paid in full then any dividend declared on the shares of Class A Common Stock or Class B Common Stock, as applicable, for any dividend period and on any shares of beneficial interest of the Corporation that rank on parity with the shares of Class A Common Stock or Class B Common Stock, as applicable, as to the payment of dividends or amounts upon liquidation, dissolution and winding up (the “Parity Stock”) will be declared ratably in proportion to accumulated, accrued and unpaid dividends on the shares of Class A Common Stock or Class B Common Stock, as applicable, and such Parity Stock.  The dividends paid to the holders of the shares of Common Stock will be subject to the rights of any class or series of Preferred Stock.

 

6



 

No distributions on the shares of Common Stock shall be authorized by the Board of Directors or paid or set apart for payment by the Corporation at such time as the terms and provisions of any agreement of the Corporation, including any agreement relating to its indebtedness, prohibits such authorization, payment or setting apart for payment or provides that such authorization, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such authorization or payment shall be restricted or prohibited by law.  Any distribution payment made on the shares of Common Stock shall first be credited against the earliest accrued but unpaid distribution due with respect to such shares which remains payable.

 

(b)           Conversion of the Class B Common Stock.  Upon termination of the Priority Period, the shares of Class B Common Stock automatically will be converted into shares of Class A Common Stock on a one-for-one basis, subject to adjustment as described in Section 6.2(c).  A notice informing holders of the shares of Class B Common Stock of such conversion will be mailed by the Corporation to the holders of record of the shares of Class B Common Stock as of the dividend payment record date for the next dividend payable after the expiration of the Priority Period, together with the dividend payable on such shares, at their respective addresses as they appear on the share transfer records of the Corporation.  No fewer than all of the outstanding shares of Class B Common Stock shall be converted.

 

If the expiration of the Priority Period falls after a dividend payment record date and prior to the related payment date, the holders of the shares of Class B Common Stock at the close of business on such record date will be entitled to receive the dividend payable on such shares on the corresponding dividend payment date, notwithstanding the conversion of such shares prior to such dividend payment date.  Upon expiration of the Priority Period, each holder of shares of Class B Common Stock (unless the Corporation defaults in the delivery of the shares of Class A Common Stock) will be, without any further action, deemed a holder of the amount of shares of Class A Common Stock, as the case may be, for which such shares of Class B Common Stock are convertible.  Fractional shares of Class A Common Stock will not be issued upon conversion of the shares of Class B Common Stock.

 

(c)           Conversion Ratio Adjustments.  The conversion ratio is subject to adjustment as hereinafter provided upon certain events, including (i) the payment of dividends (and other distributions) payable in shares of Class A Common Stock on any class of shares of beneficial interest of the Corporation, (ii) subdivisions, combinations and reclassifications of shares of Class A Common Stock and (iii) distributions to all holders of shares of Class A Common Stock of evidences of indebtedness of the Corporation or assets (including securities, but excluding those dividends, rights, warrants and distributions referred to in clause (i) or (ii) above and dividends and distributions paid in cash).  In the case of the events referred to in clauses (i) and (ii) above, the number of shares of Class A Common Stock to be issued upon conversion shall be determined by multiplying the number of shares of Class B Common Stock to be converted by a fraction, the numerator of which shall be the

 

7



 

number of shares of Class A Common Stock issued and outstanding immediately after such event, and the denominator of which shall be the number of shares of Class A Common Stock issued and outstanding immediately prior to such event.  In the case of the events referred to in clause (iii) above, the number of shares of Class A Common Stock to be issued upon conversion shall be determined by multiplying the number of shares of Class B Common Stock to be converted by a fraction, the numerator of which shall be the Market Price (as such term is defined in Section 7.1), immediately after such event, of the shares of Class A Common Stock plus the value of the evidences of indebtedness or assets received, and the denominator of which shall be the Market Price of the shares of Class A Common Stock immediately prior to such event.  The foregoing provisions notwithstanding, in making adjustments to the conversion ratio pursuant to this paragraph, no shares of Class A Common Stock issued after the closing with respect to the Offering (other than shares issued in connection with the events referred to in clauses (i) or (ii) above) and no evidences of indebtedness or assets received with respect to such shares shall be included in either numerator or denominator in making such adjustments.  In addition to the foregoing adjustments, the Corporation will be permitted to make such reductions in the conversion ratio as it considers to be advisable in order that any event treated for Federal income tax purposes as a dividend of shares or share rights will not be taxable to the holders of the shares of Class B Common Stock or, if that is not possible, to diminish any income taxes that are otherwise payable because of such event.

 

No adjustment of the conversion ratio is required to be made in any case until cumulative adjustments amount to 1% or more of the conversion ratio.  Any adjustments not so required to be made will be carried forward and taken into account in subsequent adjustments.

 

Section 6.3 Preferred Stock. The Board of Directors may classify any unissued shares of Preferred Stock and reclassify any previously classified but unissued shares of Preferred Stock of any series from time to time, into one or more classes or series of stock.

 

Section 6.4 Classified or Reclassified Shares. Prior to issuance of classified or reclassified shares of any class or series, the Board of Directors by resolution shall: (a) designate that class or series to distinguish it from all other classes and series of stock of the Corporation; (b) specify the number of shares to be included in the class or series; (c) set or change, subject to the provisions of Article VII and subject to the express terms of any class or series of stock of the Corporation outstanding at the time, the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of redemption for each class or series; and (d) cause the Corporation to file articles supplementary with the State Department of Assessments and Taxation of Maryland (“SDAT”). Any of the terms of any class or series of stock set or changed pursuant to clause (c) of this Section 6.4 may be made dependent upon facts or events ascertainable outside the Charter (including determinations by the Board of Directors or other facts or events within the control of the Corporation) and may vary among holders thereof, provided that the manner in which such facts, events or variations shall operate upon the terms of such class or series of stock is clearly and expressly set forth in the articles supplementary or other charter document.

 

8



 

Section 6.5 Stockholders’ Consent in Lieu of Meeting. Any action required or permitted to be taken at any meeting of the stockholders may be taken without a meeting by unanimous consent, in writing or by electronic transmission, in the manner permitted by the MGCL.

 

Section 6.6 Charter and Bylaws. The rights of all stockholders and the terms of all stock are subject to the provisions of the Charter and the Bylaws.

 

ARTICLE VII

RESTRICTIONS ON TRANSFER AND OWNERSHIP OF SHARES

 

Section 7.1 Definitions. For the purpose of this Charter, the following terms shall have the following meanings:

 

Aggregate Stock Ownership Limit. The term “Aggregate Stock Ownership Limit” shall mean not more than 9.8 percent (in value or in number of shares, whichever is more restrictive) of the aggregate of the outstanding shares of Capital Stock, or such other percentage determined by the Board of Directors in accordance with Section 7.2.8 of the Charter.

 

Beneficial Ownership. The term “Beneficial Ownership” shall mean ownership of Capital Stock by a Person, whether the interest in the shares of Capital Stock is held directly or indirectly (including by a nominee), and shall include interests that would be treated as owned through the application of Section 544 of the Code, as modified by Sections 856(h)(1)(B) and 856(h)(3) of the Code. The terms “Beneficial Owner,” “Beneficially Owns” and “Beneficially Owned” shall have the correlative meanings.

 

Business Day. The term “Business Day” shall mean any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in New York City are authorized or required by law, regulation or executive order to close.

 

Capital Stock. The term “Capital Stock” shall mean all classes or series of stock of the Corporation, including, without limitation, Common Stock and Preferred Stock.

 

Charitable Beneficiary. The term “Charitable Beneficiary” shall mean one or more beneficiaries of the Trust as determined pursuant to Section 7.3.6, provided that each such organization must be described in Section 501(c)(3) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.

 

Common Stock Ownership Limit. The term “Common Stock Ownership Limit” shall mean not more than 9.8 percent (in value or in number of shares, whichever is more restrictive) of the aggregate of the outstanding shares of Common Stock, or such other percentage determined by the Board of Directors in accordance with Section 7.2.8 of the Charter.

 

Constructive Ownership. The term “Constructive Ownership” shall mean ownership of Capital Stock by a Person, whether the interest in the shares of Capital Stock is held directly or indirectly (including by a nominee), and shall include interests that would be treated as owned through the application of Section 318(a) of the Code, as modified by Section 856(d)(5) of the

 

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Code. The terms “Constructive Owner,” “Constructively Owns” and “Constructively Owned” shall have the correlative meanings.

 

Excepted Holder. The term “Excepted Holder” shall mean a Person for whom an Excepted Holder Limit is created by the Charter or by the Board of Directors pursuant to Section 7.2.7.

 

Excepted Holder Limit. The term “Excepted Holder Limit” shall mean, provided that the affected Excepted Holder agrees to comply with any requirements established by the Board of Directors pursuant to Section 7.2.7 and subject to adjustment pursuant to Section 7.2.8, the percentage limit established by the Board of Directors pursuant to Section 7.2.7.

 

Initial Date. The term “Initial Date” shall mean the date of the closing of the Offering.

 

Market Price. The term “Market Price” on any date shall mean, with respect to any class or series of outstanding shares of Capital Stock, the Closing Price for such Capital Stock on such date. The “Closing Price” on any date shall mean the last sale price for such Capital Stock, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, for such Capital Stock, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if such Capital Stock is not listed or admitted to trading on the NYSE, as reported on the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which such Capital Stock is listed or admitted to trading or, if such Capital Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the principal automated quotation system that may then be in use or, if such Capital Stock is not quoted by any such system, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such Capital Stock selected by the Board of Directors of the Corporation or, in the event that no trading price is available for such Capital Stock, the fair market value of the Capital Stock, as determined in good faith by the Board of Directors of the Corporation.

 

NYSE. The term “NYSE” shall mean the New York Stock Exchange.

 

Person. The term “Person” shall mean an individual, corporation, partnership, estate, trust (including a trust qualified under Sections 401(a) or 501(c)(17) of the Code), a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity and also includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, and a group to which an Excepted Holder Limit applies.

 

Prohibited Owner. The term “Prohibited Owner” shall mean with respect to any purported Transfer, any Person who, but for the provisions of Section 7.2.1, would Beneficially Own or Constructively Own shares of Capital Stock and, if appropriate in the context, shall also

 

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mean any Person who would have been the record owner of the shares that the Prohibited Owner would have so owned.

 

Restriction Termination Date. The term “Restriction Termination Date” shall mean the first day after the Initial Date on which the Board of Directors determines pursuant to Section 5.7 of the Charter that it is no longer in the best interests of the Corporation to attempt to, or continue to, qualify as a REIT or that compliance with the restrictions and limitations on Beneficial Ownership, Constructive Ownership and Transfers of shares of Capital Stock set forth herein is no longer required in order for the Corporation to qualify as a REIT.

 

Transfer. The term “Transfer” shall mean any issuance, sale, transfer, gift, assignment, devise or other disposition, as well as any other event that causes any Person to acquire or change its Beneficial Ownership or Constructive Ownership, or any agreement to take any such actions or cause any such events, of Capital Stock or the right to vote or receive dividends on Capital Stock, including (a) the granting or exercise of any option (or any disposition of any option), (b) any disposition of any securities or rights convertible into or exchangeable for Capital Stock or any interest in Capital Stock or any exercise of any such conversion or exchange right and (c) Transfers of interests in other entities that result in changes in Beneficial Ownership or Constructive Ownership of Capital Stock; in each case, whether voluntary or involuntary, whether owned of record, Constructively Owned or Beneficially Owned and whether by operation of law or otherwise. The terms “Transferring” and “Transferred” shall have the correlative meanings.

 

Trust. The term “Trust” shall mean any trust provided for in Section 7.3.1.

 

Trustee. The term “Trustee” shall mean the Person unaffiliated with the Corporation and a Prohibited Owner, that is appointed by the Corporation to serve as trustee of the Trust.

 

Section 7.2 Capital Stock.

 

Section 7.2.1 Ownership Limitations. During the period commencing on the Initial Date and prior to the Restriction Termination Date, but subject to Section 7.4:

 

(a)           Basic Restrictions.

 

(i)            (1) No Person, other than an Excepted Holder, shall Beneficially Own or Constructively Own shares of Capital Stock in excess of the Aggregate Stock Ownership Limit, (2) no Person, other than an Excepted Holder, shall Beneficially Own or Constructively Own shares of Common Stock in excess of the Common Stock Ownership Limit and (3) no Excepted Holder shall Beneficially Own or Constructively Own shares of Capital Stock in excess of the Excepted Holder Limit for such Excepted Holder.

 

(ii)           No Person shall Beneficially Own or Constructively Own shares of Capital Stock to the extent that such Beneficial Ownership or Constructive Ownership of Capital Stock would result in the Corporation being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether the

 

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ownership interest is held during the last half of a taxable year), or otherwise failing to qualify as a REIT (including, but not limited to, Beneficial Ownership or Constructive Ownership that would result in the Corporation owning (actually or Constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant could cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code).

 

(iii)          Any Transfer of shares of Capital Stock that, if effective, would result in the Capital Stock being beneficially owned by fewer than 100 Persons (determined under the principles of Section 856(a)(5) of the Code) shall be void ab initio, and the intended transferee shall acquire no rights in such shares of Capital Stock.

 

(b)           Transfer in Trust. If any Transfer of shares of Capital Stock occurs which, if effective, would result in any Person Beneficially Owning or Constructively Owning shares of Capital Stock in violation of Section 7.2.1(a)(i) or (ii),

 

(i)            then that number of shares of the Capital Stock the Beneficial Ownership or Constructive Ownership of which otherwise would cause such Person to violate Section 7.2.1(a)(i) or (ii) (rounded up to the nearest whole share) shall be automatically transferred to a Trust for the benefit of a Charitable Beneficiary, as described in Section 7.3, effective as of the close of business on the Business Day prior to the date of such Transfer, and such Person shall acquire no rights in such shares; or

 

(ii)           if the transfer to the Trust described in clause (i) of this sentence would not be effective for any reason to prevent the violation of Section 7.2.1(a)(i) or (ii), then the Transfer of that number of shares of Capital Stock that otherwise would cause any Person to violate Section 7.2.1(a)(i) or (ii) shall be void ab initio, and the intended transferee shall acquire no rights in such shares of Capital Stock.

 

Section 7.2.2 Remedies for Breach. If the Board of Directors or any duly authorized committee thereof shall at any time determine in good faith that a Transfer or other event has taken place that results in a violation of Section 7.2.1 or that a Person intends to acquire or has attempted to acquire Beneficial Ownership or Constructive Ownership of any shares of Capital Stock in violation of Section 7.2.1 (whether or not such violation is intended), the Board of Directors or such committee thereof shall take such action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, without limitation, causing the Corporation to redeem shares, refusing to give effect to such Transfer on the books of the Corporation or instituting proceedings to enjoin such Transfer or other event; provided, however, that any Transfer or attempted Transfer or other event in violation of Section 7.2.1 shall automatically result in the transfer to the Trust described above, and, where applicable, such Transfer (or other event) shall be void ab initio as provided above irrespective of any action (or non-action) by the Board of Directors or such committee thereof.

 

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Section 7.2.3 Notice of Restricted Transfer. Any Person who acquires or attempts or intends to acquire Beneficial Ownership or Constructive Ownership of shares of Capital Stock that will or may violate Section 7.2.1(a) or any Person who would have owned shares of Capital Stock that resulted in a transfer to the Trust pursuant to the provisions of Section 7.2.1(b) shall immediately give written notice to the Corporation of such event or, in the case of such a proposed or attempted transaction, give at least 15 days prior written notice, and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer on the Corporation’s qualification as a REIT.

 

Section 7.2.4 Owners Required To Provide Information. From the Initial Date and prior to the Restriction Termination Date:

 

(a)           every owner of five percent or more (or such lower percentage as required by the Code or the U.S. Treasury Department regulations promulgated thereunder) of the outstanding shares of Capital Stock, within 30 days after the end of each taxable year, shall give written notice to the Corporation stating the name and address of such owner, the number of shares of each class and series of Capital Stock Beneficially Owned and a description of the manner in which such shares are held. Each such owner shall promptly provide to the Corporation in writing such additional information as the Corporation may request in order to determine the effect, if any, of such Beneficial Ownership on the Corporation’s qualification as a REIT and to ensure compliance with the Common Stock Ownership Limit and the Aggregate Stock Ownership Limit; and

 

(b)           each Person who is a Beneficial Owner or Constructive Owner of Capital Stock and each Person (including the stockholder of record) who is holding Capital Stock for a Beneficial Owner or Constructive Owner shall promptly provide to the Corporation in writing such information as the Corporation may request, in good faith, in order to determine the Corporation’s qualification as a REIT and to comply with the requirements of any taxing authority or governmental authority or to determine such compliance.

 

Section 7.2.5 Remedies Not Limited. Subject to Section 5.7 of the Charter, nothing contained in this Section 7.2 shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable to protect the Corporation and the interests of its stockholders in preserving the Corporation’s qualification as a REIT.

 

Section 7.2.6 Ambiguity. In the case of an ambiguity in the application of any of the provisions of this Section 7.2, Section 7.3, or any definition contained in Section 7.1, the Board of Directors shall have the power to determine the application of the provisions of this Section 7.2 or Section 7.3 or any such definition with respect to any situation based on the facts known to it. In the event Section 7.2 or 7.3 requires an action by the Board of Directors and the Charter fails to provide specific guidance with respect to such action, the Board of Directors shall have the power to determine the action to be taken so long as such action is not contrary to the provisions of Sections 7.1, 7.2 or 7.3. Absent a decision to the contrary by the Board of Directors (which the Board may make in its sole and absolute discretion), if a Person would have (but for the remedies set forth in Section 7.2.1) acquired Beneficial Ownership or Constructive Ownership of Capital Stock in violation of Section 7.2.1, such remedies (as applicable) shall

 

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apply first to the shares of Capital Stock which, but for such remedies, would have been Beneficially Owned or Constructively Owned (but not actually owned) by such Person, pro rata among the Persons who actually own such shares of Capital Stock based upon the relative number of the shares of Capital Stock held by each such Person.

 

Section 7.2.7 Exceptions.

 

(a)           Subject to Section 7.2.1(a)(ii), the Board of Directors, in its sole discretion, may exempt (prospectively or retroactively) a Person from the Aggregate Stock Ownership Limit and/or the Common Stock Ownership Limit, as the case may be, and may establish or increase an Excepted Holder Limit for such Person if the Board of Directors determines, based on such representations and undertakings as it may require, that:

 

(i)            such exemption will not cause the Beneficial Ownership or Constructive Ownership of shares of Capital Stock of any individual (as defined in Section 542(a)(2) of the Code) to violate Section 7.2.1(a)(ii); and

 

(ii)           such Person does not and will not Constructively own an interest in a tenant of the Corporation (or a tenant of any entity owned or controlled by the Corporation) that would cause the Corporation to own, actually or Constructively, more than a 9.9% interest (as set forth in Section 856(d)(2)(B) of the Code) in such tenant (for this purpose, a tenant from whom the Corporation (or an entity owned or controlled by the Corporation) derives (and is expected to continue to derive) a sufficiently small amount of revenue such that, in the opinion of the Board of Directors, rent from such tenant would not adversely affect the Corporation’s ability to qualify as a REIT, shall not be treated as a tenant of the Corporation).

 

(b)           Prior to granting any exception pursuant to Section 7.2.7(a), the Board of Directors may require a ruling from the Internal Revenue Service, or an opinion of counsel, in either case in form and substance satisfactory to the Board of Directors in its sole discretion, as it may deem necessary or advisable in order to determine or ensure the Corporation’s qualification as a REIT. Notwithstanding the receipt of any ruling or opinion, the Board of Directors may impose such conditions or restrictions as it deems appropriate in connection with granting such exception.

 

(c)           Subject to Section 7.2.1(a)(ii), an underwriter which participates in a public offering or a private placement of Capital Stock (or securities convertible into or exchangeable for Capital Stock) may Beneficially Own or Constructively Own shares of Capital Stock (or securities convertible into or exchangeable for Capital Stock) in excess of the Aggregate Stock Ownership Limit, the Common Stock Ownership Limit, or both such limits, but only to the extent necessary to facilitate such public offering or private placement.

 

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(d)           The Board of Directors may only reduce the Excepted Holder Limit for an Excepted Holder: (1) with the written consent of such Excepted Holder at any time, or (2) pursuant to the terms and conditions of the agreements and undertakings entered into with such Excepted Holder in connection with the establishment of the Excepted Holder Limit for that Excepted Holder. No Excepted Holder Limit shall be reduced to a percentage that is less than the Common Stock Ownership Limit or Aggregate Stock Ownership Limit, as applicable.

 

Section 7.2.8 Increase or Decrease in Aggregate Stock Ownership and Common Stock Ownership Limits.

 

(a)           Subject to Section 7.2.1(a)(ii), the Board of Directors may from time to time increase or decrease the Common Stock Ownership Limit and the Aggregate Stock Ownership Limit; provided, however, that any decreased Common Stock Ownership Limit and/or Aggregate Stock Ownership Limit will not be effective for any Person whose percentage ownership in Common Stock or Capital Stock is in excess of such decreased Common Stock Ownership Limit and/or Aggregate Stock Ownership Limit until such time as such Person’s percentage of Common Stock or Capital Stock equals or falls below the decreased Common Stock Ownership Limit and/or Aggregate Stock Ownership Limit, but any further acquisition of Common Stock or Capital Stock in excess of such percentage ownership of Common Stock or Capital Stock will be in violation of the Common Stock Ownership Limit and/or Aggregate Stock Ownership Limit and, provided further, that any increased or decreased Common Stock Ownership Limit and/or Aggregate Stock Ownership Limit would not allow five or fewer Persons to Beneficially Own more than 49.9% in value of the outstanding Capital Stock.

 

(b)           Prior to increasing or decreasing the Common Stock Ownership Limit or the Aggregate Stock Ownership Limit pursuant to Section 7.2.8(a), the Board of Directors may require such opinions of counsel, affidavits, undertakings or agreements, in any case in form and substance satisfactory to the Board of Directors in its sole discretion, as it may deem necessary or advisable in order to determine or ensure the Corporation’s qualification as a REIT.

 

Section 7.2.9 Legend. Each certificate for shares of Capital Stock, if certificated, or any written statement of information in lieu of a certificate delivered to a holder of uncertificated shares of Capital Stock shall bear substantially the following legend:

 

The shares represented by this certificate are subject to restrictions on Beneficial Ownership and Constructive Ownership and Transfer for the purpose, among others, of the Corporation’s maintenance of its qualification as a real estate investment trust under the Code. Subject to certain further restrictions and except as expressly provided in the Corporation’s charter, (i) no Person may Beneficially Own or Constructively Own shares of Common Stock in excess of 9.8 percent (in value or number of shares, whichever is more restrictive) (or such lesser percentage established by the Board of Directors) of the outstanding shares of Common Stock unless such Person is an Excepted Holder (in which

 

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case the Excepted Holder Limit shall be applicable); (ii) no Person may Beneficially Own or Constructively Own shares of Capital Stock in excess of 9.8 percent (in value or number of shares, whichever is more restrictive) (or such lesser percentage established by the Board of Directors) of the total outstanding shares of Capital Stock, unless such Person is an Excepted Holder (in which case the Excepted Holder Limit shall be applicable); (iii) no Person may Beneficially Own or Constructively Own Capital Stock that would result in the Corporation being “closely held” under Section 856(h) of the Code or otherwise cause the Corporation to fail to qualify as a REIT; and (iv) any Transfer of shares of Capital Stock that, if effective would result in the Capital Stock being beneficially owned by less than 100 persons (as determined under the principles of Section 856(a)(5) of the Code) shall be void ab initio, and the intended transferee shall acquire no rights in such shares of the Capital Stock. Any Person who Beneficially Owns or Constructively Owns or attempts to Beneficially Own or Constructively Own shares of Capital Stock which causes or will cause a Person to Beneficially Own or Constructively Own shares of Capital Stock in excess or in violation of the above limitations must immediately notify the Corporation or, in the case of such a proposed or attempted transaction, give at least 15 days prior written notice. If any of the restrictions on transfer or ownership as set forth in (i) through (iii) above are violated, the shares of Capital Stock in excess or in violation of the above limitations will be automatically transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries. In addition, the Corporation may redeem shares upon the terms and conditions specified by the Board of Directors in its sole discretion if the Board of Directors determines that ownership or a Transfer or other event may violate the restrictions described above. Furthermore, upon the occurrence of certain events, attempted Transfers in violation of the restrictions described in (i) through (iii) above may be void ab initio. All capitalized terms in this legend have the meanings defined in the charter of the Corporation, as the same may be amended from time to time, a copy of which, including the restrictions on transfer and ownership, will be furnished to each holder of Capital Stock on request and without charge. Requests for such a copy may be directed to the Secretary of the Corporation at its principal office.

 

Instead of the foregoing legend, the certificate or written statement of information delivered in lieu of a certificate, if any, may state that the Corporation will furnish a full statement about certain restrictions on transferability to a stockholder on request and without charge.

 

Section 7.3 Transfer of Capital Stock in Trust.

 

Section 7.3.1 Ownership in Trust. Upon any purported Transfer or other event described in Section 7.2.1(b) that would result in a transfer of shares of Capital Stock to a Trust, such shares of Capital Stock shall be deemed to have been transferred to the Trustee as trustee of a Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the

 

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Trustee shall be effective as of the close of business on the Business Day prior to the purported Transfer or other event that results in the transfer to the Trust pursuant to Section 7.2.1(b). The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with the Corporation and any Prohibited Owner. Each Charitable Beneficiary shall be designated by the Corporation as provided in Section 7.3.6.

 

Section 7.3.2 Status of Shares Held by the Trustee. Shares of Capital Stock held by the Trustee shall be issued and outstanding shares of Capital Stock. The Prohibited Owner shall have no rights in the shares held by the Trustee. The Prohibited Owner shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends or other distributions and shall not possess any rights to vote or other rights attributable to the shares held in the Trust.

 

Section 7.3.3 Dividend and Voting Rights. The Trustee shall have all voting rights and rights to dividends or other distributions with respect to shares of Capital Stock held in the Trust, which rights shall be exercised for the exclusive benefit of the Charitable Beneficiary. Any dividend or other distribution paid prior to the discovery by the Corporation that the shares of Capital Stock have been transferred to the Trustee shall be paid by the recipient of such dividend or distribution to the Trustee upon demand and any dividend or other distribution authorized but unpaid shall be paid when due to the Trustee. Any dividend or other distribution so paid to the Trustee shall be held in trust for the Charitable Beneficiary. The Prohibited Owner shall have no voting rights with respect to shares held in the Trust and, subject to Maryland law, effective as of the date that the shares of Capital Stock have been transferred to the Trust, the Trustee shall have the authority (at the Trustee’s sole discretion) (i) to rescind as void any vote cast by a Prohibited Owner prior to the discovery by the Corporation that the shares of Capital Stock have been transferred to the Trustee and (ii) to recast such vote in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary; provided, however, that if the Corporation has already taken irreversible corporate action, then the Trustee shall not have the authority to rescind and recast such vote. Notwithstanding the provisions of this Article VII, until the Corporation has received notification that shares of Capital Stock have been transferred into a Trust, the Corporation shall be entitled to rely on its share transfer and other stockholder records for purposes of preparing lists of stockholders entitled to vote at meetings, determining the validity and authority of proxies and otherwise conducting votes of stockholders.

 

Section 7.3.4 Sale of Shares by Trustee. Within 20 days of receiving notice from the Corporation that shares of Capital Stock have been transferred to the Trust, the Trustee of the Trust shall sell the shares held in the Trust to a person, designated by the Trustee, whose ownership of the shares will not violate the ownership limitations set forth in Section 7.2.1(a). Upon such sale, the interest of the Charitable Beneficiary in the shares sold shall terminate and the Trustee shall distribute the net proceeds of the sale to the Prohibited Owner and to the Charitable Beneficiary as provided in this Section 7.3.4. The Prohibited Owner shall receive the lesser of (1) the price paid by the Prohibited Owner for the shares or, if the event causing the shares to be held in the Trust did not involve a purchase of such shares at Market Price, the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee (net of any commissions and other expenses of sale) from the sale or other disposition of the shares held in the Trust. The Trustee may reduce

 

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the amount payable to the Prohibited Owner by the amount of dividends and other distributions which have been paid to the Prohibited Owner and are owed by the Prohibited Owner to the Trustee pursuant to Section 7.3.3 of this Article VII. Any net sales proceeds in excess of the amount payable to the Prohibited Owner shall be immediately paid to the Charitable Beneficiary. If, prior to the discovery by the Corporation that shares of Capital Stock have been transferred to the Trustee, such shares are sold by a Prohibited Owner, then (i) such shares shall be deemed to have been sold on behalf of the Trust and (ii) to the extent that the Prohibited Owner received an amount for such shares that exceeds the amount that such Prohibited Owner was entitled to receive pursuant to this Section 7.3.4, such excess shall be paid to the Trustee upon demand.

 

Section 7.3.5 Purchase Right in Stock Transferred to the Trustee. Shares of Capital Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such Transfer to the Trust (or, if the event that resulted in the Transfer to the Trust did not involve a purchase of such shares at Market Price, the Market Price of such shares on the day of the event that resulted in the Transfer of such shares to the Trust) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation may reduce the amount payable to the Trustee by the amount of dividends and other distributions which has been paid to the Prohibited Owner and are owed by the Prohibited Owner to the Trustee pursuant to Section 7.3.3 of this Article VII and may pay the amount of such reduction to the Trustee for the benefit of the Charitable Beneficiary. The Corporation shall have the right to accept such offer until the Trustee has sold the shares held in the Trust pursuant to Section 7.3.4. Upon such a sale to the Corporation, the interest of the Charitable Beneficiary in the shares sold shall terminate and the Trustee shall distribute the net proceeds of the sale to the Prohibited Owner.

 

Section 7.3.6 Designation of Charitable Beneficiaries. By written notice to the Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust such that the shares of Capital Stock held in the Trust would not violate the restrictions set forth in Section 7.2.1(a) in the hands of such Charitable Beneficiary. Neither the failure of the Corporation to make such designation nor the failure of the Corporation to appoint the Trustee before its automatic transfer provided for in Section 7.2.1(b) shall make such transfer ineffective, provided that the Corporation thereafter makes such designation and appointment.

 

Section 7.4 NYSE Transactions. Nothing in this Article VII shall preclude the settlement of any transaction entered into through the facilities of the NYSE or any other national securities exchange or automated inter-dealer quotation system. The fact that the settlement of any transaction occurs shall not negate the effect of any other provision of this Article VII and any transferee in such a transaction shall be subject to all of the provisions and limitations set forth in this Article VII.

 

Section 7.5 Enforcement. The Corporation is authorized specifically to seek equitable relief, including injunctive relief, to enforce the provisions of this Article VII.

 

Section 7.6 Non-Waiver. No delay or failure on the part of the Corporation or the Board of Directors in exercising any right hereunder shall operate as a waiver of any right of the

 

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Corporation or the Board of Directors, as the case may be, except to the extent specifically waived in writing.

 

Section 7.7 Severability. If any provision of this Article VII or any application of any such provision is determined to be invalid by any federal or state court having jurisdiction over the issues, the validity of the remaining provisions shall not be affected and other applications of such provisions shall be affected only to the extent necessary to comply with the determination of such court.

 

ARTICLE VIII

AMENDMENTS

 

The Corporation reserves the right from time to time to make any amendment to the Charter, now or hereafter authorized by law, including any amendment altering the terms or contract rights, as expressly set forth in the Charter, of any shares of outstanding stock. All rights and powers conferred by the Charter on stockholders, directors and officers are granted subject to this reservation. Except as set forth below and except for those amendments permitted to be made without stockholder approval under Maryland law or by specific provision in the Charter, any amendment to the Charter shall be valid only if declared advisable by the Board of Directors and approved by the affirmative vote of stockholders entitled to cast a majority of all the votes entitled to be cast on the matter. Any amendment to Section 5.8, to Article VII or to this sentence of the Charter shall be valid only if declared advisable by the Board of Directors and approved by the affirmative vote of stockholders entitled to cast at least two-thirds of all the votes entitled to be cast on the matter.

 

ARTICLE IX

LIMITATION OF LIABILITY

 

To the maximum extent that Maryland law in effect from time to time permits limitation of the liability of directors and officers of a corporation, no present or former director or officer of the Corporation shall be liable to the Corporation or its stockholders for money damages. Neither the amendment nor repeal of this Article IX, nor the adoption or amendment of any other provision of the Charter or Bylaws inconsistent with this Article IX, shall apply to or affect in any respect the applicability of the preceding sentence with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.

 

THIRD: The amendment and restatement of the Charter as hereinabove set forth has been duly advised by the Board of Directors and approved by the sole stockholder of the Corporation as required by law.  The Board of Directors authorized Stephen H. Gray to act as witness to the foregoing amendment and restatement of the Charter.

 

FOURTH: The current address of the principal office of the Corporation in Maryland is as set forth in Article III of the foregoing amendment and restatement of the Charter.

 

FIFTH: The name and address of the Corporation’s current resident agent in Maryland is as set forth in Article IV of the foregoing amendment and restatement of the Charter.

 

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SIXTH: The number of directors of the Corporation and the names of those currently in office are as set forth in Article V of the foregoing amendment and restatement of the Charter.

 

SEVENTH:  The total number of shares of stock which the Corporation had authority to issue was 200,000,000, consisting of 100,000,000 shares of Common Stock, $0.01 par value per share and 100,000,000 shares of Preferred Stock, $0.01 par value per share.  The aggregate par value of all authorized shares of stock was $2,000,000.

 

The total number of shares of stock which the Corporation has authority to issue pursuant to the foregoing amendment and restatement of the Charter is 300,000,000 shares of stock, consisting of (i) 200,000,000 shares of Common Stock, $0.01 par value per share, of which 100,000,000 are classified as shares of Class A Common Stock and 100,000,000 are classified as shares of Class B Common Stock and (ii) 100,000,000 shares of Preferred Stock, $0.01 par value per share. The aggregate par value of all authorized shares of stock is $3,000,000.

 

EIGHTH: The undersigned acknowledges these Articles of Amendment and Restatement to the Charter to be the corporate act of the Corporation and as to all matters or facts required to be verified under oath, the undersigned acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment and Restatement to be signed and acknowledged in its name and on its behalf on this 29th day of November, 2012.

 

 

ALTISOURCE RESIDENTIAL CORPORATION

 

 

 

 

 

/s/ William C. Erbey

 

Name:

William C. Erbey

 

Title:

Chairman of the Board

 

 

 

 

 

ATTEST:

 

 

 

 

 

/s/ Stephen H. Gray

 

Stephen H. Gray

 

 


EXHIBIT 3.2

 

ALTISOURCE RESIDENTIAL CORPORATION

 

BYLAWS

 

ARTICLE I

OFFICES

 

Section 1. PRINCIPAL OFFICE. The principal office of the Corporation in the State of Maryland shall be located at such place as the Board of Directors may designate.

 

Section 2. ADDITIONAL OFFICES. The Corporation may have additional offices, including a principal executive office, at such places as the Board of Directors may from time to time determine or the business of the Corporation may require.

 

ARTICLE II

MEETINGS OF STOCKHOLDERS

 

Section 1. PLACE. All meetings of stockholders shall be held at the principal executive office of the Corporation or at such other place as shall be set in accordance with these Bylaws and stated in the notice of the meeting.

 

Section 2. ANNUAL MEETING. An annual meeting of the stockholders for the election of directors and the transaction of any business within the powers of the Corporation shall be held on the date and at the time and place set by the Board of Directors. The Corporation shall hold its first annual meeting of stockholders beginning with the year 2013.

 

Section 3. SPECIAL MEETINGS.

 

(a) General. The chairman of the board, the chief executive officer, the president or the Board of Directors may call a special meeting of the stockholders. Subject to subsection (b) of this Section 3, a special meeting of stockholders shall also be called by the secretary of the Corporation to act on any matter that may properly be considered at a meeting of stockholders upon the written request of stockholders entitled to cast not less than a majority of all the votes entitled to be cast on such matter at such meeting.

 

(b) Stockholder-Requested Special Meetings.

 

(1) Any stockholder of record seeking to have stockholders request a special meeting shall, by sending written notice to the secretary (the “Record Date Request Notice”) by registered mail, return receipt requested, request the Board of Directors to fix a record date to determine the stockholders entitled to request a special meeting (the “Request Record Date”). The Record Date Request Notice shall set forth the purpose of the meeting and the matters proposed to be acted on at it, shall be signed by one or more stockholders of record as of the date of signature (or their agents duly authorized in a writing accompanying the Record Date Request Notice), shall bear the date of signature of each such stockholder (or such agent) and shall set forth all information relating to each such stockholder and each matter proposed to be acted on

 



 

at the meeting that would be required to be disclosed in connection with the solicitation of proxies for the election of directors in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such a solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Upon receiving the Record Date Request Notice, the Board of Directors may fix a Request Record Date. The Request Record Date shall not precede and shall not be more than ten days after the close of business on the date on which the resolution fixing the Request Record Date is adopted by the Board of Directors. If the Board of Directors, within ten days after the date on which a valid Record Date Request Notice is received, fails to adopt a resolution fixing the Request Record Date, the Request Record Date shall be the close of business on the tenth day after the first date on which the Record Date Request Notice is received by the secretary.

 

(2) In order for any stockholder to request a special meeting to act on any matter that may properly be considered at a meeting of stockholders, one or more written requests for a special meeting (collectively, the “Special Meeting Request”) signed by stockholders of record (or their agents duly authorized in a writing accompanying the request) as of the Request Record Date entitled to cast not less than a majority of all of the votes entitled to be cast on such matter at such meeting (the “Special Meeting Percentage”) shall be delivered to the secretary. In addition, the Special Meeting Request shall (a) set forth the purpose of the meeting and the matters proposed to be acted on at it (which shall be limited to those lawful matters set forth in the Record Date Request Notice received by the secretary), (b) bear the date of signature of each such stockholder (or such agent) signing the Special Meeting Request, (c) set forth (i) the name and address, as they appear in the Corporation’s books, of each stockholder signing such request (or on whose behalf the Special Meeting Request is signed), (ii) the class, series and number of all shares of stock of the Corporation which are owned (beneficially or of record) by such stockholder and (iii) the nominee holder for, and number of, shares of stock of the Corporation owned beneficially but not of record by such stockholder, (d) be sent to the secretary by registered mail, return receipt requested, and (e) be received by the secretary within 60 days after the Request Record Date. Any requesting stockholder (or agent duly authorized in a writing accompanying the revocation of the Special Meeting Request) may revoke his, her or its request for a special meeting at any time by written revocation delivered to the secretary.

 

(3) The secretary shall inform the requesting stockholders of the reasonably estimated cost of preparing and delivering the notice of the meeting (including the Corporation’s proxy materials). The secretary shall not be required to call a special meeting upon stockholder request and such meeting shall not be held unless, in addition to the documents required by paragraph (2) of this Section 3(b), the secretary receives payment of such reasonably estimated cost prior to the preparation and mailing or delivery of such notice of the meeting.

 

(4) In the case of any special meeting called by the secretary upon the request of stockholders (a “Stockholder-Requested Meeting”), such meeting shall be held at such

 

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place, date and time as may be designated by the Board of Directors; provided, however, that the date of any Stockholder-Requested Meeting shall be not more than 90 days after the record date for such meeting (the “Meeting Record Date”); and provided further that if the Board of Directors fails to designate, within ten days after the date that a valid Special Meeting Request is actually received by the secretary (the “Delivery Date”), a date and time for a Stockholder-Requested Meeting, then such meeting shall be held at 2:00 p.m. local time on the 90th day after the Meeting Record Date or, if such 90th day is not a Business Day (as defined below), on the first preceding Business Day; and provided further that in the event that the Board of Directors fails to designate a place for a Stockholder-Requested Meeting within ten days after the Delivery Date, then such meeting shall be held at the principal executive office of the Corporation. In fixing a date for any special meeting, the chairman of the board, chief executive officer, president or Board of Directors may consider such factors as he, she or it deems relevant, including, without limitation, the nature of the matters to be considered, the facts and circumstances surrounding any request for the meeting and any plan of the Board of Directors to call an annual meeting or a special meeting. In the case of any Stockholder-Requested Meeting, if the Board of Directors fails to fix a Meeting Record Date that is a date within 30 days after the Delivery Date, then the close of business on the 30th day after the Delivery Date shall be the Meeting Record Date. The Board of Directors may revoke the notice for any Stockholder-Requested Meeting in the event that the requesting stockholders fail to comply with the provisions of paragraph (3) of this Section 3(b).

 

(5) If written revocations of the Special Meeting Request have been delivered to the secretary and the result is that stockholders of record (or their agents duly authorized in writing), as of the Request Record Date, entitled to cast less than the Special Meeting Percentage have delivered, and not revoked, requests for a special meeting to the secretary: (i) if the notice of meeting has not already been delivered, the secretary shall refrain from delivering the notice of the meeting and send to all requesting stockholders who have not revoked such requests written notice of any revocation of a request for a special meeting on the matter, or (ii) if the notice of meeting has been delivered and if the secretary first sends to all requesting stockholders who have not revoked requests for a special meeting on the matter written notice of any revocation of a request for the special meeting and written notice of the Corporation’s intention to revoke the notice of the meeting or for the chairman of the meeting to adjourn the meeting without action on the matter, (A) the secretary may revoke the notice of the meeting at any time before ten days before the commencement of the meeting or (B) the chairman of the meeting may call the meeting to order and adjourn the meeting without acting on the matter. Any request for a special meeting received after a revocation by the secretary of a notice of a meeting shall be considered a request for a new special meeting.

 

(6) The chairman of the board, chief executive officer, president or Board of Directors may appoint regionally or nationally recognized independent inspectors of elections to act as the agent of the Corporation for the purpose of promptly performing a ministerial review of the validity of any purported Special Meeting Request received by the secretary. For the purpose of permitting the inspectors to perform such review,

 

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no such purported Special Meeting Request shall be deemed to have been delivered to the secretary until the earlier of (i) five Business Days after receipt by the secretary of such purported request and (ii) such date as the independent inspectors certify to the Corporation that the valid requests received by the secretary represent, as of the Request Record Date, stockholders of record entitled to cast not less than the Special Meeting Percentage. Nothing contained in this paragraph (6) shall in any way be construed to suggest or imply that the Corporation or any stockholder shall not be entitled to contest the validity of any request, whether during or after such five Business Day period, or to take any other action (including, without limitation, the commencement, prosecution or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation).

 

(7) For purposes of these Bylaws, “Business Day” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.

 

Section 4. NOTICE. Not less than ten nor more than 90 days before each meeting of stockholders, the secretary shall give to each stockholder entitled to vote at such meeting and to each stockholder not entitled to vote who is entitled to notice of the meeting notice in writing or by electronic transmission stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by any statute, the purpose for which the meeting is called, by mail, by presenting it to such stockholder personally, by leaving it at the stockholder’s residence or usual place of business or by any other means permitted by Maryland law. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at the stockholder’s address as it appears on the records of the Corporation, with postage thereon prepaid. If transmitted electronically, such notice shall be deemed to be given when transmitted to the stockholder by an electronic transmission to any address or number of the stockholder at which the stockholder receives electronic transmissions. The Corporation may give a single notice to all stockholders who share an address, which single notice shall be effective as to any stockholder at such address, unless a stockholder objects to receiving such single notice or revokes a prior consent to receiving such single notice. Failure to give notice of any meeting to one or more stockholders, or any irregularity in such notice, shall not affect the validity of any meeting fixed in accordance with this Article II or the validity of any proceedings at any such meeting.

 

Subject to Section 11(a) of this Article II, any business of the Corporation may be transacted at an annual meeting of stockholders without being specifically designated in the notice, except such business as is required by any statute to be stated in such notice. No business shall be transacted at a special meeting of stockholders except as specifically designated in the notice. The Corporation may postpone or cancel a meeting of stockholders by making a public announcement (as defined in Section 11(c)(3) of this Article II) of such postponement or cancellation prior to the meeting. Notice of the date, time and place to which the meeting is postponed shall be given not less than ten days prior to such date and otherwise in the manner set forth in this section.

 

Section 5. ORGANIZATION AND CONDUCT. Every meeting of stockholders shall be conducted by an individual appointed by the Board of Directors to be chairman of the meeting

 

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or, in the absence of such appointment, by the chairman of the board or, in the case of a vacancy in the office or absence of the chairman of the board, by one of the following officers present at the meeting in the following order: the chief executive officer, the president, the vice presidents in their order of rank and seniority, the secretary, or, in the absence of such officers, a chairman chosen by the stockholders by the vote of a majority of the votes cast by stockholders present in person or by proxy. The secretary, or, in the secretary’s absence, an assistant secretary, or, in the absence of both the secretary and assistant secretaries, an individual appointed by the Board of Directors or, in the absence of such appointment, an individual appointed by the chairman of the meeting shall act as secretary. In the event that the secretary presides at a meeting of the stockholders, an assistant secretary, or, in the absence of assistant secretaries, an individual appointed by the Board of Directors or the chairman of the meeting, shall record the minutes of the meeting. The order of business and all other matters of procedure at any meeting of stockholders shall be determined by the chairman of the meeting. The chairman of the meeting may prescribe such rules, regulations and procedures and take such action as, in the discretion of the chairman and without any action by the stockholders, are appropriate for the proper conduct of the meeting, including, without limitation, (a) restricting admission to the time set for the commencement of the meeting; (b) limiting attendance at the meeting to stockholders of record of the Corporation, their duly authorized proxies and other such individuals as the chairman of the meeting may determine; (c) limiting participation at the meeting on any matter to stockholders of record of the Corporation entitled to vote on such matter, their duly authorized proxies and other such individuals as the chairman of the meeting may determine; (d) limiting the time allotted to questions or comments; (e) determining when and for how long the polls should be opened and when the polls should be closed; (f) maintaining order and security at the meeting; (g) removing any stockholder or any other individual who refuses to comply with meeting procedures, rules or guidelines as set forth by the chairman of the meeting; (h) concluding a meeting or recessing or adjourning the meeting to a later date and time and at a place announced at the meeting; and (i) complying with any state and local laws and regulations concerning safety and security. Unless otherwise determined by the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

 

Section 6. QUORUM. At any meeting of stockholders, the presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at such meeting on any matter shall constitute a quorum; but this section shall not affect any requirement under any statute or the charter of the Corporation (the “Charter”) for the vote necessary for the adoption of any measure. If such quorum is not established at any meeting of the stockholders, the chairman of the meeting may adjourn the meeting sine die or from time to time to a date not more than 120 days after the original record date without notice other than announcement at the meeting. At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified.

 

The stockholders present either in person or by proxy, at a meeting which has been duly called and at which a quorum has been established, may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough stockholders to leave fewer than required to establish a quorum.

 

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Section 7. VOTING. A plurality of all the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to elect a director. Each share may be voted for as many individuals as there are directors to be elected and for whose election the share is entitled to be voted. A majority of the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to approve any other matter which may properly come before the meeting, unless more than a majority of the votes cast is required by statute or by the Charter. Unless otherwise provided by statute or by the Charter, each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of stockholders. Voting on any question or in any election may be viva voce unless the chairman of the meeting shall order that voting be by ballot or otherwise.

 

Section 8. PROXIES. A stockholder may cast the votes entitled to be cast by the holder of the shares of stock owned of record by the stockholder in person or by proxy executed by the stockholder or by the stockholder’s duly authorized agent in any manner permitted by law. Such proxy or evidence of authorization of such proxy shall be filed with the secretary of the Corporation before or at the meeting. No proxy shall be valid more than eleven months after its date unless otherwise provided in the proxy.

 

Section 9. VOTING OF STOCK BY CERTAIN HOLDERS. Stock of the Corporation registered in the name of a corporation, partnership, trust, limited liability company or other entity, if entitled to be voted, may be voted by the president or a vice president, general partner, trustee, manager or managing member thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to vote such stock pursuant to a bylaw or a resolution of the governing body of such corporation or other entity or agreement of the partners of a partnership presents a certified copy of such bylaw, resolution or agreement, in which case such person may vote such stock. Any director or fiduciary may vote stock registered in the name of such person in the capacity of such director or fiduciary, either in person or by proxy.

 

Shares of stock of the Corporation directly or indirectly owned by it shall not be voted at any meeting and shall not be counted in determining the total number of outstanding shares entitled to be voted at any given time, unless they are held by it in a fiduciary capacity, in which case they may be voted and shall be counted in determining the total number of outstanding shares at any given time.

 

The Board of Directors may adopt by resolution a procedure by which a stockholder may certify in writing to the Corporation that any shares of stock registered in the name of the stockholder are held for the account of a specified person other than the stockholder. The resolution shall set forth the class of stockholders who may make the certification, the purpose for which the certification may be made, the form of certification and the information to be contained in it; if the certification is with respect to a record date, the time after the record date within which the certification must be received by the Corporation; and any other provisions with respect to the procedure which the Board of Directors considers necessary or desirable. On receipt of such certification, the person specified in the certification shall be regarded as, for the purposes set forth in the certification, the holder of record of the specified stock in place of the stockholder who makes the certification.

 

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Section 10. INSPECTORS. The Board of Directors or the chairman of the meeting may appoint, before or at the meeting, one or more inspectors for the meeting and any successor to the inspector. The inspectors, if any, shall (i) determine the number of shares of stock represented at the meeting, in person or by proxy, and the validity and effect of proxies, (ii) receive and tabulate all votes, ballots or consents, (iii) report such tabulation to the chairman of the meeting, (iv) hear and determine all challenges and questions arising in connection with the right to vote, and (v) do such acts as are proper to fairly conduct the election or vote. Each such report shall be in writing and signed by the inspector or by a majority of them if there is more than one inspector acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors. The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be prima facie evidence thereof.

 

Section 11. ADVANCE NOTICE OF STOCKHOLDER NOMINEES FOR DIRECTOR AND OTHER STOCKHOLDER PROPOSALS.

 

(a) Annual Meetings of Stockholders.

 

(1) Nominations of individuals for election to the Board of Directors and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders (i) pursuant to the Corporation’s notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the Corporation who was a stockholder of record both at the time of giving of notice by the stockholder as provided for in this Section 11(a) and at the time of the annual meeting, who is entitled to vote at the meeting in the election of each individual so nominated or on any such other business and who has complied with this Section 11(a).

 

(2) For any nomination or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of paragraph (a)(1) of this Section 11, the stockholder must have given timely notice thereof in writing to the secretary of the Corporation and such other business must otherwise be a proper matter for action by the stockholders. To be timely, a stockholder’s notice shall set forth all information required under this Section 11 and shall be delivered to the secretary at the principal executive office of the Corporation not earlier than the 150th day nor later than 5:00 p.m., Eastern Time, on the 120th day prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting; provided, however, that in connection with the Corporation’s first annual meeting or in the event that the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year’s annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the 150th day prior to the date of such annual meeting and not later than 5:00 p.m., Eastern Time, on the later of the 120th day prior to the date of such annual meeting, as originally convened, or the tenth day following the day on which public announcement of the date of such meeting is first made. The public announcement of a postponement or adjournment of an annual meeting shall not commence a new time period for the giving of a stockholder’s notice as described above.

 

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(3) Such stockholder’s notice shall set forth:

 

(i) as to each individual whom the stockholder proposes to nominate for election or reelection as a director (each, a “Proposed Nominee”), all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as a director in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act and the rules thereunder;

 

(ii) as to any business that the stockholder proposes to bring before the meeting, a description of such business, the stockholder’s reasons for proposing such business at the meeting and any material interest in such business of such stockholder or any Stockholder Associated Person (as defined below), individually or in the aggregate, including any anticipated benefit to the stockholder or the Stockholder Associated Person therefrom;

 

(iii) as to the stockholder giving the notice, any Proposed Nominee and any Stockholder Associated Person,

 

(A) the class, series and number of all shares of stock or other securities of the Corporation or any affiliate thereof (collectively, the “Company Securities”), if any, which are owned (beneficially or of record) by such stockholder, Proposed Nominee or Stockholder Associated Person, the date on which each such Company Security was acquired and the investment intent of such acquisition, and any short interest (including any opportunity to profit or share in any benefit from any decrease in the price of such stock or other security) in any Company Securities of any such person,

 

(B) the nominee holder for, and number of, any Company Securities owned beneficially but not of record by such stockholder, Proposed Nominee or Stockholder Associated Person,

 

(C) whether and the extent to which such stockholder, Proposed Nominee or Stockholder Associated Person, directly or indirectly (through brokers, nominees or otherwise), is subject to or during the last six months has engaged in any hedging, derivative or other transaction or series of transactions or entered into any other agreement, arrangement or understanding (including any short interest, any borrowing or lending of securities or any proxy or voting agreement), the effect or intent of which is to (I) manage risk or benefit of changes in the price of (x) Company Securities or (y) any security of any entity that was listed in the Peer Group in the Stock Performance Graph in the most recent annual report to security holders of the Corporation (a “Peer Group Company”) for such stockholder, Proposed Nominee or Stockholder Associated Person or

 

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(II) increase or decrease the voting power of such stockholder, Proposed Nominee or Stockholder Associated Person in the Corporation or any affiliate thereof (or, as applicable, in any Peer Group Company) disproportionately to such person’s economic interest in the Company Securities (or, as applicable, in any Peer Group Company) and

 

(D) any substantial interest, direct or indirect (including, without limitation, any existing or prospective commercial, business or contractual relationship with the Corporation), by security holdings or otherwise, of such stockholder, Proposed Nominee or Stockholder Associated Person, in the Corporation or any affiliate thereof, other than an interest arising from the ownership of Company Securities where such stockholder, Proposed Nominee or Stockholder Associated Person receives no extra or special benefit not shared on a pro rata basis by all other holders of the same class or series;

 

(iv) as to the stockholder giving the notice, any Stockholder Associated Person with an interest or ownership referred to in clauses (ii) or (iii) of this paragraph (3) of this Section 11(a) and any Proposed Nominee,

 

(A) the name and address of such stockholder, as they appear on the Corporation’s stock ledger, and the current name and business address, if different, of each such Stockholder Associated Person and any Proposed Nominee and

 

(B) the investment strategy or objective, if any, of such stockholder and each such Stockholder Associated Person who is not an individual and a copy of the prospectus, offering memorandum or similar document, if any, provided to investors or potential investors in such stockholder and each such Stockholder Associated Person; and

 

(v) to the extent known by the stockholder giving the notice, the name and address of any other stockholder supporting the nominee for election or reelection as a director or the proposal of other business on the date of such stockholder’s notice.

 

(4) Such stockholder’s notice shall, with respect to any Proposed Nominee, be accompanied by a certificate executed by the Proposed Nominee (i) certifying that such Proposed Nominee (a) is not, and will not become a party to, any agreement, arrangement or understanding with any person or entity other than the Corporation in connection with service or action as a director that has not been disclosed to the Corporation and (b) will serve as a director of the Corporation if elected; and (ii) attaching a completed Proposed Nominee questionnaire (which questionnaire shall be provided by the Corporation, upon request, to the stockholder providing the notice and shall include all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as a director in an election contest (even if an election

 

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contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act and the rules thereunder, or would be required pursuant to the rules of any national securities exchange or over-the-counter market).

 

(5) Notwithstanding anything in this subsection (a) of this Section 11 to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased, and there is no public announcement of such action at least 130 days prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting, a stockholder’s notice required by this Section 11(a) shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the secretary at the principal executive office of the Corporation not later than 5:00 p.m., Eastern Time, on the tenth day following the day on which such public announcement is first made by the Corporation.

 

(6) For purposes of this Section 11, “Stockholder Associated Person” of any stockholder means (i) any person acting in concert with such stockholder, (ii) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder (other than a stockholder that is a depositary) and (iii) any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such stockholder or such Stockholder Associated Person.

 

(b) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of individuals for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected only (i) by or at the direction of the Board of Directors or (ii) provided that the special meeting has been called in accordance with Section 3(a) of this Article II for the purpose of electing directors, by any stockholder of the Corporation who is a stockholder of record both at the time of giving of notice provided for in this Section 11 and at the time of the special meeting, who is entitled to vote at the meeting in the election of each individual so nominated and who has complied with the notice procedures set forth in this Section 11. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more individuals to the Board of Directors, any such stockholder may nominate an individual or individuals (as the case may be) for election as a director as specified in the Corporation’s notice of meeting, if the stockholder’s notice, containing the information required by paragraph (a)(3) of this Section 11, shall be delivered to the secretary at the principal executive office of the Corporation not earlier than the 120th day prior to such special meeting and not later than 5:00 p.m., Eastern Time, on the later of the 90th day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. The public announcement of a postponement or adjournment of a special meeting shall not commence a new time period for the giving of a stockholder’s notice as described above.

 

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(c) General.

 

(1) If information submitted pursuant to this Section 11 by any stockholder proposing a nominee for election as a director or any proposal for other business at a meeting of stockholders shall be inaccurate in any material respect, such information may be deemed not to have been provided in accordance with this Section 11. Any such stockholder shall notify the Corporation of any inaccuracy or change (within two Business Days of becoming aware of such inaccuracy or change) in any such information. Upon written request by the secretary of the Corporation or the Board of Directors, any such stockholder shall provide, within five Business Days of delivery of such request (or such other period as may be specified in such request), (A) written verification, satisfactory, in the discretion of the Board of Directors or any authorized officer of the Corporation, to demonstrate the accuracy of any information submitted by the stockholder pursuant to this Section 11, and (B) a written update of any information submitted by the stockholder pursuant to this Section 11 as of an earlier date. If a stockholder fails to provide such written verification or written update within such period, the information as to which written verification or a written update was requested may be deemed not to have been provided in accordance with this Section 11.

 

(2) Only such individuals who are nominated in accordance with this Section 11 shall be eligible for election by stockholders as directors, and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with this Section 11. The chairman of the meeting shall have the power to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with this Section 11.

 

(3) “Public announcement” shall mean disclosure (i) in a press release reported by the Dow Jones News Service, Associated Press, Business Wire, PR Newswire or other widely circulated news or wire service or (ii) in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to the Exchange Act.

 

(4) Notwithstanding the foregoing provisions of this Section 11, a stockholder shall also comply with all applicable requirements of state law and of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 11. Nothing in this Section 11 shall be deemed to affect any right of a stockholder to request inclusion of a proposal in, or the right of the Corporation to omit a proposal from, the Corporation’s proxy statement pursuant to Rule 14a-8 (or any successor provision) under the Exchange Act. Nothing in this Section 11 shall require disclosure of revocable proxies received by the stockholder or Stockholder Associated Person pursuant to a solicitation of proxies after the filing of an effective Schedule 14A by such stockholder or Stockholder Associated Person under Section 14(a) of the Exchange Act.

 

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Section 12. CONTROL SHARE ACQUISITION ACT. Notwithstanding any other provision of the Charter or these Bylaws, Title 3, Subtitle 7 of the Maryland General Corporation Law, or any successor statute (the “MGCL”), shall not apply to any acquisition by any person of shares of stock of the Corporation. This section may be repealed, in whole or in part, at any time, whether before or after an acquisition of control shares and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent control share acquisition.

 

ARTICLE III

DIRECTORS

 

Section 1. GENERAL POWERS. The business and affairs of the Corporation shall be managed under the direction of its Board of Directors.

 

Section 2. NUMBER AND TENURE. At any regular meeting or at any special meeting called for that purpose, a majority of the entire Board of Directors may establish, increase or decrease the number of directors, provided that the number thereof shall never be less than the minimum number required by the MGCL, nor more than 15, and further provided that the tenure of office of a director shall not be affected by any decrease in the number of directors. Any director of the Corporation may resign at any time by delivering his or her resignation to the Board of Directors, the chairman of the board or the secretary. Any resignation shall take effect immediately upon its receipt or at such later time specified in the resignation. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation.

 

Section 3. ANNUAL AND REGULAR MEETINGS. An annual meeting of the Board of Directors shall be held immediately after and at the same place as the annual meeting of stockholders, no notice other than this Bylaw being necessary. In the event such meeting is not so held, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors. The Board of Directors may provide, by resolution, the time and place for the holding of regular meetings of the Board of Directors without other notice than such resolution.

 

Section 4. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by or at the request of the chairman of the board, the chief executive officer, the president or a majority of the directors then in office. The person or persons authorized to call special meetings of the Board of Directors may fix any place as the place for holding any special meeting of the Board of Directors called by them. The Board of Directors may provide, by resolution, the time and place for the holding of special meetings of the Board of Directors without other notice than such resolution.

 

Section 5. NOTICE. Notice of any special meeting of the Board of Directors shall be delivered personally or by telephone, electronic mail, facsimile transmission, courier or United States mail to each director at his or her business or residence address. Notice by personal delivery, telephone, electronic mail or facsimile transmission shall be given at least 24 hours prior to the meeting. Notice by United States mail shall be given at least three days prior to the meeting. Notice by courier shall be given at least two days prior to the meeting. Telephone notice shall be deemed to be given when the director or his or her agent is personally given such notice

 

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in a telephone call to which the director or his or her agent is a party. Electronic mail notice shall be deemed to be given upon transmission of the message to the electronic mail address given to the Corporation by the director. Facsimile transmission notice shall be deemed to be given upon completion of the transmission of the message to the number given to the Corporation by the director and receipt of a completed answer-back indicating receipt. Notice by United States mail shall be deemed to be given when deposited in the United States mail properly addressed, with postage thereon prepaid. Notice by courier shall be deemed to be given when deposited with or delivered to a courier properly addressed. Neither the business to be transacted at, nor the purpose of, any annual, regular or special meeting of the Board of Directors need be stated in the notice, unless specifically required by statute or these Bylaws.

 

Section 6. QUORUM. A majority of the directors shall constitute a quorum for transaction of business at any meeting of the Board of Directors, provided that, if less than a majority of such directors is present at such meeting, a majority of the directors present may adjourn the meeting from time to time without further notice, and provided further that if, pursuant to applicable law, the Charter or these Bylaws, the vote of a majority or other percentage of a particular group of directors is required for action, a quorum must also include a majority or such other percentage of such group.

 

The directors present at a meeting which has been duly called and at which a quorum has been established may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough directors to leave fewer than required to establish a quorum.

 

Section 7. VOTING. The action of a majority of the directors present at a meeting at which a quorum is present shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable law, the Charter or these Bylaws. If enough directors have withdrawn from a meeting to leave fewer than required to establish a quorum, but the meeting is not adjourned, the action of the majority of that number of directors necessary to constitute a quorum at such meeting shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable law, the Charter or these Bylaws.

 

Section 8. ORGANIZATION. At each meeting of the Board of Directors, the chairman of the board or, in the absence of the chairman, the vice chairman of the board, if any, shall act as chairman of the meeting. In the absence of both the chairman and vice chairman of the board, the chief executive officer or, in the absence of any chief executive officer, the president or, in the absence of the president, a director chosen by a majority of the directors present, shall act as chairman of the meeting. The secretary or, in his or her absence, an assistant secretary of the Corporation, or, in the absence of the secretary and all assistant secretaries, an individual appointed by the chairman of the meeting, shall act as secretary of the meeting.

 

Section 9. TELEPHONE MEETINGS. Directors may participate in a meeting by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting.

 

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Section 10. CONSENT BY DIRECTORS WITHOUT A MEETING. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each director and is filed with the minutes of proceedings of the Board of Directors.

 

Section 11. VACANCIES. If for any reason any or all of the directors cease to be directors, such event shall not terminate the Corporation or affect these Bylaws or the powers of the remaining directors hereunder. Until such time as the Corporation becomes subject to Section 3-804(c) of the MGCL, any vacancy on the Board of Directors for any cause other than an increase in the number of directors may be filled by a majority of the remaining directors, even if such majority is less than a quorum; any vacancy in the number of directors created by an increase in the number of directors may be filled by a majority vote of the entire Board of Directors; and any individual so elected as director shall serve until the next annual meeting of stockholders and until his or her successor is elected and qualifies. At such time as the Corporation becomes subject to Section 3-804(c) of the MGCL and except as may be provided by the Board of Directors in setting the terms of any class or series of preferred stock, any vacancy on the Board of Directors may be filled only by a majority of the remaining directors, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy shall serve for the remainder of the full term of the directorship in which the vacancy occurred and until a successor is elected and qualifies.

 

Section 12. COMPENSATION. Directors shall not receive any stated salary for their services as directors but, by resolution of the Board of Directors, may receive compensation per year and/or per meeting and/or per visit to real property or other facilities owned or leased by the Corporation and for any service or activity they performed or engaged in as directors. Directors may be reimbursed for expenses of attendance, if any, at each annual, regular or special meeting of the Board of Directors or of any committee thereof and for their expenses, if any, in connection with each property visit and any other service or activity they performed or engaged in as directors; but nothing herein contained shall be construed to preclude any directors from serving the Corporation in any other capacity and receiving compensation therefor.

 

Section 13. RELIANCE. Each director and officer of the Corporation shall, in the performance of his or her duties with respect to the Corporation, be entitled to rely on any information, opinion, report or statement, including any financial statement or other financial data, prepared or presented by an officer or employee of the Corporation whom the director or officer reasonably believes to be reliable and competent in the matters presented, by a lawyer, certified public accountant or other person, as to a matter which the director or officer reasonably believes to be within the person’s professional or expert competence, or, with respect to a director, by a committee of the Board of Directors on which the director does not serve, as to a matter within its designated authority, if the director reasonably believes the committee to merit confidence.

 

Section 14. RATIFICATION. The Board of Directors or the stockholders may ratify and make binding on the Corporation any action or inaction by the Corporation or its officers to the extent that the Board of Directors or the stockholders could have originally authorized the matter. Moreover, any action or inaction questioned in any stockholders’ derivative proceeding or any other proceeding on the ground of lack of authority, defective or irregular execution,

 

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adverse interest of a director, officer or stockholder, non-disclosure, miscomputation, the application of improper principles or practices of accounting or otherwise, may be ratified, before or after judgment, by the Board of Directors or by the stockholders, and if so ratified, shall have the same force and effect as if the questioned action or inaction had been originally duly authorized, and such ratification shall be binding upon the Corporation and its stockholders and shall constitute a bar to any claim or execution of any judgment in respect of such questioned action or inaction.

 

Section 15. CERTAIN RIGHTS OF DIRECTORS AND OFFICERS. A director who is not also an officer of the Corporation shall have no responsibility to devote his or her full time to the affairs of the Corporation. Any director or officer, in his or her personal capacity or in a capacity as an affiliate, employee, or agent of any other person, or otherwise, may have business interests and engage in business activities similar to, in addition to or in competition with those of or relating to the Corporation.

 

No contract or other transaction between this Corporation and any other corporation shall be impaired, affected or invalidated, nor shall any director be liable in any way by reason of the fact that any one or more of the directors of this Corporation is or are interested in, or is a director or officer, or are directors or officers of such other corporation, provided that such facts are disclosed or made known to the Board of Directors.

 

Any director, personally or individually, may be a party to or may be interested in any contract or transaction of this Corporation, and no director shall be liable in any way by reason of such interest, provided that the fact of such interest be disclosed or made known to the Board of Directors, and provided that the Board of Directors shall authorize, approve or ratify such contract or transaction by the vote (not counting the vote of any such director) of a majority of a quorum, notwithstanding the presence of any such director at the meeting at which such action is taken.  Such director or directors may be counted in determining the presence of a quorum at such meeting.  This section shall not be construed to impair or invalidate or in any way affect any contract or other transaction which would otherwise be valid under the law (common, statutory or otherwise applicable) thereto.

 

Section 16. EMERGENCY PROVISIONS. Notwithstanding any other provision in the Charter or these Bylaws, this Section 16 shall apply during the existence of any catastrophe, or other similar emergency condition, as a result of which a quorum of the Board of Directors under Article III of these Bylaws cannot readily be obtained (an “Emergency”). During any Emergency, unless otherwise provided by the Board of Directors, (i) a meeting of the Board of Directors or a committee thereof may be called by any director or officer by any means feasible under the circumstances; (ii) notice of any meeting of the Board of Directors during such an Emergency may be given less than 24 hours prior to the meeting to as many directors and by such means as may be feasible at the time, including publication, television or radio; and (iii) the number of directors necessary to constitute a quorum shall be one-third of the entire Board of Directors.

 

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ARTICLE IV

COMMITTEES

 

Section 1. NUMBER, TENURE AND QUALIFICATIONS. The Board of Directors may appoint from among its members an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee and one or more other committees, composed of one or more directors, to serve at the pleasure of the Board of Directors.

 

Section 2. POWERS. The Board of Directors may delegate to committees appointed under Section 1 of this Article any of the powers of the Board of Directors, except as prohibited by law.

 

Section 3. MEETINGS. Notice of committee meetings shall be given in the same manner as notice for special meetings of the Board of Directors. A majority of the members of the committee shall constitute a quorum for the transaction of business at any meeting of the committee. The act of a majority of the committee members present at a meeting shall be the act of such committee. The Board of Directors may designate a chairman of any committee, and such chairman or, in the absence of a chairman, any two members of any committee (if there are at least two members of the committee) may fix the time and place of its meeting unless the Board shall otherwise provide. In the absence of any member of any such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint another director to act in the place of such absent member.

 

Section 4. TELEPHONE MEETINGS. Members of a committee of the Board of Directors may participate in a meeting by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting.

 

Section 5. CONSENT BY COMMITTEES WITHOUT A MEETING. Any action required or permitted to be taken at any meeting of a committee of the Board of Directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each member of the committee and is filed with the minutes of proceedings of such committee.

 

Section 6. VACANCIES. Subject to the provisions hereof, the Board of Directors shall have the power at any time to change the membership of any committee, to fill any vacancy, to designate an alternate member to replace any absent or disqualified member or to dissolve any such committee.

 

ARTICLE V

OFFICERS

 

Section 1. GENERAL PROVISIONS. The officers of the Corporation shall include a president, a secretary and a treasurer and may include a chairman of the board, a vice chairman of the board, a chief executive officer, one or more vice presidents, a chief operating officer, a chief financial officer, one or more assistant secretaries and one or more assistant treasurers. In addition, the Board of Directors may from time to time elect such other officers with such powers and duties as it shall deem necessary or desirable. The officers of the Corporation shall be elected annually by the Board of Directors, except that the chief executive officer or president

 

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may from time to time appoint one or more vice presidents, assistant secretaries and assistant treasurers or other officers. Each officer shall serve until his or her successor is elected and qualifies or until his or her death, or his or her resignation or removal in the manner hereinafter provided. Any two or more offices except president and vice president may be held by the same person. Election of an officer or agent shall not of itself create contract rights between the Corporation and such officer or agent.

 

Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the Corporation may be removed, with or without cause, by the Board of Directors if in its judgment the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Any officer of the Corporation may resign at any time by delivering his or her resignation to the Board of Directors, the chairman of the board, the chief executive officer, the president or the secretary. Any resignation shall take effect immediately upon its receipt or at such later time specified in the resignation. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation. Such resignation shall be without prejudice to the contract rights, if any, of the Corporation.

 

Section 3. VACANCIES. A vacancy in any office may be filled by the Board of Directors for the balance of the term.

 

Section 4. CHIEF EXECUTIVE OFFICER. The Board of Directors may designate a chief executive officer. A chief executive officer shall have general responsibility for implementation of the policies of the Corporation, as determined by the Board of Directors, and for the management of the business and affairs of the Corporation. He or she may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed; and in general shall perform all duties incident to the office of chief executive officer and such other duties as may be prescribed by the Board of Directors from time to time.

 

Section 5. CHIEF OPERATING OFFICER. The Board of Directors may designate a chief operating officer. The chief operating officer shall have the responsibilities and duties as determined by the Board of Directors or the chief executive officer.

 

Section 6. CHIEF FINANCIAL OFFICER. The Board of Directors may designate a chief financial officer. The chief financial officer shall have the responsibilities and duties as determined by the Board of Directors or the chief executive officer.

 

Section 7. CHAIRMAN OF THE BOARD. The Board of Directors shall designate a chairman of the board. The chairman of the board shall preside over the meetings of the Board of Directors and of the stockholders at which he or she shall be present. The chairman of the board shall perform such other duties as may be assigned to him or her by the Board of Directors.

 

Section 8. PRESIDENT. In the absence of a chief executive officer, the president shall in general supervise and control all of the business and affairs of the Corporation. In the absence of a designation of a chief executive officer by the Board of Directors, the president shall be the

 

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chief executive officer. He or she may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed; and in general shall perform all duties incident to the office of president and such other duties as may be prescribed by the Board of Directors from time to time.

 

Section 9. VICE PRESIDENTS. In the absence of the president or in the event of a vacancy in such office, the vice president (or in the event there be more than one vice president, the vice presidents in the order designated at the time of their election or, in the absence of any designation, then in the order of their election) shall perform the duties of the president and when so acting shall have all the powers of and be subject to all the restrictions upon the president; and shall perform such other duties as from time to time may be assigned to such vice president by the chief executive officer, the president or by the Board of Directors. The Board of Directors may designate one or more vice presidents as executive vice president, senior vice president, or vice president for particular areas of responsibility.

 

Section 10. SECRETARY. The secretary shall (a) keep the minutes of the proceedings of the stockholders, the Board of Directors and committees of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation; (d) keep a register of the post office address of each stockholder which shall be furnished to the secretary by such stockholder; (e) have general charge of the stock transfer books of the Corporation; and (f) in general perform such other duties as from time to time may be assigned to him or her by the chief executive officer, the president or the Board of Directors.

 

Section 11. TREASURER. The treasurer shall have the custody of the funds and securities of the Corporation and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors and in general perform such other duties as from time to time may be assigned to him or her by the chief executive officer, the president or the Board of Directors. In the absence of a designation of a chief financial officer by the Board of Directors, the treasurer shall be the chief financial officer of the Corporation.

 

The treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the president and Board of Directors, at the regular meetings of the Board of Directors or whenever it may so require, an account of all his or her transactions as treasurer and of the financial condition of the Corporation.

 

Section 12. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant secretaries and assistant treasurers, in general, shall perform such duties as shall be assigned to them by the secretary or treasurer, respectively, or by the chief executive officer, the president or the Board of Directors.

 

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Section 13. COMPENSATION. The compensation of the officers shall be fixed from time to time by or under the authority of the Board of Directors and no officer shall be prevented from receiving such compensation by reason of the fact that he or she is also a director.

 

ARTICLE VI

CONTRACTS, CHECKS AND DEPOSITS

 

Section 1. CONTRACTS. The Board of Directors or any manager of the Corporation approved by the Board of Directors and acting within the scope of its authority pursuant to a management agreement with the Corporation may authorize any officer or agent to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the Corporation and such authority may be general or confined to specific instances. Any agreement, deed, mortgage, lease or other document shall be valid and binding upon the Corporation when executed by an authorized person and duly authorized or ratified by action of the Board of Directors or a manager acting within the scope of its authority pursuant to a management agreement.

 

Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or agent of the Corporation in such manner as shall from time to time be determined by the Board of Directors.

 

Section 3. DEPOSITS. All funds of the Corporation not otherwise employed shall be deposited or invested from time to time to the credit of the Corporation as the Board of Directors, the chief executive officer, the president, the chief financial officer, the treasurer or any other officer designated by the Board of Directors may determine.

 

ARTICLE VII

STOCK

 

Section 1. CERTIFICATES. The Board of Directors may authorize the Corporation to issue some or all of the shares of any class or series of its stock without certificates. In the event that the Corporation issues shares of stock represented by certificates, such certificates shall be in such form as prescribed by the Board of Directors or a duly authorized officer, shall contain the statements and information required by the MGCL and shall be signed by the officers of the Corporation in the manner permitted by the MGCL. In the event that the Corporation issues shares of stock without certificates, to the extent then required by the MGCL, the Corporation shall provide to the record holders of such shares a written statement of the information required by the MGCL to be included on stock certificates. There shall be no differences in the rights and obligations of stockholders based on whether or not their shares are represented by certificates. If shares of a class or series of stock are authorized by the Board of Directors to be issued without certificates, no stockholder shall be entitled to a certificate or certificates representing any shares of such class or series of stock held by such stockholder unless otherwise determined by the Board of Directors and then only upon written request by such stockholder to the secretary of the Corporation.

 

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Section 2. TRANSFERS. All transfers of shares of stock shall be made on the books of the Corporation, by the holder of the shares, in person or by his or her attorney, in such manner as the Board of Directors or any officer of the Corporation may prescribe and, if such shares are certificated, upon surrender of certificates duly endorsed. The issuance of a new certificate upon the transfer of certificated shares is subject to the determination of the Board of Directors that such shares shall no longer be represented by certificates. Upon the transfer of uncertificated shares, to the extent then required by the MGCL, the Corporation shall provide to the record holders of such shares a written statement of the information required by the MGCL to be included on stock certificates.

 

The Corporation shall be entitled to treat the holder of record of any share of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by the laws of the State of Maryland.

 

Notwithstanding the foregoing, transfers of shares of any class or series of stock will be subject in all respects to the Charter and all of the terms and conditions contained therein.

 

Section 3. REPLACEMENT CERTIFICATE. Any officer of the Corporation may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, destroyed, stolen or mutilated, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, destroyed, stolen or mutilated; provided, however, if such shares have ceased to be certificated, no new certificate shall be issued unless requested in writing by such stockholder and the Board of Directors has determined that such certificates may be issued. Unless otherwise determined by an officer of the Corporation, the owner of such lost, destroyed, stolen or mutilated certificate or certificates, or his or her legal representative, shall be required, as a condition precedent to the issuance of a new certificate or certificates, to give the Corporation a bond in such sums as it may direct as indemnity against any claim that may be made against the Corporation.

 

Section 4. FIXING OF RECORD DATE. The Board of Directors may set, in advance, a record date for the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or determining stockholders entitled to receive payment of any dividend or the allotment of any other rights, or in order to make a determination of stockholders for any other proper purpose. Such date, in any case, shall not be prior to the close of business on the day the record date is fixed and shall be not more than 90 days and, in the case of a meeting of stockholders, not less than ten days, before the date on which the meeting or particular action requiring such determination of stockholders of record is to be held or taken.

 

When a record date for the determination of stockholders entitled to notice of and to vote at any meeting of stockholders has been set as provided in this section, such record date shall continue to apply to the meeting if adjourned or postponed, except if the meeting is adjourned or postponed to a date more than 120 days after the record date originally fixed for the meeting, in which case a new record date for such meeting may be determined as set forth herein.

 

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Section 5. STOCK LEDGER. The Corporation shall maintain at its principal office or at the office of its counsel, accountants or transfer agent, an original or duplicate stock ledger containing the name and address of each stockholder and the number of shares of each class held by such stockholder.

 

Section 6. FRACTIONAL STOCK; ISSUANCE OF UNITS. The Board of Directors may authorize the Corporation to issue fractional stock or authorize the issuance of scrip, all on such terms and under such conditions as it may determine. Notwithstanding any other provision of the Charter or these Bylaws, the Board of Directors may issue units consisting of different securities of the Corporation. Any security issued in a unit shall have the same characteristics as any identical securities issued by the Corporation, except that the Board of Directors may provide that for a specified period securities of the Corporation issued in such unit may be transferred on the books of the Corporation only in such unit.

 

ARTICLE VIII

ACCOUNTING YEAR

 

The Board of Directors shall have the power, from time to time, to fix the fiscal year of the Corporation by a duly adopted resolution.

 

ARTICLE IX

DISTRIBUTIONS

 

Section 1. AUTHORIZATION. Dividends and other distributions upon the stock of the Corporation may be authorized by the Board of Directors, subject to the provisions of law and the Charter. Dividends and other distributions may be paid in cash, property or stock of the Corporation, subject to the provisions of law and the Charter.

 

Section 2. CONTINGENCIES. Before payment of any dividends or other distributions, there may be set aside out of any assets of the Corporation available for dividends or other distributions such sum or sums as the Board of Directors may from time to time, in its absolute discretion, think proper as a reserve fund for contingencies, for equalizing dividends, for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall determine, and the Board of Directors may modify or abolish any such reserve.

 

ARTICLE X

INVESTMENT POLICY

 

Subject to the provisions of the Charter, the Board of Directors may from time to time adopt, amend, revise or terminate any policy or policies with respect to investments by the Corporation as it shall deem appropriate in its sole discretion.

 

ARTICLE XI

SEAL

 

Section 1. SEAL. The Board of Directors may authorize the adoption of a seal by the Corporation. The seal shall contain the name of the Corporation and the year of its incorporation

 

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and the words “Incorporated Maryland.” The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof.

 

Section 2. AFFIXING SEAL. Whenever the Corporation is permitted or required to affix its seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place the word “(SEAL)” adjacent to the signature of the person authorized to execute the document on behalf of the Corporation.

 

ARTICLE XII

INDEMNIFICATION AND ADVANCE OF EXPENSES

 

Each person who was or is made a party or is threatened to be made a party to or is otherwise involved (including involvement as a witness) in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “proceeding”), by reason of the fact that he or she is or was a director, officer or employee of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, manager, officer, employee or agent of another corporation or of a partnership, limited liability company, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer or other employee or in any other capacity while serving as a director, officer or employee, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by Maryland law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto), against all expense, liability and loss (including attorneys’ fees, judgments, fines, excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a director, manager, officer, employee or agent and shall inure to the benefit of the indemnitee’s heirs, legal representatives, executors and administrators.  The right to indemnification conferred in this Article XII shall be a contract right and shall include the obligation of the Corporation to pay the expenses incurred in defending any such proceeding in advance of its final disposition (an “advance of expenses”); provided, however, that in any case an advance of expenses incurred by an indemnitee shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (a “final adjudication”) that such indemnitee is not entitled to be indemnified for such expenses under this Article XII or otherwise.  The Corporation may, by action of its Board of Directors, provide indemnification to agents of the Corporation with the same or lesser scope and effect as the foregoing indemnification of directors, officers and employees.  Any director, officer or employee of the Corporation serving (i) another corporation, partnership, limited liability company, joint venture, trust or other enterprise of which a majority of the equity interests entitled to vote in the election of its directors or the equivalent thereof is controlled by the Corporation, or (ii) any employee benefit plan of the Corporation or any entity referred to in clause (i), in any capacity shall be deemed to be doing so at the request of the Corporation.

 

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Neither the amendment nor repeal of this Article, nor the adoption or amendment of any other provision of these Bylaws or the Charter inconsistent with this Article, shall apply to or affect in any respect the applicability of the preceding paragraph with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.

 

ARTICLE XIII

WAIVER OF NOTICE

 

Whenever any notice of a meeting is required to be given pursuant to the Charter or these Bylaws or pursuant to applicable law, a waiver thereof in writing or by electronic transmission, given by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice, unless specifically required by statute. The attendance of any person at any meeting shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

 

ARTICLE XIV

AMENDMENT OF BYLAWS

 

The Board of Directors shall have the exclusive power to adopt, alter or repeal any provision of these Bylaws and to make new Bylaws.

 

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EXHIBIT 8.1

DRAFT 11/1/12

 

                               , 2012

 

Altisource Residential Corporation

c/o Altisource Asset Management Corporation

402 Strand Street

Frederiksted, U.S. Virgin Islands 00840-3531

 

Re: Real Estate Investment Trust Qualification Opinion

 

Ladies and Gentlemen:

 

We have acted as tax counsel to Altisource Residential Corporation, a Maryland corporation (the “Company”), in connection with a certain corporate restructuring transaction (the “Separation”) and the issuance of Company common stock as described in the registration statement on Form 10, File No. 001-35657 (the “Registration Statement”) initially filed by the Company on September 20, 2012, with the Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended.  All capitalized terms used herein have their respective meanings set forth in the Registration Statement unless otherwise stated.

 

For purposes of the opinion set forth below, we have reviewed and relied upon the Registration Statement (including exhibits thereto), the Separation Agreement, the Company’s organizing documents, and such other documents, records, and instruments (including the representation letter dated [       ], 2012, containing various representations by the Company) as in our discretion we have deemed necessary, appropriate, or relevant as a basis for our opinion and we have assumed that the Separation will be consummated as described in the Registration Statement and Separation Agreement.  In addition, in rendering our opinion we have relied upon certain other representations and information provided to us and statements of factual matters made by the Company, which we have neither investigated nor verified.  We have assumed that such representations, information and statements are true, correct, complete, and not breached, and that no actions that are inconsistent with such representations, information or statements will be taken.  We have also assumed that all statements made “to the best knowledge of” or “beliefs” of any persons will be true, correct, and complete as if made without such qualification.  Any inaccuracy in, or breach of, any of the aforementioned representations, information, statements and assumptions, or any change after the date hereof in applicable law, could adversely affect our opinion.  No ruling has been (or will be) sought from the Internal Revenue Service (the “Service”) by the Company in connection with the Company’s Separation.  The opinion expressed herein is not binding on the Service or any other taxing authority, and there can be no assurance that the Service, any other taxing authority, or a court of competent jurisdiction will not disagree with such opinion.

 

Based upon and subject to the foregoing as well as the limitations set forth below, we are of the opinion as of the date hereof, that under presently applicable United States federal income tax law, the Company has been organized and has operated in conformity with the

 



 

requirements for qualification and taxation as a Real Estate Investment Trust (“REIT”) under the Internal Revenue Code of 1986, as amended, (the “Code”) and its proposed method of operation will enable it to continue to meet the requirements for qualification and taxation as a REIT under the Code.

 

No opinion is expressed as to any matter not specifically addressed above.  Our opinion is limited to the tax matters specifically stated herein, and we have not been asked to address, nor have we addressed, any other tax matters, and no other opinion should be inferred herefrom.  Our opinion is based on current United States federal income tax law and administrative guidance, any of which may be changed or subject to different interpretation at any time, possibly with retroactive effect.  We undertake no obligation to advise you as to any such changes that may affect our opinion unless we are specifically asked to do so.  We also express no opinion as to the laws of any jurisdiction other than the federal income tax laws of the United States.

 

This opinion letter is being furnished solely to the Company in connection with the Separation described herein, and is not to be relied upon or utilized by any other person or entity other than the Company, and may not be made available to any other person without our prior written consent.

 

 

Very truly yours,

 

 

 

 

 

Kramer Levin Naftalis & Frankel LLP

 

IRS Circular 230 disclosure:

 

This opinion is limited to the one or more Federal tax issues addressed in the opinion.  Additional issues may exist that could affect the Federal tax treatment of the transaction or matter that is the subject of the opinion and the opinion does not consider or provide a conclusion with respect to any additional issues.  With respect to any significant Federal tax issues outside the limited scope of the opinion, the opinion was not written, and cannot be used by the taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer.

 


EXHIBIT 10.4

 

 

MASTER SERVICES AGREEMENT

 

This Master Services Agreement is made by and between ALTISOURCE SOLUTIONS S.À R.L., a Luxembourg private limited liability company (“Altisource”) and ALTISOURCE RESIDENTIAL CORPORATION, a Maryland corporation (“Residential”, and together with Altisource, the “Parties” and each individually, a “Party”), and is dated as of [    ], 2012.

 

RECITAL

 

WHEREAS, Residential desires to receive, and Altisource is willing to provide, or cause to be provided, certain Services pursuant to the terms and conditions set forth herein.

 

AGREEMENT

 

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

 

1.                                      DEFINED TERMS.

 

Definitions of certain capitalized terms used in this Agreement are contained in Exhibit 1 to this Agreement, attached hereto and incorporated herein by this reference.

 

2.                                          SERVICES.

 

2.1.                            PROVISION OF SERVICES.  Subject to the terms and conditions of this Agreement, Altisource shall provide, or cause to be provided, to Residential and any of Residential’s Affiliates, the Services set forth on Exhibit 2, attached hereto and incorporated herein by this reference, for the respective Service Period shown on Exhibit 2, unless a Service Period is earlier terminated in accordance with Section 6 of this Agreement.  In each case, the Services set forth on Exhibit 2 are further described in the Services Letter.

 

2.2.                            STATEMENTS OF WORK.  In addition to the Services set forth on Exhibit 2, 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 Additional Services to be performed hereunder.  All SOWs shall be governed by the terms and conditions of this Agreement.  In addition, all SOWs shall be agreed to by each Party, shall be in writing and may contain, to the extent applicable:

 

(a)                                 The identity of each Party providing or responsible for providing each Service thereunder;

(b)                                 A description of each Service to be performed thereunder;

(c)                                  The applicable Performance Standard for the provision of each Service thereunder;

(d)                                 A description of the penalties of nonperformance and the incentives for performance in accordance with the applicable Performance Standard;

(e)                                  A description of Residential’s criteria for evaluating the acceptance of deliverables;

(f)                                   The amount, schedule and method of compensation for each Service thereunder;

(g)                                  A description of the renewal option for that SOW;

(h)                                 Any support requirements of Residential with respect to each Service thereunder;

(i)                                     Training and support commitments with respect to each Service thereunder; and

(j)                                    Any other terms the Parties desire.

 

2.3.                            WHEN SERVICES ARE TO BE PROVIDED.  The Services shall be provided on Business Days during hours that constitute regular business hours for each of Residential and Altisource, unless otherwise agreed or as provided on Exhibit 2, in the Services Letter or an applicable SOW.

 

2.4.                            RIGHT TO RECEIVE SERVICES IS NON-TRANSFERABLE.  Residential shall not 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 Residential and Residential’s Affiliates.  Whenever Residential requires that Altisource provide a Service directly to a Residential Affiliate, Residential shall notify Altisource in writing by identifying the applicable Service and providing the name, contact and billing information of the corresponding Residential Affiliate.  In those instances where Residential requires that Altisource provide Services directly to a Residential Affiliate, all references to Residential in this Agreement, the Service Letter, the Fee Letter and the applicable SOW and Fee Schedule shall be deemed to refer to Residential and/or the applicable Residential Affiliate, as the context may require.

 

Confidential

 

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2.5.                            STAFFING.  Notwithstanding anything to the contrary in this Section 2 (but subject to the second succeeding sentence), Altisource shall have the exclusive right to select, employ, pay, supervise, administer, direct and discharge any of its employees who will perform Services.  Altisource shall be responsible for paying such employees’ compensation and providing to such employees any benefits. With respect to each Service, Altisource shall use commercially reasonable efforts to have qualified individuals participate in the provision of such Service; provided, however, that:

 

(a)                                 Altisource shall not be obligated to have any individual participate in the provision of any Service if Altisource determines that such participation would adversely affect Altisource or Altisource’s Affiliates; and

 

(b)                                 None of Altisource or Altisource’s Affiliates shall be required to continue to employ any particular individual during the applicable Service Period.

 

2.6.                            ALTISOURCE’S USE OF AFFILIATES TO PROVIDE SERVICES.  Altisource may provide Services through Altisource’s Affiliates, whether by unilateral assignment, designation or subcontract.  To the extent one or more of the Services are required to be performed by a licensed Affiliate, Altisource, in its sole discretion, has the right to: (i) designate the licensed Affiliate or other licensed third party, at Altisource’s sole discretion to provide any Services under this Agreement, the Services Letter and/or any applicable SOW; and/or (ii) assign, in whole or in part, this Agreement, the Services Letter and/or any applicable SOW to such Affiliate without consent.

 

2.7.                            ALTISOURCE’S USE OF THIRD PARTIES TO PROVIDE SERVICES.  In addition, Altisource and/or Altisource’s Affiliates may engage third-party contractors to perform any of the Services or to provide professional services related to any of the Services.

 

3.                                      STANDARD OF PERFORMANCE.

 

Altisource shall use commercially reasonable efforts to provide, or cause to be provided, to Residential each Service in accord with any Performance Standard as may be identified in the applicable SOW.  Notwithstanding the foregoing, Altisource shall not have any obligation hereunder to provide to Residential any improvements, upgrades, updates, substitutions, modifications or enhancements to any of the Services unless otherwise specified in the Services Letter or applicable SOW.  Residential acknowledges and agrees that Altisource may be providing services similar to the Services provided hereunder that involve the same resources as those used to provide the Services to its and its Affiliates’ business units and other third parties.

 

4.                                     FEES AND BILLING.

 

4.1.                            FEES, FEE LETTER.  As compensation for a particular Service, Residential agrees to pay to Altisource the respective amount set forth in (i) the Fee Letter and/or the applicable Fee Schedule for that Service; or (ii) an SOW and/or Fee Schedule with respect to any Additional Service performed pursuant to such SOW.

 

4.2.                            ANNUAL ADJUSTMENT.  The fees for the Services shall be adjusted each year as negotiated between the Parties in good faith based on prevailing market conditions and inflation.

 

4.3.                            FEE EXEMPTION.  Residential shall not be obligated to pay fees for (i) new Services, other than Additional Services or Services requested pursuant to an SOW, which Altisource performs without the authorization of Residential, or (ii) Services not provided due to a Force Majeure Event.

 

4.4.                            BILLING AND PAYMENT.  Altisource shall submit statements of account to Residential on a monthly basis with respect to the Invoiced Amount, setting out the Services provided, and the amount billed to Residential 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).

 

4.4.1.                  PAYMENT BY WIRE TRANSFER.  Residential shall pay the Invoiced Amount to Altisource by wire transfer of immediately available funds to an account or accounts specified by Altisource, or in such other manner as specified by Altisource in writing, or otherwise reasonably agreed to by the Parties, within thirty (30) days of the date of delivery to Residential of the applicable statement of account; provided, that, in the event of any dispute as to an Invoiced Amount, Residential 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.

 

4.4.2.                  PAYMENT FROM RESERVE ACCOUNT.  For certain Services, Altisource will require that Residential prefund a dedicated Reserve Fund for the payment of certain expenses in connection with each of those Services, as

 

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more particularly described in the SOW and/or the Fee Schedule for each of those respective Services.  Each Reserve Fund will be owned by Residential, but managed by Altisource on behalf of Residential.  If a Reserve Fund has been established pursuant to an SOW and/or Fee Schedule, then Altisource may draw its expenses and pay third party invoices (including Commingled Invoice Statements as defined in Section 4.5) on behalf of Residential directly from the Reserve Fund in accordance with the terms of the applicable SOW and/or Fee Schedule.

 

4.5.                            THIRD PARTY BILLING, COMMINGLED INVOICES.  Altisource may cause any third party to which amounts are owed by Residential in connection with Services to issue a separate invoice to Residential for such amounts.  Residential shall pay or cause to be paid any such separate third party invoice in accordance with the payment terms thereof.  Altisource shall separate Commingled Invoices and prepare Commingled Invoice Statements, for all Commingled Invoices Altisource receives.  Altisource shall deliver such Commingled Invoice Statement and a copy of the Commingled Invoice to Residential.  Residential shall, within thirty (30) days after the date of delivery to Residential 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 or to satisfy any payment obligation of Residential and any of Residential’s 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, Residential shall reimburse Altisource for such payments as invoiced by Altisource within thirty (30) days following the date of delivery of such invoice from Altisource.

 

4.6.                            INTEREST ON COMMINGLED INVOICES.  Residential acknowledges and agrees that it shall be responsible for any interest or other amounts with respect to any portion of any Commingled Invoice that Residential is required to pay or Altisource pays on Residential’s behalf pursuant to any Commingled Invoice Statement.

 

4.7.                            BOOKS AND RECORDS, AUDIT RIGHTS.  Altisource shall maintain books and records adequate for the provision of the Services.  At its own expense, Residential may request an audit of the books and records of Altisource to determine performance in accordance with Section 4.4.  If such audit reveals an underpayment of fees, Residential shall promptly pay the underpayment amount in accordance with the terms of this Agreement.  If such audit reveals an overpayment of fees, Altisource shall promptly refund the overpayment amount in accordance with Section 4.4.

 

4.8.                            SUSPENSION OF SERVICE.  Altisource may, in its discretion and without any liability, suspend any performance under this Agreement upon failure of Residential to make timely any payments required under this Agreement beyond the applicable cure date specified in Section 6.3.1 of this Agreement.

 

4.9.                            INTEREST, COSTS OF COLLECTION.  In the event that Residential does not make any payment to Altisource when due in accordance with the terms of this Agreement, the Services Letter or the Fee Letter, as applicable, Altisource may, at its option, charge Residential 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, Residential shall reimburse Altisource for all costs of collection of overdue amounts, including any reasonable attorneys’ fees.

 

4.10.                     FAVORABLE PRICING.  The Parties intend that the fees Altisource charges Residential, as set forth in this Section 4 generally reflect competitively to the industry market rate for comparable services.  Furthermore, the Parties intend that Altisource will provide Residential with preferential pricing with regard to the overall delivery of Services (although not necessarily for each instance when Altisource provides a Service), so that Residential can establish a competitive advantage in the marketplace.

 

5.                                      TERM.

 

5.1.                            INITIAL TERM.  The initial term of this Agreement shall commence on the Effective Date and shall continue in full force and effect, subject to Section 5.2, until the date that is fifteen (15) years from the Effective Date (the “Initial Term”), or the earlier date upon which this Agreement has been otherwise terminated in accordance with Section 6 of this Agreement.

 

5.2.                            RENEWAL TERM.  This Agreement will automatically renew for successive two (2) year terms (each, a “Renewal Term”) unless either Party decides that it does not wish to renew this Agreement or any particular Service or SOW hereunder before the expiration of the Initial Term or any Renewal Term, as applicable, by notifying the other Party in writing at least nine (9) months before the completion of the Initial Term or Renewal Term, as applicable.

 

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6.                                      TERMINATION.

 

6.1.                            DISPUTE RESOLUTION PRIOR TO TERMINATION.  The Parties acknowledge and agree that, prior to initiating any termination of this Agreement or any Service or SOW, the Parties must first follow and comply with the dispute resolution procedures set forth in Section 19.1 of this Agreement.

 

6.2.                           TERMINATION BY RESIDENTIAL.

 

6.2.1.                TERMINATION OF AGREEMENT.

 

6.2.1.1           Material Breach.  Residential may terminate this Agreement in the event of a material breach by Altisource of any covenant or representation and warranty contained herein or otherwise directly relating to or affecting the Services to be provided hereunder that cannot be or has not been cured by the 60th day following Altisource’s receipt of written notice of such breach given by Residential, which notice shall be given no later than sixty (60) days following the later of the occurrence of such breach or the date upon which Residential should have known of such breach.

 

6.2.1.2           Altisource’s Insolvency.  Residential may terminate this Agreement if Altisource: (i) becomes insolvent; (ii) 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 Altisource and, within sixty (60) days thereof, such Party fails to secure a dismissal thereof; or (iii) makes any assignment for the benefit of creditors, which bankruptcy, insolvency or assignment cannot be or has not been cured by the 60th day following Altisource’s receipt of written notice of such failure given by Residential, which such notice shall be given no later than forty five (45) days following the later of the occurrence of such event or the date upon which Residential should have known of such event.

 

6.2.2.                TERMINATION OF SERVICES OR SOWS.

 

6.2.2.1           Legal Prohibition.  Residential may terminate a particular Service or SOW if Residential is prohibited by law from receiving such Services from Altisource.

 

6.2.2.2           Legal Violation.  Residential may terminate a particular Service or SOW if Altisource materially violates an applicable law or regulation to which Altisource is subject to governing the performance of a Service, which violation cannot be or has not been cured by the 60th day following Altisource’s receipt of written notice of such violation given by Residential, which such notice shall be given no later than forty five (45) days following the later of the occurrence of such violation or the date upon which Residential should have known of such violation.

 

6.2.2.3          Government Citation.  Residential may terminate a particular Service or SOW if Altisource is cited by a Governmental Authority for materially violating an applicable law or regulation to which Altisource is subject to governing the performance of a Service, which violation cannot be or has not been cured by the 60th day following Altisource’s receipt of written notice of such violation given by Residential which such notice shall be given no later than forty five (45) days following the later of the occurrence of such citation or the date upon which Residential should have known of such citation.

 

6.2.2.4           Performance StandardsResidential may terminate a particular Service or SOW if Altisource materially fails to meet any Performance Standard for a period of two consecutive months or four nonconsecutive months in any rolling twelve (12) month period, which failure cannot be or has not been cured by the 60th day following Altisource’s receipt of written notice of such failure given by Residential, which such notice shall be given no later than forty-five (45) days following the later of the occurrence of such failure or the date upon which Residential should have known of such failure.

 

6.2.2.5           Discontinuance of Business.  Residential may terminate a particular Service or SOW, in whole or in part, not less than 120 days following Altisource’s receipt of written notice of such termination in the event Residential discontinues the line of business receiving such Services.  In the event Residential terminates such Service or SOW in accordance with this Section 6.2.2.5 unless otherwise set forth herein or in the applicable SOW, or in the event Altisource terminates this Agreement pursuant to Section 6.3.1.10, Residential shall be responsible for payment of the following costs and expenses:

 

(a)                                 Costs and expenses relating to the re-employment or termination of an employee or employees of Altisource or any of Altisource’s Affiliates who had been previously engaged in providing the Services governed by the terminated Service or SOW;

 

(b)                                 Costs and expenses relating to existing contracts with third parties that had been entered into by Altisource solely for the provision of Services under such terminated Service or SOW; and

 

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(c)                                  Costs and expenses relating to facilities, hardware and equipment (including depreciation) used solely for the purpose of providing such Services or SOW.

 

6.2.3.                ALTISOURCE’S RIGHT TO CURE.  For the avoidance of doubt, with respect to all termination rights granted Residential in this Section 6.2 except for those in Section 6.2.2.1, if Altisource has cured the underlying event or circumstance giving rise to written notice of the same, within the time period specified above, Residential may not terminate this Agreement or the applicable Service or SOW.  Furthermore, if Altisource is unable to effect a cure of the event or circumstance occurring under Section 6.2 within the time period specified, despite a good faith effort to effect such cure, Residential shall allow Altisource such additional time as reasonably required to effect such cure without termination of this Agreement or the applicable Service or SOW, but in no event shall such additional time exceed ninety (90) days unless otherwise agreed by the Parties.

 

6.3.                          TERMINATION BY ALTISOURCE.

 

6.3.1.                ALTISOURCE’S CAUSES FOR TERMINATION.

 

6.3.1.1           Non-Payment.  Altisource may terminate this Agreement or the particular Service or SOW if Residential fails to make any payment for any portion of Services, which payment remains unmade by the 60th day following Altisource’s giving of written notice of such failure to Residential.

 

6.3.1.2           Legal Prohibition.  Altisource may terminate this Agreement or the particular Service or SOW if Altisource is prohibited by law from providing such Services to Residential upon Altisource giving written notice of such prohibition to Residential.

 

6.3.1.3           Change in Law.  Altisource may terminate the Agreement or the particular Service or SOW if there is a change in law that affects such Service upon Altisource giving written notice of such change to Residential.

 

6.3.1.4           Legal Violation.  Altisource may terminate this Agreement or the particular Service or SOW if Residential materially violates an applicable law or regulation to which Residential is subject to governing the receipt, acceptance or use of a Service, which violation cannot be or has not been cured by the 60th day following Residential’s receipt of written notice of such violation given by Altisource.

 

6.3.1.5           Government Prohibition.  Altisource may terminate this Agreement or the particular Service or SOW if Residential or Altisource receives an order from a Governmental Authority prohibiting the performance of the Services.

 

6.3.1.6           Government Citation.  Altisource may terminate this Agreement or the particular Service or SOW if Altisource is notified by a Governmental Authority, due to the actions of Residential, for materially violating any law governing the performance of a Service, which violation cannot be or has not been cured by Residential by the 60th day following Residential’s receipt of written notice of such violation given by Altisource.

 

6.3.1.7           Residential’s Insolvency.  Altisource may terminate this Agreement or the particular Service or SOW if Residential: (i) becomes insolvent; (ii) files a petition in bankruptcy or insolvency, is adjudicated bankrupt or answer seeking reorganization insolvent or files any petition or 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 Residential and within sixty (60) days thereof Residential fails to secure a dismissal thereof; or (iii) makes any assignment for the benefit of creditors.

 

6.3.1.8           Intellectual Property Infringement.  Altisource may terminate this Agreement or the particular Service or SOW in the event of any material infringement of Altisource’s intellectual property, by Residential or caused by Residential, including intellectual property developed hereunder pursuant to Section 9 below.

 

6.3.1.9           Material BreachAltisource may terminate this Agreement or the particular Service or SOW 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 to Residential that cannot be or has not been cured by the 60th day from Altisource’s giving of written notice of such breach to Residential.

 

6.3.1.10    Termination of Asset Management Agreement.  In the event Residential terminates that certain Asset Management Agreement by and between Residential and Altisource Asset Management Corporation, dated  as of [    ], 2012 for any reason other than “for cause,” as defined therein, Altisource, in its sole discretion, may:

 

(a)                                 Terminate this Agreement and/or any or all SOWs, in which case: (i) Residential shall be responsible for payment of the costs and expenses listed in Section 6.2.2.5; and (ii) Altisource, in

 

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its sole discretion, may reduce its obligation to provide post-termination services pursuant to Section 6.5 from 270 days to either 180 days or 90 days; or

 

(b)                                 Continue under this Agreement in full force and effect, except that Altisource, in its sole discretion, may unilaterally nullify Section 4.10 so that Section 4.10 would no longer have any force or effect.

 

6.3.2.                  RESIDENTIAL’S RIGHT TO CURE.  For the avoidance of doubt, with respect to Section 6.3.1.9 only, if Residential has cured the underlying event or circumstance giving rise to written notice of the same, within the time period specified above, Altisource may not terminate this Agreement or the applicable Service or SOW; provided, however, that Altisource may, if it so states in the written notice required to be provided to Residential pursuant to the above, suspend the Service performed hereunder or under the applicable SOW until Residential has cured such violation or breach, as the case may be.

 

6.4.                            WIND-DOWN PERIOD. During the period that is six (6) months prior to the date of termination of this Agreement, Altisource shall have no obligation to: (i) expand the scope of its Services under this Agreement or any SOW; (ii) perform any new or additional Services under this Agreement or any SOW; or (iii) invest in hardware, software or equipment for performance against a Service or SOW.

 

6.5.                            POST-TERMINATION SERVICES.  Subject to Altisource’s rights under Section 6.3.1.10, upon termination of this Agreement and, any SOW or any Services, for any reason whatsoever, Residential may elect to purchase post-termination services from Altisource for a period of 270 days from the date on which this Agreement terminates on the current terms hereunder or in place under the applicable SOW(s).

 

6.6.                            EFFECTS OF TERMINATION.

 

6.6.1.                SERVICES, FEES.  Upon the early termination of any Service or SOW pursuant to this Section 6 or upon the expiration of the applicable Service Period, Altisource shall no longer be obligated to provide such Service (except as provided in Section 6.5); provided that Residential shall be obligated to reimburse Altisource for any reasonable out-of pocket expenses or costs attributable to such termination unless otherwise provided herein or in the applicable SOW(s).

 

6.6.2.                NO ESTOPPEL.  No termination, cancelation 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.

 

6.6.3.                TERMINATION OF LICENSE.  The intellectual property licenses granted pursuant to Section 9 of this Agreement shall terminate upon any termination of this Agreement with immediate effect.

 

6.6.4.                SURVIVAL. Notwithstanding any provision herein to the contrary, Sections 4, 9, 11, 12, 14, 15, 18 and 19 of this Agreement shall survive the termination of this Agreement.

 

7.                                      CHANGE ORDER PROCEDURES; TEMPORARY EMERGENCY CHANGES.

 

7.1.                            PROCEDURE FOR PERMANENT CHANGE ORDERS.  The Parties hereto may change the nature and scope of Services provided hereunder or under any SOW by mutual agreement. The Party seeking the change shall submit a request containing: (i) the identity of the Party requesting such change; (ii) the reason(s) for the change; (iii) a description of the requested change; and (iv) a timetable for the implementation of the change.  The non-requesting Party shall have thirty (30) Business Days to consider the suggested change and either approve or decline such change. For the avoidance of doubt, no change to any Service or SOW will become part of the Performance Standard for such Service or SOW without Altisource’s prior approval.

 

7.2.                            PROCEDURE FOR TEMPORARY CHANGE ORDERS.  Notwithstanding the foregoing, in the event Altisource is unable to contact Residential’s designated contact for a specific Service or SOW after reasonable effort, Altisource may make temporary changes to any SOW or Services, which Altisource shall document and report to Residential the next Business Day. Such changes shall become permanent only if Altisource subsequently follows the procedures in Section 7.1 hereof for permanent change order procedures. Residential shall not be obligated to pay for any changed Services performed with out it sprior approval.

 

7.3.                            PROCEDURE FOR EMERGENCY SERVICE REQUESTS.  Residential may, in an emergency, request additional Services to be performed as promptly as practicable, and Altisource shall use its reasonable best efforts to perform such Services as promptly as practicable.  While Altisource will continue to provide services in line with the request from Residential, in the event that Altisource plans to incur materially additional costs

 

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in providing this service, Altisource may submit a financial proposal to make Altisource financially whole. In such a case, Residential and Altisource may agree for the one-time increase in payment for the emergency. Such emergency request shall last no longer than thirty (30) Business Days, and Altisource shall have no obligation to continue performing such Services unless Residential follows the procedures in Section 7.1 hereof for permanent change order procedures.

 

7.4.                            SUPPLEMENTAL PROCEDURES.  The Parties hereto agree to cooperate in good faith to determine and implement additional procedures for change orders as needed.

 

8.                                      EXCLUSIVITY.

 

8.1.                            EXCLUSIVE PROVIDER.  During the term of this Agreement, Altisource will be the exclusive provider of all Services to Residential and all of Residential’s Affiliates.

 

8.1.1.                RIGHT OF FIRST OPPORTUNITY.  If Residential elects to receive any Additional Service, Residential shall first request a proposal for the provision of such Additional Service from Altisource. Altisource shall have the duration of the Exclusive Tender Period to respond to such request for Additional Service and to provide a proposed SOW to Residential. During the Exclusive Tender Period, Residential shall not solicit proposals or negotiate with any other third party with respect to such request for Additional Service. Upon receipt of Altisource’s proposal for the Additional Service, Residential shall consider such proposal exclusively and shall negotiate with Altisource in good faith with respect to the possible provision by Altisource of such Additional Services.

 

8.1.2.                END OF THE EXCLUSIVE TENDER PERIOD.  If, at the end of the Exclusive Tender Period, Altisource and Residential do not agree on the proposed SOW, Residential may solicit proposals from Third Party Additional Service Providers with respect to the Additional Service; provided, however, that Residential shall not disclose any Confidential Information received from Altisource, whether verbal or written, in the proposed SOW or during the Exclusive Tender Period negotiations, and such Confidential Information shall be subject to the terms of Section 11 hereof.  Residential may not agree to a proposed SOW with a Third Party Additional Service Provider where the terms and conditions of the proposed SOW are not materially better than the terms and conditions provided by Altisource.

 

8.2.                           RESIDENTIAL MAY NOT PROVIDE SERVICES.  Residential shall not develop or provide, for itself or other parties, services reasonably similar to or related to the Services provided by Altisource hereunder or under any SOW or provided by Altisource to other parties under any SOW without first obtaining written approval from Altisource, which Altisource may approve in its sole discretion.

 

8.3.                            ALTISOURCE MAY PROVIDE SERVICES TO THIRD PARTIES.  For the avoidance of doubt, Altisource shall not be restricted from providing services to a third party that are similar or identical to the Services provided hereunder or under any SOW.

 

9.                                      INTELLECTUAL PROPERTY.

 

9.1.                            RETENTION OF RIGHTS.

 

9.1.1.                BY ALTISOURCE.  Altisource shall retain all rights to all technology and intellectual property owned or licensed by Altisource prior to the provision of Services hereunder or developed by Altisource during the course of and in association with the provision of Services under this Agreement by Altisource, including all derivative works.

 

9.1.2.                BY RESIDENTIAL.  Residential shall retain all rights to all intellectual property owned or licensed by Residential prior to the provision of Services hereunder or developed by Residential during the course of and in association with the provision of Services by Altisource under this Agreement, including all derivative works.

 

9.2.                            GRANT OF LIMITED LICENSES.  Each Party grants to the other and their 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 such Party solely to the extent necessary for the other Party to perform its obligations hereunder.

 

9.3.                            TERMINATION OF LIMITED LICENSES.  For the avoidance of doubt, this license will terminate upon the termination, cancellation or expiration of this Agreement.

 

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10.                               ACCESS; RELATIONSHIP EXECUTIVES.

 

10.1.                     ACCESS TO RESIDENTIAL’S PREMISES AND RECORDS.  Residential shall permit Altisource and its employees and representatives access, on Business Days during hours that constitute regular business hours for Residential and upon reasonable prior request, to the premises of Residential and such data, books, records and personnel designated by the Residential as involved in receiving or overseeing the Services as Altisource may reasonably request for the purposes of providing the Services.  Altisource shall provide Residential, upon reasonable prior written notice, such documentation relating to the provision of the Services as Residential may reasonably request for the purposes of confirming any Invoiced Amount pursuant to this Agreement. Any documentation so provided by Altisource pursuant to this Section 10.1 will be subject to the confidentiality obligations set forth in Section 11.

 

10.2.                     RELATIONSHIP EXECUTIVES.  Each Party hereto shall designate a Relationship Executive to report and discuss issues with respect to the provision of the Services.  Each Party hereto shall designate 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 Residential shall be Ashish Pandey and the initial Relationship Executive designated by Altisource shall be William B. Shepro.  Either Party may replace its Relationship Executive at any time by providing written notice thereof to the other Party hereto.

 

11.                               CONFIDENTIALITY.

 

11.1.                     DUTY TO PROTECT CONFIDENTIAL INFORMATION.  Subject to Section 11.2, each of Residential and Altisource are 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 its own confidential and proprietary information pursuant to policies in effect as of the Effective Date, all Confidential Information concerning the other Party and shall not use any such Confidential Information other than for such purposes as shall be expressly permitted hereunder, except to the extent that such Confidential Information has been (i) in the public domain through no fault of such Party 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, 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 the other Party.

 

11.2.                     PERMITTED DISCLOSURES.  Each Party agrees not to release or disclose, or permit to be released or disclosed, any such Confidential Information (excluding Confidential Information described in clauses (i), (ii) and (iii) of Section 11.1) to any other Person, except its directors, officers, employees, agents, accountants, counsel and other advisors and representatives who need to know such Confidential Information (who shall be advised of their obligations hereunder with respect to such Confidential Information), except in compliance with Section 11.3.

 

11.3.                     REQUIRED DISCLOSURES.  In the event that either Party either determines on the advice of its counsel that it is required to disclose any Confidential Information pursuant to applicable law or receives any demand under lawful process or from any Governmental Authority to disclose or provide Confidential Information of the other Party that is subject to the confidentiality provisions hereof, such Party shall, to the extent permitted by law, notify the other Party prior to disclosing or providing such Confidential 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 Party that received such request may thereafter disclose or provide Confidential Information to the extent required by such law (as so advised by counsel) or by lawful process or such Governmental Authority.

 

11.4.                     RETURN OR DESTRUCTION OF CONFIDENTIAL INFORMATION.  Without limiting the foregoing, when any Confidential Information is no longer needed for the purposes contemplated by this Agreement, each Party will promptly, after request of the other Party, either return the Confidential 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 Confidential Information not returned in a tangible form (including any such Confidential Information that exists in an electronic form) has been destroyed (as have such copies thereof and such notes, extracts or summaries based thereon).

 

12.                               LIMITATION OF LIABILITY; INDEMNIFICATION.

 

12.1.                     WAIVER BY RESIDENTIAL.  Other than the statements expressly made by Altisource in this Agreement or in any SOW, Altisource makes no representation or warranty, express or implied, with respect to the

 

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Services and, except as provided in Section 12.2, Residential hereby waives, releases and renounces all other representations, warranties, obligations and liabilities of Altisource, and any other rights, claims and remedies of Residential against Altisource, express or implied, arising by law or otherwise, with respect to any nonconformance, durability, error, omission or defect in any of the Services, including: (i) any implied warranty of merchantability, fitness for a particular purpose or noninfringement; (ii) any implied warranty 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 Altisource.

 

12.2.                     ALTISOURCE’S LIABILITY.  None of Altisource or any of Altisource’s 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 Altisource or such person under or in connection with this Agreement, except that Altisource shall be liable for direct damages or losses incurred by Residential arising out of the gross negligence or willful misconduct of Altisource or any of Altisource’s Affiliates or any of its or their respective officers, directors, employees, agents, attorneys-infact, contractors or other representatives in the performance or nonperformance of the Services.

 

12.3.                     LIMITATIONS OF LIABILITY.  In no event shall (i) the amount of damages or losses for which Altisource and Residential may be liable under this Agreement exceed the fees due to Altisource for the most recent six (6) month period under the applicable Service or SOW(s), provided that if Services have been performed for less than six (6) months, then the damages or losses will be limited to the value of the actual Services performed during such period; or (ii) the aggregate amount of all such damages or losses for which Altisource may be liable under this Agreement exceed $1,000,000; provided, that, no such cap shall apply to liability for damages or losses arising from or relating to breaches of Section 11 (relating to confidentiality), infringement of intellectual property, fraud or criminal acts.  Except as provided in Section 12.2 hereof, none of Altisource or Residential or any of their respective Affiliates or any of 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.

 

12.4.                     CONTRIBUTORY NEGLIGENCE, WILLFUL MISCONDUCT.  Notwithstanding anything to the contrary herein, none of Altisource or any of Altisource’s 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 Residential for any action taken or omitted to be taken by Altisource 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, Residential and any of Residential’s Affiliates.

 

12.5.                     LIMITATION ON CERTAIN DAMAGES.  Without limiting Section 12.2 hereof, 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 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 of 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 Section 12.5 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 Altisource or Residential for any incidental, consequential, indirect, special or punitive damages.

 

12.6.                     INDEMNIFICATION.  Each Party shall indemnify and hold the other Party, its respective Affiliates and any of its or their respective officers, directors, employees, agents, attorneys-infact, contractors or other representatives (individually or collectively, as applicable, the “Indemnified Party”) harmless from and against any and all damages, claims or losses that the Indemnified Party may at any time suffer or incur, or become subject to, as a result of the gross negligence or willful misconduct of the indemnifying Party in connection with this Agreement or the Services provided hereunder, except those damages, claims or losses incurred by the Indemnified Party arising out of the negligence, gross negligence or willful misconduct of the Indemnified Party.

 

13.                               COMPLIANCE WITH LAW.

 

Altisource shall provide the Services under this Agreement and any SOW, and Residential shall conduct its

 

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businesses relating to receipt of those Services, in compliance with all applicable Laws.

 

14.                               TAXES.

 

Unless otherwise provided herein or in an applicable SOW, 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 Sales Taxes, and an amount equal to such Sales Taxes so chargeable shall, subject to receipt of a valid receipt or invoice as required below in this Section 14, be paid by Residential to Altisource in addition to the amounts otherwise payable under this Agreement.  In each case where an amount in respect of Sales Tax is payable by Residential in respect of a Service provided by Altisource, Altisource shall furnish in a timely manner a valid Sales Tax receipt or invoice to Residential in the form and manner required by applicable law to allow Residential to recover such tax to the extent allowable under such law.

 

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

 

16.                               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 herein, 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 venture of the other by reason of this Agreement.

 

17.                               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 a Force Majeure Event.  During the pendency of such Force Majeure 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.

 

18.                               NON-SOLICITATION.

 

Each Party acknowledges that the value to the other Party of its business and the transactions contemplated by this Agreement would be substantially diminished if one Party were to solicit the employment of or hire any employee of the other Party or any of its Affiliates.  Accordingly, each Party agrees that it shall not, directly or indirectly and without the prior consent of the other Party, solicit the employment of, or hire, employ or retain, or otherwise encourage or cause to leave employment with the other Party, or cause any other Person to hire, employ or retain, or otherwise encourage or cause to leave employment with the other Party or any of its Affiliates, any Person who is or was employed by the other Party or any of its Affiliates at any time within twelve (12) months preceding the time of such solicitation or hiring, employment, retention or encouragement except with the written consent of the other Party.

 

19.                               DISPUTE RESOLUTION PROVISIONS.

 

19.1.                     DISPUTE RESOLUTION - GENERAL.

 

It is the intent of the Parties to use reasonable best 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 must deliver an Escalation Notice to the other Party 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 Relationship Executive, 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).  In response to the Escalation Notice, the Relationship Executives shall set an agenda, location and, if necessary, procedures, to discuss, negotiate and resolve the matter(s) set forth in the Escalation Notice. The Parties shall use reasonable best efforts to meet no later than thirty (30) days following receipt of the Escalation Notice delivered pursuant to Section 20.6 of this Agreement.  Neither Party may initiate a

 

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termination of this Agreement pursuant to Section 6 of this Agreement or initiate a legal action or proceeding pursuant to Section 19.2 of this Agreement until the earlier to occur of: (i) the 45th day following the delivery of the Escalation Notice pursuant to Section 20.6 of this Agreement; or (ii) two Business Days following the second meeting (either by phone or in person) of the Relationship Executives or their designees to specifically address the matter(s) set forth in the Escalation Notice.

 

19.2.                     JURISDICTION, VENUE.  Any action or proceeding arising out of or relating to this Agreement shall be brought in the courts of the Grand Duchy of Luxembourg (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 in any other court.  The Parties 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 anywhere in the world.  The Parties acknowledge and agree that, prior to initiating any legal action or proceeding under this Agreement, the Parties must first follow and comply with the dispute resolution procedures set forth in Section 19.1 above.

 

19.3.                     GOVERNING LAW.  This Agreement shall be governed by and construed and interpreted in accordance with the internal laws of the Grand Duchy of Luxembourg irrespective of the choice of law principles.

 

19.4.                     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.

 

19.5.                     SPECIFIC PERFORMANCE, INJUNCTIVE RELIEF, EQUITABLE REMEDIES.  In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party who is aggrieved shall have the right to seek specific performance and injunctive or other equitable relief of its rights under this 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 shall not oppose the granting of such relief. The Parties agree that the remedies at law for any breach or threatened breach hereof, including monetary damages, are inadequate compensation for any loss and that any defense 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.

 

20.                               GENERAL CONTRACT PROVISIONS.

 

20.1.                     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 as a whole (including all of the schedules hereto) and not to any particular provision of this Agreement. Article, Section, Exhibit, Schedule and Appendix references are to the articles, sections, exhibits, schedules and appendices of or to this Agreement unless otherwise specified. Any reference herein to this Agreement, unless otherwise stated, shall be construed to refer to this Agreement as amended, supplemented or otherwise modified from time to time, as permitted by Section 20.9. The word “including” and words of similar import when used in this 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.

 

20.2.                     ASSIGNMENT.

 

This Agreement shall inure to the benefit of, and be binding upon, the Parties hereto and their respective successors and permitted assigns.  Except as provided in Section 2.6 with regard to Altisource’s ability to unilaterally assign, in whole or in part, its obligations to one or more Affiliates or licensed third parties, 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,

 

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including by merger or consolidation, all or substantially all the consolidated assets of such Party. Any purported assignment in violation of this Section 20.2 shall be void and shall constitute a material breach of this Agreement.

 

20.3.                     ENTIRE AGREEMENT.  This Agreement, the schedules hereto and the Services Letter, 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.

 

20.4.                     THIRD PARTY BENEFICIARIES.  Except for the indemnification rights under this Agreement (a) the provisions of this Agreement are solely for the benefit of the Parties hereto and are not intended to confer upon any Person except the Parties hereto any rights or remedies hereunder and (b) there are no third party beneficiaries of this Agreement, and this Agreement shall not 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.

 

20.5.                     DUE AUTHORITY, PROPER EXECUTION.  Residential represents on behalf of itself and Altisource represents on behalf of itself as follows:

 

(a)                                 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 this Agreement and to consummate the transactions contemplated hereby; and

 

(b)                                 This Agreement has been duly executed and delivered by it and constitutes, or will constitute, a valid and binding agreement of it enforceable in accordance with the terms hereof.

 

20.6.                     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) at noon local time on the second Business Day after dispatch if sent by an internationally recognized overnight courier; and (c) if such notice is to Altisource, when (a) or (b) has occurred and a copy is sent and received by e-mail to: contractmanagement@altisource.com.

 

If to Altisource:

Altisource Solutions S.à r.l.

291 route d’Arlon

Luxembourg City, Luxembourg L-1150

Attention: Corporate Secretary

 

If to Residential:

Altisource Residential Corporation

c/o Altisource Asset Management Corporation

402 Strand St.

Frederiksted, VI  00840-3531

Attn: Corporate Secretary

With a copy to: contractmanagement@altisource.com

 

 

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

 

20.7.                     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 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 affect the original intent of the Parties.

 

20.8.                     HEADINGS.  The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

20.9.                     WAIVERS AND AMENDMENTS MUST BE IN WRITING.  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.  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.

 

20.10.              ALTISOURCE’S RIGHT TO AMEND.  Notwithstanding the first sentence of Section 20.9, Altisource shall have the right to amend or terminate any Service, SOW, Fee Schedule and/or this Agreement unilaterally, if

 

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the subject matter of any Service, SOW, Fee Schedule and/or this Agreement becomes materially and adversely impacted by changes in any Laws.  To the extent Altisource exercises its right to amend any of those documents, as provided in this Section, any amendment must be limited to mitigating the impact of the change of Laws so that Altisource can continue providing the applicable Services to Residential as if the change of Laws had not occurred.  To the extent the changes in such Laws allow, any amendment or termination will be effective thirty (30) days after Altisource provides written notice to Residential.  To the extent that the change of Laws require the amendment or termination to be effective prior to thirty (30) days, it will be effective as required.

 

20.11.              COUNTERPARTS.  This Agreement may be executed in one or more counterparts, including by facsimile, 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.

 

20.12.              ELECTRONIC SIGNATURES.  This Agreement may be executed by providing an electronic signature under the terms of the Electronic Signatures Act, 15 U.S.C. § 7001 et. seq., and may not be denied legal effect solely because it is in electronic form or permits the completion of the business transaction referenced herein electronically instead of in person.

 

IN WITNESS WHEREOF, the Parties hereto have executed and delivered this Agreement as of the Contract Date.

 

 

RESIDENTIAL:

 

ALTISOURCE:

 

 

 

ALTISOURCE RESIDENTIAL CORPORATION

 

ALTISOURCE SOLUTIONS S.À R.L.

 

 

 

 

 

 

 

 

 

 

By:

 

 

By:

 

 

 

 

 

 

Name (Print):

 

 

Name:

William B. Shepro

 

 

 

 

 

Title:

 

 

Title:

Manager

 

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MASTER SERVICES AGREEMENT

 

EXHIBIT 1

(DEFINITIONS)

 

1.                                    INTEGRATION WITH AGREEMENT.

 

This “Exhibit 1” (“Exhibit 1”) is attached to, and incorporated into, that certain Master Services Agreement by and between Altisource Solutions S.á r.l. (“Altisource”) and Altisource Residential Corporation (“Residential”) and dated as of [    ], 2012.  Neither the Agreement nor this Exhibit 1 shall be construed or interpreted without the other.

 

2.                                    DEFINITIONS.

 

For purposes of the Agreement, including all Schedules thereto, the following defined terms shall have the meanings set forth in this Section or in the cross-referenced section of the Agreement indicated below.

 

2.1.                          AFFILIATE. The term “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.

 

2.2.                          ADDITIONAL SERVICES.  The term “Additional Services” means a service that:

 

(a)                                 Is reasonably similar or related to the Services provided hereunder or under any SOW or provided by Altisource to other parties under any SOW; and

 

(b)                                 Reasonably would be expected to involve a purchase volume greater than $100,000 on an annual basis.

 

2.3.                          AGREEMENT.  The term “Agreement” means this Master Services Agreement by and between Altisource and Residential and dated as of [    ], 2012, including all Schedules attached thereto, as well as any SOWs entered into pursuant to Section 2.2.

 

2.4.                          BUSINESS DAY.  The term “Business Day” means any day which is not a Saturday, Sunday or official holiday of the United States Federal Reserve System Banks and Branches.

 

2.5.                          COMMINGLED INVOICE.  The term “Commingled Invoice” means any third party invoice that aggregates Services and/or Additional Services for the benefit of Residential, on the one hand, with services not for the benefit of Residential, on the other hand.

 

2.6.                          COMMINGLED INVOICE STATEMENT.  The term “Commingled Invoice Statement” means 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 Residential.

 

2.7.                            CONFIDENTIAL INFORMATION.  The term “Confidential Information” means all confidential information concerning one Party that is either in the other Party’s possession (including Confidential Information in its possession prior to the Effective Date) or is furnished by one Party to the other Party or its directors, officers, employees, agents, accountants, counsel and other advisors and representatives at any time pursuant to this Agreement.

 

2.8.                          CONTRACT DATE.  The term “Contract Date” means [    ], 2012.

 

2.9.                          EFFECTIVE DATE.  The term “Effective Date” means [    ], 2012.

 

2.10.                   ESCALATION NOTICE.  The term “Escalation Notice” means a 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) for the purpose of resolving a dispute, controversy or claim.

 

2.11.                   EXCLUSIVE TENDER PERIOD.  The term “Exclusive Tender Period” means the period of time beginning on the date Altisource receives a request from Residential for a proposal from Altisource for the provision of Additional Service and ending sixty (60) Business Days thereafter.

 

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2.12.                   FEE LETTER.  The term “Fee Letter” means that certain Fee Letter by and between Altisource and Residential dated as of the Contract Date of the Agreement.

 

2.13.                   FEE SCHEDULE.  The term “Fee Schedule” means a fee schedule entered into between the Parties with regard to the compensation due Altisource by Residential specifically for certain Services Altisource provides Residential in accordance with a particular Statement of Work.

 

2.14.                   FORCE MAJEURE EVENT.  The term “Force Majeure Event” means 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.

 

2.15.                   GOVERNMENTAL AUTHORITY.  The term “Governmental Authority” means any duly constituted body politic, whether elected, appointed or otherwise generally acknowledged as the legitimate sovereign government of the applicable jurisdiction, including but not limited to international, national, federal, state, regional, local and municipal branches of government.

 

2.16.                   INITIAL TERM.  See Section 5.1 of the Agreement.

 

2.17.                   INVOICED AMOUNT.  The term “Invoiced Amount” means all amounts due and payable by Residential to Altisource as shown on each respective statement of account periodically submitted by Altisource to Residential.

 

2.18.                   LawsThe term “Laws” means all laws, rules, regulations, orders, ordinances, directions and requirements of any Governmental Authority, now in force or which may hereafter be in force, including, without limitation, privacy and data protection laws, labor and overtime laws, tax laws, the U.S. Foreign Corrupt Practices Act, environmental protection laws and all requirements from any Governmental Authority to maintain necessary licenses and permits.

 

2.19.                   PERFORMANCE STANDARD.  The term “Performance Standard” means any quality standards, service level requirements, specifications and acceptance criteria as may be identified in an SOW.

 

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

 

2.21.                   REDUCED COST SERVICE. See Section 4.10 of the Agreement.

 

2.22.                   RELATIONSHIP EXECUTIVE.  The term “Relationship Executive” means an individual designated by each Party to serve as the primary relationship manager for the other Party.

 

2.23.                  RELEVANT SERVICES.  See Section 4.10 of the Agreement.

 

2.24.                   RENEWAL TERM.  See Section 5.2 of the Agreement.

 

2.25.                   RESERVE FUND.  The term “Reserve Fund” means a certain account prefunded by Residential for the authorized payment by Altisource of anticipated forecast fees and expenses incurred in the delivery of a Service and as described more fully in the applicable SOW and/or the Fee Letter.

 

2.26.                   SALES TAX.  The term “Sales Tax” means any goods and services taxes, value added taxes, sales taxes or similar taxes, now or hereinafter imposed, on the performance or delivery of Services.

 

2.27.                   SERVICES.  The term “Services” means the services set forth on Exhibit 2 of the Agreement, and/or in any SOWs, as the context requires.  The term “Services” includes, but is not limited to, Additional Services.

 

2.28.                   SERVICES LETTER.  The term “Services Letter” means that certain Services Letter by and between Altisource and Residential dated as of the Contract Date of the Agreement.

 

2.29.                   SERVICE PERIOD.  The term “Service Period” means, for each service set forth on Exhibit 2 of the Agreement, the period of time commencing on the Effective Date of the Agreement through the respective period specified on Exhibit 2 of the Agreement.

 

2.30.                   STATEMENT OF WORK (SOW).  The terms “Statement of Work” and “SOW” are used interchangeably and mean a statement of work entered into between the Parties with regard to a Service.

 

2.31.                   THIRD PARTY ADDITIONAL SERVICE PROVIDER.  The term “Third Party Additional Service Provider” means any third party requested by Residential to submit and negotiate proposals with regard to Additional Services.  For the avoidance of doubt, the term “Third Party Additional Service Provider” may or may not refer to a third party who provides Additional Services to Residential.

 

2.32.                   THIRD PARTY BILLINGS.  The term “Third Party Billings” means any amounts separately invoiced to Residential from a third party and payable by Residential in connection with delivery of Services.

 

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IN WITNESS WHEREOF, the Parties hereto have executed and delivered this Exhibit 1 as of the Contract Date.

 

 

RESIDENTIAL:

 

ALTISOURCE:

 

 

 

ALTISOURCE RESIDENTIAL CORPORATION

 

ALTISOURCE SOLUTIONS S.À R.L.

 

 

 

 

 

 

 

 

 

 

By:

 

 

By:

 

 

 

 

 

 

Name (Print):

 

 

Name:

William B. Shepro

 

 

 

 

 

Title:

 

 

Title:

Manager

 

3



 

MASTER SERVICES AGREEMENT

 

EXHIBIT 2

(SERVICES)

 

1.                                    INTEGRATION WITH AGREEMENT.

 

This “Exhibit 2” (“Exhibit 2”) is attached to, and incorporated into, that certain Master Services Agreement by and between Altisource Solutions S.á r.l. (“Altisource”) and {Altisource Residential, L.P.} (“Residential”) and dated as of [    ], 2012.  Neither the Agreement nor this Exhibit 2 shall be construed or interpreted without the other.

 

2.                                    SERVICES.

 

Altisource shall provide the following Services to Residential and any of Residential’s Affiliates in accordance with the terms as set forth in this Agreement and any Service Letters, SOWs and/or Fee Letters as agreed upon by the Parties:

 

Service

 

Service Period
(Years)

1

Asset Management Services

 

15

2

Renovation Services

 

15

3

Property Preservation and Inspection Services

 

15

4

Valuation Services

 

15

5

Acquisition and Sales Support Services

 

15

6

Insurance Services

 

15

7

Leasing and Property Management Services

 

15

 

IN WITNESS WHEREOF, the Parties hereto have executed and delivered this Exhibit 2 as of as of the Contract Date.

 

RESIDENTIAL:

 

ALTISOURCE:

 

 

 

ALTISOURCE RESIDENTIAL CORPORATION

 

ALTISOURCE SOLUTIONS S.À R.L.

 

 

 

 

 

 

 

 

 

 

By:

 

 

By:

 

 

 

 

 

 

Name (Print):

 

 

Name:

William B. Shepro

 

 

 

 

 

Title:

 

 

Title:

Manager

 

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Altisource Residential

 

Re:  Services Letter

 

Ladies and Gentlemen:

 

Reference is made to the Master Services Agreement dated September     , 2012, as amended, modified or supplemented from time to time (the “MSA”), by and between Altisource Solutions S.à r.l. (“Altisource”) and Altisource Residential, L.P. (“Residential”).  This letter constitutes a Services Letter as contemplated in Section 2.1 of the MSA.

 

As compensation for each Service, as that term is defined in the MSA and as described in Schedules A-1 to A-7 hereto (collectively, “Schedule A”), Residential agrees to pay Altisource the corresponding amount set forth in that separate Fee Letter of even date herewith (the “Fee Letter”), in accordance with the terms and provisions of the MSA, Schedule A and the Fee Letter, as applicable.

 

Altisource and Residential each agree that neither will disclose this Services Letter or the concerns hereof, except (a) to the extent necessary to comply with the law or any legal process or the requirements of any governmental authority or of any securities exchange on which securities of the disclosing party or any affiliate of the disclosing party are listed or traded, (b) as part of normal reporting or review procedures to governmental authorities, and (c) in order to enforce our respective rights under the MSA in a legal proceeding.

 

Please confirm that the foregoing is in accordance with your understanding by signing and returning the enclosed copy of this letter.

 

 

Very truly yours,

 

 

 

ALTISOURCE SOLUTIONS S.À R.L.

 

 

 

 

 

By

 

 

Name:

William B. Shepro

 

Title:

Manager

 

 

ALTISOURCE RESIDENTIAL, L.P.

 

By: Altisource Residential GP, LLC, its general partner

 

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

 

 

 

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

Confidential

 

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GRAPHIC

 

STATEMENT OF WORK

(ASSET MANAGEMENT SERVICES)

 

SERVICES LETTER - SCHEDULE A-1

 

This Statement of Work (Asset Management Services) (the “SOW”) is made by and between ALTISOURCE SOLUTIONS S.À R.L., a Luxembourg private limited liability company (“Altisource”) and ALTISOURCE RESIDENTIAL, L.P., a Delaware limited partnership (“Residential”, and together with Altisource, the “Parties” and each individually, a “Party”), and is dated as of September       , 2012.

 

RECITAL

 

WHEREAS, Residential desires to receive, and Altisource is willing to provide, or cause to be provided, certain Services pursuant to the terms and conditions set forth herein.

 

AGREEMENT

 

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

 

1.                                      INTEGRATION WITH SERVICES LETTER.

 

This SOW is attached to, and incorporated into, that certain Services Letter, dated as of September         , 2012, from Altisource to Residential (the “Services Letter”) as Schedule A-1 to the Services Letter.  Neither the Services Letter nor this SOW shall be construed or interpreted without the other.

 

2.                                      GOVERNED BY MASTER SERVICES AGREEMENT.

 

This SOW is governed by that certain Master Services Agreement by and between Altisource and Residential and dated as of September         , 2012 (the “MSA”), the terms of which are hereby incorporated  by this reference.  This SOW shall not be construed or interpreted without the MSA.

 

3.                                      DEFINED TERMS.

 

Definitions of certain capitalized terms used in this SOW are contained in Exhibit 1 to this SOW, attached hereto and incorporated herein by this reference.  Any capitalized term not defined in this SOW, including any exhibits to this SOW, shall have the meaning given that term in the MSA.

 

4.                                          SERVICES.

 

4.1.                            PROVISION OF ASSET MANAGEMENT SERVICES.  Subject to the terms and conditions of the MSA, Altisource shall provide, or cause to be provided, to Residential, and any of Residential’s Affiliates, with regard to REO Properties, the following Services:

 

(a)                                 the Agency Services;

 

(b)                                 the Renovation Services;

 

(c)                                  the Property Preservation and Inspection Services;

 

(d)                                 the Property Tax Management Services;

 

(e)                                  the Eviction Services;

 

(f)                                   the Valuation Services;

 

(g)                                  the Acquisition and Sales Support Services; and

 

(h)                                 the Insurance Services.

 

4.2.                            AGENCY SERVICES.

 

4.2.1.                  APPOINTMENT.  Residential hereby appoints Altisource, and Altisource hereby accepts this appointment, as Residential’s duly authorized representative, agent, attorney-in-fact and asset manager, as the context may require, for the purpose of delegating authority to Altisource in order to enable Altisource to perform the other Asset Management Services on Residential’s behalf as further described herein.

 

4.2.2.                  POWERS OF ATTORNEY.  Upon the written request of Altisource, Residential agrees to execute, or cause to be executed, and furnish to Altisource appropriate powers of attorney and other documents necessary or appropriate to enable Altisource to carry out its duties hereunder.

 

Confidential

 

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4.3.                            RENOVATION SERVICES.

 

4.3.1.                  RENOVATION SOW.  Altisource will act on behalf of Residential to manage the services described more particularly on the Renovation SOW, namely:

 

(a)                                 Assess real properties to determine their surrounding market conditions, physical conditions and renovation estimates;

 

(b)                                 Define renovation scope of work; and

 

(c)                                  Execute renovation of properties according to Customer Finished Property Criteria and Customer Design Specifications, within Residential’s delegated authority to Altisource for the delivery of marketable rental properties.

 

4.3.2.                  CRITERIA AND SPECIFICATIONS.  Residential will provide Altisource with the Customer Finished Property Criteria and Customer Design Specifications, as those terms are defined in the Renovation SOW, subject to Altisource’s agreement and acceptance of those criteria and specifications in Altisource’s sole discretion.

 

4.4.                            PROPERTY PRESERVATION AND INSPECTION SERVICES.  Altisource will act on behalf of Residential to manage the services described more particularly on the Property Preservation and Inspection SOW, including, but not limited to:

 

4.4.1.                  INSPECTION SERVICES. Altisource will order and analyze inspections to identify occupancy status and life-safety issues.

 

4.4.2.                  INITIAL AND ON-GOING PRESERVATION SERVICES.  Altisource will secure the property and provide initial and on-going property preservation services for vacant properties.

 

4.4.3.                  REMEDIATION SERVICES. Altisource will plan and remediate health and life safety issues through standard work items and awarding bids for non-standard maintenance and repairs in accordance with authority delegated by Residential.

 

4.4.1.                  UTILITIES AND HOA MANAGEMENT.  Altisource will provide utility activation and management for gas and electric utilities and ensure that delinquent utilities are brought current.  Altisource will ensure that any delinquent HOA dues, fees or other similar assessments are brought current and paid on a timely basis until the sale of the applicable REO Property is completed.

 

4.4.2.                  VIOLATIONS MANAGEMENT AND MITIGATIONAltisource will ensure that all code violations affecting a property which have been filed are resolved and cured within Delegated Authority Matrix guidelines.

 

4.4.3.                  CASH-FOR-RELOCATION, CASH-FOR-REDEMPTION AND EVICTIONS FULFILLMENT.  Altisource will support various internal and judicial efforts for occupants to vacate the property and surrender access.

 

4.5.                           PROPERTY TAX MANAGEMENT SERVICES.  Altisource shall pay all past due taxes and assessments owed on a given real property, as well as all current real estate taxes and assessments as invoiced. Altisource will notify Residential of the amount and jurisdiction owed. In addition, Altisource may elect, at its sole discretion, to file and prosecute an appeal of any property tax assessment on behalf of Residential.

 

4.6.                            EVICTION SERVICES.

 

4.6.1.                  LEGAL EVICTION PROGRAM MANAGEMENT.  Altisource will:

 

(a)                                 Send eviction request to eviction attorney;

 

(b)                                 Track case progress, follow up with attorneys as required and escalate as appropriate to address issues and delays in the process;

 

(c)                                  Escalate contested evictions to Residential’s attention, including details of issue with estimated attorney fees; and

 

(d)                                 In event the occupant files bankruptcy after a valid foreclosure, then Altisource will assign the relief from stay action to the eviction attorney and monitor the action.

 

(e)                                  Note:  Eviction Services pursuant to this SOW do not include evictions of tenants of Residential’s rental property portfolio.  Those eviction services are provided by Altisource pursuant to the Leasing and Property Management SOW.

 

4.6.2.                  REDEMPTION AND CASH-FOR-REDEMPTION PROGRAM MANAGEMENT.  Altisource will:

 

(a)                                 Develop a Cash-for-Redemption program for Residential by customizing Altisource’s existing Cash-for-Redemption program to meet Residential’s specific parameters, subject to approval by Residential;

 

2



 

(b)                                 Monitor, leveraging occupancy inspections described more fully in the Property Preservation and Inspection SOW, the property to determine if the occupant has abandoned the property during the redemption period applicable to the property’s jurisdiction.  If the property is identified as vacant, file the appropriate documents with the governing authorities and issue required notifications to prior occupant in order to reach a determination of abandonment.  Upon receiving final determination of abandonment, secure the property as more fully described in the Property Preservation and Inspection SOW;

 

(c)                                  Extend to and negotiate Cash-for-Redemption offers with occupant of property in Redemption states to facilitate their vacating of the property;

 

(d)                                 Execute Cash-for-Redemption agreements in accordance with the Cash-for-Redemption offers and ensure occupant signs the Cash-for-Redemption agreement and submits signed W-9;

 

(e)                                  Upon agreement of acceptance of a Cash-for-Redemption offer, ensure that the property has been left in “broom clean” condition, that all personal property has been removed and that the occupant has vacated the property; and

 

(f)                                   Coordinate payment of the agreed amount to occupant on behalf of Residential.

 

4.6.3.                  CASH-FOR-RELOCATION PROGRAM MANAGEMENT.  Altisource will:

 

(a)                                 Develop a Cash-for-Relocation program for Residential by customizing Altisource’s existing Cash-for-Relocation program to meet Residential’s specific parameters, subject to approval by Residential;

 

(b)                                 Initiate Cash-for-Relocation offers within the parameters of the Cash-for-Relocation program described above;

 

(c)                                  Execute Cash-for-Relocation agreements in accordance with the Cash-for-Relocation offers and ensure occupant signs the Cash-for-Relocation agreement and submits signed W-9;

 

(d)                                 Implement the Cash-for-Relocation agreements by ensuring that the real property has been left in “broom clean” condition, that all personal property has been removed and that the occupant has vacated; and

 

(e)                                  Coordinate payment of the agreed amount to occupant on behalf of Residential.

 

4.6.4.                  OCCUPIED REO PROPERTY SALES PROGRAM MANAGEMENT.  Where allowed by law and approved by Residential, Altisource will market occupied REO Properties, using appropriate disclaimers or disclosures in marketing materials and agreements.

 

4.6.5.                 LEASE CONVERSION PROGRAM MANAGEMENT.  Altisource will:

 

(a)                                 Develop a Lease Conversion program for Residential by customizing Altisource’s existing Cash-for-Relocation program to meet Residential’s specific parameters, subject to approval by Residential;

 

(b)                                 Initiate Lease Conversion offers and qualify occupant for tenancy within the parameters of the Lease Conversion program described above and Residential-approved Tenant Qualifications for rental property described in the Leasing and Property Management SOW; and

 

(c)                                  Execute Lease Conversion agreements in accordance with the Lease Conversion offers and ensure occupant signs the Lease agreement and provides a key to the property.

 

4.7.                            VALUATION SERVICES.  Altisource will act on behalf of Residential to manage the services described below, some of which are described more particularly on the Valuation SOW, including, but not limited to:

 

(a)                                 For unoccupied REO Properties, order thirty (30) day quick sale distressed CMAs upon the property being secured, and every ninety (90) days thereafter until the unoccupied REO Property is sold;

 

(b)                                 Order Exterior BPOs for all occupied REO Properties; and

 

(c)                                  Order additional Valuation Services as may be necessary from time to time to support the needs of Residential, either as may be specifically requested by Residential or as determined by Altisource.

 

4.8.                            ACQUISITION AND SALES SUPPORT SERVICES.  Altisource will act on behalf of Residential to manage the services described below, some of which are described more particularly on the Acquisition and Sales Support SOW, including, but not limited to:

 

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4.8.1.                  IDENTIFICATION OF SPECIAL INVESTOR REQUIREMENTS.  Identify any special requirements for managing Residential’s assets, including but not limited to, any MSA-specific and/or state-specific Performance Standards.

 

4.8.2.                  AUTHORIZATION OF REPAIRS AND IMPROVEMENTS.  Authorize repairs and improvements on the property that directly relate to the improvement of the property which will, under most circumstances, increase the value of the property or shorten the marketing timeframe. Anticipated return on repairs should be a minimum of $1 for $1 return with a preferred return anticipated at $1.25 for $1 or more.  Return on repairs projected to be less than 100% may be justified if critical to effecting an accelerated marketing period.

 

4.8.3.                  ASSIGNMENT OF BROKER.  Assign Altisource affiliate RHSS broker or select referral broker where Altisource affiliate RHSS broker is not available, as further set forth in the Acquisition and Sales Support SOW herein.  Execute formal listing agreement provided by Altisource with selected broker.

 

4.8.4.                  LIST PRICE DETERMINATION.  Establish list price for REO Properties according to Residential approved pricing methodology.  Using current pricing methodology, initial list price of REO Properties is 100% of a 30-day CMA.  This methodology may be changed at the direction of Residential at its discretion.

 

4.8.5.                  PROPERTY LISTING.  List property for sale with the local Multiple Listing Service to ensure advertising to the community as further set forth in the Acquisition and Sales Support SOW. REO Properties will also be listed for sale on Altisource’s affiliated consumer web portal, where customers can bid on the REO Properties in time-limit bid auctions or make offers to purchase in a non-auction format.

 

4.8.6.                  MARKETING EVALUATION AND LIST PRICE RECOMMENDATIONS.  As needed during the marketing of the property, submit requests to reduce the list price if deemed in the best interest of Residential to do so.  Altisource may reduce the price every thirty (30) days by 5% if benchmark initial list price is greater than $150,000.00 or reduce by 8% or minimum $4,000.00 if benchmark initial list price is less than $150,000.  At ninety (90) days on market, Altisource will review file to assess potential marketing gaps, including initial list price too high, property condition, broker performance or adverse neighborhood issues. In addition, Altisource will order an updated CMA and make a recommendation on revised pricing.

 

4.8.7.                  EVALUATION OF OFFERS.  Handle all offers received on REO Properties and reject, counteroffer or accept offers based on business rules and authority matrix agreed upon between Altisource and Residential.  Altisource has pre-approved authority from Residential to approve offers as follows:

 

(a)                                 Initial list price of $15,000 or less —offers greater than 60% of latest list price;

 

(b)                                 Initial list price of $15,001 to $30,000 —offers greater than 85% of latest list price;

 

(c)                                  Initial list price of $30,001 to $150,000 —offers greater than 90% of latest list price; and

 

(d)                                 Initial list price of $150,001 or greater —offers greater than 95% of latest list price.

 

4.8.8.                  REVIEW AND EXECUTION OF PURCHASE AND SALES AGREEMENTS.  Review and execute (via electronic signature) all contracts and addenda and deliver fully-executed documents to closers.

 

4.9.                            INSURANCE SERVICES.  Altisource will act on behalf of Residential to manage the services described more particularly on the Insurance SOW, including, but not limited to:

 

4.9.1.                  TITLE SERVICES.  Altisource will provide title search, title curative and title insurance services, such as: (i) ordering and issuing preliminary title searches; (ii) researching, negotiating and clearing any defective title issues; and (iii) ordering and issuing title insurance policies.

 

4.9.2.                  SETTLEMENT SERVICESAltisource will provide closing, escrow and settlement services, such as: (i) preparation of closing documents; (ii) receipt of any necessary termite or other inspections; (iii) scheduling and handling closing activities; (iv) closing of escrow and disbursement of sellers’ proceeds; (v) verification that wired sellers’ proceeds match the amounts shown on the Final Approved/Executed HUD-1 Settlement Statement; (vi) wiring of net sales proceeds to bank accounts designated by sellers; and (vii) within sixty (60) days of sale funding, ensuring outstanding invoices have been processed.

 

4.9.3.                  PROPERTY AND CASUALTY INSURANCE SERVICES. Altisource will manage, structure and generally administer all aspects of Residential’s specialty property insurance programs, including hazard, wind, flood and liability insurance as further set forth in the Insurance SOW. Altisource will also coordinate the filing of hazard insurance claims and the provision of Property Condition Certificates if the damage to the property is estimated to exceed $1,000.

 

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5.                                      FEES.

 

Altisource shall charge, and Residential agrees to pay, the Fee for the Asset Management Services as set forth on that certain Asset Management Services Fee Schedule, which is attached to the Fee Letter as Schedule B-1.

 

6.                                      SPECIAL PROVISIONS.

 

NONE

 

7.                                      INTERPRETATION.

 

7.1.                            CONTROLLING PROVISIONS. Notwithstanding anything set forth in the MSA to the contrary, the Parties agree that the following provisions shall, in connection with Services provided pursuant to this SOW, either are (i) in addition to the terms of the MSA; or (ii) to the extent that this SOW is inconsistent with the terms of the MSA, then the terms of the MSA shall control to the extent of any conflict, unless noted below:

 

NONE

 

All other terms and conditions as set forth in the MSA shall remain in full force and effect.

 

7.2.                            CROSS-REFERENCES. Except for this Section 7 and any other instance which refers to a specific Section of the SOW or the Exhibit(s), all references to the SOW are deemed to refer to the SOW as supplemented by the Exhibit(s).

 

8.                                      COUNTERPARTS, ELECTRONIC SIGNATURES.

 

This SOW may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all of which shall together constitute one and the same SOW. This SOW may be executed by providing an electronic signature under the terms of the Electronic Signatures Act, 15 U.S.C. § 7001 et. seq., and may not be denied legal effect solely because it is in electronic form or permits the completion of the business transaction referenced herein electronically instead of in person.

 

IN WITNESS WHEREOF, the Parties hereto have executed and delivered this Agreement as of the Contract Date.

 

 

RESIDENTIAL:

 

ALTISOURCE:

 

 

 

 

 

 

ALTISOURCE RESIDENTIAL, L.P.

 

ALTISOURCE SOLUTIONS S.À R.L.

 

 

 

By: Altisource Residential GP, LLC, its general partner

 

 

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

 

 

 

 

 

 

 

 

By:

 

 

By:

 

 

 

 

 

 

Name (Print):

 

 

Name:

William B. Shepro

 

 

 

 

 

Title:

 

 

Title:

Manager

 

 

 

 

 

Date:

 

 

Date:

 

 

5



 

STATEMENT OF WORK

 

EXHIBIT 1

(DEFINITIONS)

 

1.                                      INTEGRATION WITH SOW.

 

This “Exhibit 1” (“Exhibit 1”) is attached to, and incorporated into, that certain Statement of Work (Asset Management Services), dated as of September         , 2012, by and between Altisource Solutions S.á r.l. (“Altisource”) and Altisource Residential, L.P., a Delaware limited partnership (“Residential”) (the “SOW”).  Neither the SOW nor this Exhibit 1 shall be construed or interpreted without the other.

 

2.                                      DEFINITIONS.

 

For purposes of the SOW, the following defined terms shall have the meanings set forth in this Section.  Unless otherwise defined in this SOW, capitalized terms used herein shall have the meanings ascribed to them in the MSA.

 

2.1.                            ACQUISITION AND SALES SUPPORT SERVICES.  The term “Acquisition and Sales Support Services” means those Services described in Section 4.8 of the SOW.

 

2.2.                            ACQUISITION AND SALES SUPPORT SOW.  The term “Acquisition and Sales Support SOW” means that certain Statement of Work (Acquisition and Sales Support Services), dated as of September         , 2012, by and between Altisource and Residential, which is attached to the Services Letter as Schedule A-5.

 

2.3.                            AGENCY SERVICES.  The term “Agency Services” means those Services described in Section 4.2 of the SOW.

 

2.4.                            ASSET MANAGEMENT SERVICES.  The term “Asset Management Services” means those Services described in Section 4.1 of the SOW, either individually or in the aggregate as the context requires, with regard to REO Properties.

 

2.5.                            CASH-FOR-REDEMPTION. The term “Cash-for-Redemption” means a program by which an occupant of real property is offered money in exchange for the occupant’s waiver of their statutory or equitable redemption rights and the occupant’s agreement to leave the real property voluntarily by an agreed upon deadline.

 

2.6.                            CASH-FOR-RELOCATION. The term “Cash-for-Relocation” means a program by which an occupant of real property is offered money in exchange for the occupant’s agreement to leave the real property voluntarily by an agreed upon deadline.

 

2.7.                            COMPARATIVE MARKET ANALYSIS (CMA).The terms “Comparative Market Analysis” and “CMA” are used interchangeably and mean a licensed real estate agent prepared product which includes a description of the subject property’s interior and exterior condition, three comparable active listings, three comparable sold properties and an estimated value based on normal and 30-day marketing times. The report also includes an itemized list of recommended repairs.

 

2.8.                            CONTRACT DATE.  The term “Contract Date” means September                , 2012.

 

2.9.                            DELEGATED AUTHORITY MATRIX.  The term “Delegated Authority Matrix” means the matrix establishing the authorized amounts for renovation and repair costs as well as an escalation process for approvals exceeding authorized amounts.

 

2.10.                     EFFECTIVE DATE.  The term “Effective Date” means                                          2012.

 

2.11.                     EVICTION SERVICES.  The term “Eviction Services” means those Services described in Section 4.6 of the SOW.

 

2.12.                     HOA.  The term “HOA” means Home Owners Association, referring to the Home Owners Association associated with a specific property.  HOA may also refer to a Condominium Owners Association associated with a specific property.

 

2.13.                     INSURANCE SERVICES.  The term “Insurance Services” means those Services described in Section 4.9 of the SOW.

 

2.14.                     INSURANCE SOW.  The term “Insurance SOW” means that certain Statement of Work (Insurance Services), dated as of September         , 2012, by and between Altisource and Residential, which is attached to the Services Letter as Schedule A-6.

 

1



 

2.15.                     LEASING AND PROPERTY MANAGEMENT SOW.  The term “Leasing and Property Management SOW” means that certain Statement of Work (Leasing and Property Management Services), dated as of  September       , 2012, by and between Altisource and Residential, which is attached to the Services Letter as Schedule A-7.

 

2.16.                     MSA.  The term “MSA” has the meaning ascribed to in Section 2 of the SOW.

 

2.17.                     PERFORMANCE STANDARD.  The term “Performance Standard” means any quality standards, service level requirements, specifications and acceptance criteria as may be identified in an SOW.

 

2.18.                     PROPERTY PRESERVATION AND INSPECTION SERVICES.  The term “Property Preservation and Inspection Services” means those Services described in Section 4.4 of the SOW.

 

2.19.                     PROPERTY PRESERVATION AND INSPECTION SOW.  The term “Property Preservation and Inspection SOW” means that certain Statement of Work (Property Preservation and Inspection Services), dated as of September         , 2012, by and between Altisource and Residential, which is attached to the Services Letter as Schedule A-3.

 

2.20.                     PROPERTY TAX MANAGEMENT SERVICES.  The term “Property Tax Management Services” means those Services described in Section 4.5 of the SOW.

 

2.21.                     RENOVATION SERVICES.  The term “Renovation Services” means those Services described in Section 4.3 of the SOW.

 

2.22.                     RENOVATION SOW.  The term “Renovation SOW” means that certain Statement of Work (Renovation Services), dated as of September         , 2012, by and between Altisource and Residential, which is attached to the Services Letter as Schedule A-2.

 

2.23.                     RENTAL PROPERTY.  The term “Rental Property” means the real property owned by Residential which is active in Residential’s rental property program, indicated by an active status in the Propertyware system.

 

2.24.                     REO PROPERTIES.  The term “REO Properties” means real properties owned by Residential but not active in Residential’s rental program.

 

2.25.                     SERVICES.  The term “Services” means the Asset Management Services.

 

2.26.                     SERVICES LETTER.  The term “Services Letter” has the meaning ascribed to in Section 1 of the SOW.

 

2.27.                     VALUATION SERVICES.  The term “Valuation Services” means those Services described in Section 4.7 of the SOW.

 

2.28.                    VALUATION SOW.  The term “Valuation SOW” means that certain Statement of Work (Valuation Services), dated as of September         , 2012, by and between Altisource and Residential, which is attached to the Services Letter as Schedule A-4.

 

{REMAINDER OF PAGE INTENTIONALLY LEFT BLANK}

 

2



 

IN WITNESS WHEREOF, the Parties hereto have executed and delivered this Exhibit 1 as of the Contract Date.

 

RESIDENTIAL:

 

ALTISOURCE:

 

 

 

ALTISOURCE RESIDENTIAL, L.P.

 

ALTISOURCE SOLUTIONS S.À R.L.

 

 

 

By:

Altisource Residential GP, LLC, its general partner

 

 

By:

Altisource Residential GP Member, LLC, its sole member

 

 

 

 

 

 

 

 

 

 

By:

 

 

By:

 

 

 

 

 

 

Name (Print):

 

 

Name:

William B. Shepro

 

 

 

 

 

Title:

 

 

Title:

Manager

 

 

 

 

 

Date:

 

 

Date:

 

 

3



 

GRAPHIC

 

STATEMENT OF WORK

(RENOVATION SERVICES)

 

SERVICES LETTER - SCHEDULE A-2

 

This Statement of Work (Renovation Services) (this “SOW”) is made by and between ALTISOURCE SOLUTIONS S.À R.L., a Luxembourg private limited liability company (“Altisource”) and ALTISOURCE RESIDENTIAL, L.P., a Delaware limited partnership (“Residential”, and together with Altisource, the “Parties” and each individually, a “Party”), and is dated as of September       , 2012.

 

RECITAL

 

WHEREAS, Residential desires to receive, and Altisource is willing to provide, or cause to be provided, certain Services pursuant to the terms and conditions set forth herein.

 

AGREEMENT

 

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

 

1.                                      INTEGRATION WITH SERVICES LETTER.

 

This SOW is attached to, and incorporated into, that certain Services Letter, dated as of September         , 2012, from Altisource to Residential (the “Services Letter”) as Schedule A-2 to the Services Letter.  Neither the Services Letter nor this SOW shall be construed or interpreted without the other.

 

2.                                      GOVERNED BY MASTER SERVICES AGREEMENT.

 

This SOW is governed by that certain Master Services Agreement by and between Altisource and Residential and dated as of September         , 2012 (the “MSA”), the terms of which are hereby incorporated  by this reference.  This SOW shall not be construed or interpreted without the MSA.

 

3.                                      DEFINED TERMS.

 

Definitions of certain capitalized terms used in this SOW are contained in Exhibit 1 to this SOW, attached hereto and incorporated herein by this reference.  Any capitalized term not defined in this SOW, including any exhibits to this SOW, shall have the meaning given that term in the MSA.

 

4.                                          SERVICES.

 

4.1.                            PROVISION OF RENOVATION SERVICES.  Subject to the terms and conditions of the MSA, Altisource shall provide, or cause to be provided, to Residential and any of Residential’s Affiliates, the Property Assessment Services and the Property Renovation Services with regard to REO Properties as well as any other properties owned by Residential.

 

4.2.                            PROPERTY ASSESSMENT SERVICES.

 

4.2.1.                  INITIAL SCREENING ASSESSMENT.  Altisource will perform high level interior and exterior reviews of the property to assess the general condition and identify potential costs and risk factors that would preclude the property from being selected as a Rental Property.  Altisource will complete at least 90% of all orders placed within a calendar month for Initial Screening Assessments within three (3) Business Days.  If the property passes the Initial Screening Assessment, the inspector may proceed with the Renovation Estimate Assessment.

 

4.2.2.                  RENOVATION ESTIMATE ASSESSMENT.  Altisource will complete a Renovation Estimate Assessment of the property to develop a Renovation Estimate.  Altisource will complete at least 90% of all orders placed within a calendar month for Renovation Estimate Assessments within three (3) Business Days.  The Renovation Estimate will include estimated material requirements as well as the renovation work required to conform the property to Residential’s Customer Finished Property Criteria and the Customer Design Specifications.  The Renovation Estimate Assessment must be performed in conjunction with an Initial Screening Assessment.  The Renovation Estimate will not be performed if the property fails the Initial Screening Assessment.

 

4.2.3.                  PROPERTY ONBOARDING ASSESSMENT.  Altisource will complete a Property Onboarding Assessment for any occupied property being evaluated for conversion to a Rental Property, including properties being evaluated for Deed-For-Lease as well as lease conversion of an REO occupant.  The Property Onboarding Assessment will include identifying and estimating repair costs for any life safety and health issues and deferred maintenance items that need to be addressed as well as documenting major components and condition of the property.

 

Confidential

 

1



 

4.3.                            PROPERTY RENOVATION SERVICES.

 

4.3.1.                  PRELIMINARY SCOPE OF WORK.  The Preliminary Scope of Work will be developed by Altisource based on the Renovation Estimate.  The Preliminary Scope of Work will be submitted to Residential for review and approval to determine whether to renovate the property for use as a Rental Property, or to market and sell the property as an REO Property.  Residential may request additional review and refinement of the Preliminary Scope of Work or request additional assessment of potential renovated property rent.

 

4.3.2                     FINAL SCOPE OF WORK. The Final Scope of Work will be developed based on the Preliminary Scope of Work, plus any refinements and approved Change Orders:

 

(a)                                 Confirm the materials requirements and labor estimates to renovate the property are consistent with the Customer Finished Property Criteria and the Customer Design Specifications;

 

(b)                                 Provide an estimated schedule for completion and identify any predecessors required to begin renovation; and

 

(c)                                  Provide the renovation budget, inclusive of any accepted Change Orders.

 

4.3.2.                  RENOVATION OF PROPERTY. Altisource will renovate properties acquired by Residential consistent with the Final Scope of Work.  Altisource will pull any required permits and renovate the property according to the Final Scope of Work, consistent with local rules and regulations.  Altisource will update the renovation schedule on a regular basis through completion, including any required inspections, lien releases, and closeout of any permits.

 

4.3.3.                  MANAGEMENT OF CHANGE ORDERS.

 

4.3.3.1.        Identification of Change Orders.   Altisource may identify Change Orders required to bring the property to the desired condition as a result of unanticipated or previously unidentified conditions or events.  Altisource will estimate the cost and time impacts of any identified Change Orders and provide appropriate supporting documentation and recommendations.

 

4.3.3.2.       Authorization of Change Orders.  Altisource will authorize certain Change Orders based on the Delegated Authority Matrix to be performed without delay.  If a requested Change Order exceeds the authorized amounts in the Delegated Authority Matrix, Altisource will follow the Defined Escalation Process for review and approval of the Change Order request.  Upon acceptance of any Change Orders, the renovation timeline will be revised as required.

 

4.3.3.3.        Change Order Impact.  Altisource will use its best efforts to minimize the impact of Change Orders on the expected renovation timeline.

 

4.3.4.                  TURNOVER TO LEASING.  Altisource will conduct a final inspection of the property to ensure the Final Scope of Work is fully completed, meets locally accepted construction and finishing standards and is consistent with the Customer Finished Property Criteria and the Customer Design Specifications.

 

5.                                      FEES.

 

Altisource shall charge, and Residential agrees to pay, the Fee for the Renovation Services as set forth on that certain Renovation Services Fee Schedule, which is attached to the Fee Letter as Schedule B-2.

 

6.                                      SPECIAL PROVISIONS.

 

NONE

 

7.                                      INTERPRETATION.

 

7.1.                            CONTROLLING PROVISIONS. Notwithstanding anything set forth in the MSA to the contrary, the Parties agree that the following provisions shall, in connection with Services provided pursuant to this SOW, either are (i) in addition to the terms of the MSA; or (ii) to the extent that this SOW is inconsistent with the terms of the MSA, then the terms of the MSA shall control to the extent of any conflict, unless noted below:

 

NONE

 

All other terms and conditions as set forth in the MSA shall remain in full force and effect.

 

7.2.                            CROSS-REFERENCES. Except for this Section 7 and any other instance which refers to a specific Section of the SOW or the Exhibit(s), all references to the SOW are deemed to refer to the SOW as supplemented by the Exhibit(s).

 

8.                                      COUNTERPARTS, ELECTRONIC SIGNATURES.

 

This SOW may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all of which shall together constitute one and the same SOW. This SOW

 

2



 

may be executed by providing an electronic signature under the terms of the Electronic Signatures Act, 15 U.S.C. § 7001 et. seq., and may not be denied legal effect solely because it is in electronic form or permits the completion of the business transaction referenced herein electronically instead of in person.

 

IN WITNESS WHEREOF, the Parties hereto have executed and delivered this Agreement as of the Contract Date.

 

RESIDENTIAL:

 

ALTISOURCE:

 

 

 

ALTISOURCE RESIDENTIAL, L.P.

 

ALTISOURCE SOLUTIONS S.À R.L.

 

 

 

By:

Altisource Residential GP, LLC, its general partner

 

 

By:

Altisource Residential GP Member, LLC, its sole member

 

 

 

 

 

 

 

 

 

 

By:

 

 

By:

 

 

 

 

 

 

Name (Print):

 

 

Name:

William B. Shepro

 

 

 

 

 

Title:

 

 

Title:

Manager

 

 

 

 

 

Date:

 

 

Date:

 

 

3



 

STATEMENT OF WORK

 

EXHIBIT 1

(DEFINITIONS)

 

1.                                      INTEGRATION WITH SOW.

 

This “Exhibit 1” (“Exhibit 1”) is attached to, and incorporated into, that certain Statement of Work (Renovation Services), dated as of September         , 2012, by and between Altisource Solutions S.á r.l. (“Altisource”) and Altisource Residential, L.P., a Delaware limited partnership (“Residential”) (the “SOW”).  Neither the SOW nor this Exhibit 1 shall be construed or interpreted without the other.

 

2.                                      DEFINITIONS.

 

For purposes of the SOW, the following defined terms shall have the meanings set forth in this Section.  Unless otherwise defined in this SOW, capitalized terms used herein shall have the meanings ascribed to them in the MSA.

 

2.1.                            CHANGE ORDER.   The term “Change Order” means the request to modify the Final Scope of Work to accommodate unanticipated conditions, events, or costs.

 

2.2.                            CONTRACT DATE.  The term “Contract Date” means September        , 2012.

 

2.3.                            CUSTOMER DESIGN SPECIFICATIONS.  The term “Customer Design Specifications” means the Residential defined and maintained standard specifications of key materials, fixtures and finishes to be used in the renovation of properties.  Modifications to the Customer Design Specifications will only affect properties with renovation work commencing after Residential notifies Altisource of such modifications.

 

2.4.                            CUSTOMER FINISHED PROPERTY CRITERIA.  The term “Customer Finished Property Criteria” means the Residential defined and maintained minimum acceptable criteria for all finished renovated properties. Modifications to the Customer Finished Property Criteria will only affect properties with renovation work commencing after Residential notifies Altisource of such modifications.

 

2.5.                            DEED-FOR-LEASE.  The term “Deed-For-Lease” means the process by which a mortgagor deeds the property to the lender in exchange for a lease obligation to remain in the home as a tenant.

 

2.6.                            DEFINED ESCALATION PROCESS.  The term “Defined Escalation Process” means the process establishing the level of approval required for renovation and repair costs exceeding pre-approved limits.

 

2.7.                            DELEGATED AUTHORITY MATRIX.  The term “Delegated Authority Matrix” means the matrix establishing the authorized amounts for defined renovation and change order costs as well as an escalation process for approvals exceeding authorized amounts.

 

2.8.                            EFFECTIVE DATE.  The term “Effective Date” means                           2012.

 

2.9.                            FINAL SCOPE OF WORK.  The term “Final Scope of Work” means the final plan for renovation of the property.  The Final Scope of Work includes an assessment of total costs and time frame for renovation of the property as well as any preliminary matters that are required to begin renovation.

 

2.10.                     INITIAL SCREENING ASSESSMENT.  The term “Initial Screening Assessment” means the interior and exterior reviews of the property condition that will be used to estimate construction costs and other factors.

 

2.11.                     MSA.  The term “MSA” has the meaning ascribed to in Section 2.

 

2.12.                     PRELIMINARY SCOPE OF WORK.  The term “Preliminary Scope of Work” means the preliminary plan for the renovation as well as an estimate of total costs and time frame for renovation of the property.

 

2.13.                     PROPERTY ASSESSMENT SERVICES.  The term “Property Assessment Services” means those Services described in Section 4.2 of the SOW.

 

2.14.                     PROPERTY ONBOARDING ASSESSMENT.  The term “Property Onboarding Assessment” means the Assessment used to determine initial repairs required and document the condition of an occupied REO Property for consideration as a Rental Property.

 

2.15.                     PROPERTY RENOVATION SERVICES.  The term “Property Renovation Services” means those Services described in Section 4.3 of the SOW.

 

2.16.                     RENOVATION ESTIMATE.  The term “Renovation Estimate” means the estimate of the materials and work required to renovate the property to the standards defined by the Customer Design Specifications and Customer Finished Property Criteria.

 

1



 

2.17.                     RENOVATION ESTIMATE ASSESSMENT.  The term “Renovation Estimate Assessment” means the Assessment used to determine the Renovation Estimate.

 

2.18.                     RENTAL PROPERTY.  The term “Rental Property” means the real property owned by Residential which is active in Residential’s rental property program, indicated by an active status in the Propertyware system.

 

2.19.                     REO PROPERTIES.  The term “REO Properties” means real properties owned by Residential but not active in Residential’s rental program.

 

2.20.                     SERVICES.  The term “Services” means the Renovation Services.

 

2.21.                     SERVICES LETTER.  The term “Services Letter” has the meaning ascribed to in Section 1 of the SOW.

 

2.22.                     TURNOVER TO LEASINGThe term “Turnover to Leasing” means the point at which a property that has been selected for Residential’s leasing program is eligible to be rented to a tenant.

 

IN WITNESS WHEREOF, the Parties hereto have executed and delivered this Exhibit 1 as of the Contract Date.

 

 

RESIDENTIAL:

 

ALTISOURCE:

 

 

 

 

 

 

ALTISOURCE RESIDENTIAL, L.P.

 

ALTISOURCE SOLUTIONS S.À R.L.

 

 

 

By:

Altisource Residential GP, LLC, its general partner

 

 

By:

Altisource Residential GP Member, LLC, its sole member

 

 

 

 

 

 

 

 

By:

 

 

By:

 

 

 

 

 

 

Name (Print):

 

 

Name:

William B. Shepro

 

 

 

 

 

Title:

 

 

Title:

Manager

 

 

 

 

 

Date:

 

 

Date:

 

 

2



 

GRAPHIC

 

STATEMENT OF WORK

(PROPERTY PRESERVATION AND INSPECTION SERVICES)

 

SERVICES LETTER - SCHEDULE A-3

 

This Statement of Work (Property Preservation and Inspection Services) (this “SOW”) is made by and between ALTISOURCE SOLUTIONS S.À R.L., a Luxembourg private limited liability company (“Altisource”) and ALTISOURCE RESIDENTIAL, L.P., a Delaware limited partnership (“Residential”, and together with Altisource, the “Parties” and each individually, a “Party”), and is dated as of September     , 2012.

 

RECITAL

 

WHEREAS, Residential desires to receive, and Altisource is willing to provide, or cause to be provided, certain Services pursuant to the terms and conditions set forth herein.

 

AGREEMENT

 

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

 

1.                                      INTEGRATION WITH SERVICES LETTER.

 

This SOW is attached to, and incorporated into, that certain Services Letter, dated as of September         , 2012, from Altisource to Residential (the “Services Letter”) as Schedule A-3 to the Services Letter.  Neither the Services Letter nor this SOW shall be construed or interpreted without the other.

 

2.                                      GOVERNED BY MASTER SERVICES AGREEMENT.

 

This SOW is governed by that certain Master Services Agreement by and between Altisource and Residential and dated as of September         , 2012 (the “MSA”), the terms of which are hereby incorporated  by this reference.  This SOW shall not be construed or interpreted without the MSA.

 

3.                                      DEFINED TERMS.

 

Definitions of certain capitalized terms used in this SOW are contained in Exhibit 1 to this SOW, attached hereto and incorporated herein by this reference.  Any capitalized term not defined in this SOW, including any exhibits to this SOW, shall have the meaning given that term in the MSA.

 

4.                                          SERVICES.

 

4.1.                            PROVISION OF PROPERTY PRESERVATION AND INSPECTION SERVICES.  Subject to the terms and conditions of the MSA, Altisource shall provide, or cause to be provided, to Residential, and any of Residential’s Affiliates, the Property Preservation and Inspection Services with regard to REO Properties within the Delegated Authority Matrix and per direction and mutual agreement of Residential as required for each Service.

 

4.2.                            COMMUNICATIONS.  Altisource will use its proprietary platform to communicate with Residential.  This will include critical updates to Residential of property conditions, preservation activities and repairs at properties.

 

4.3.                            DOCUMENT RETENTION.  Altisource will retain property inspection reports and photographs within the proprietary technology platform for a period of three (3) months unless otherwise specified.

 

4.4.                            PROPERTY INSPECTION SERVICES.

 

4.4.1.                  OCCUPANCY INSPECTION. Altisource will perform an Occupancy Inspection semi-monthly on occupied properties until the property is verified as vacant.  The inspection of the designated property is to determine the apparent occupancy status based on generally observable conditions evident to the inspector.  If vacant, Altisource will secure the property per Section 4.5.1.

 

4.4.2.                  INITIAL REO INSPECTION.  Upon first receiving an assignment from Residential to manage the property, Altisource will perform an initial inspection of the subject property once vacant to determine any health and life safety issues.  Altisource will begin to secure the property and remediate those health and life safety issues per Sections 4.5.1 through 4.5.9.

 

4.4.3.                  MONTHLY REO INSPECTION.  Altisource will perform property inspections once per month on vacant properties to identify any material changes to the REO Property’s condition.

 

4.4.4.                  OTHER INSPECTIONS.  Altisource will perform a variety of additional inspections as needed as determined by Altisource according to Altisource established business rules or as Residential may request, including

 

Confidential

 

1



 

but not limited to, certificate of use, certificate of re-occupancy, Chinese drywall, FHA certificate, HVAC, Discoloration, pest, plumbing, pool, roof, septic, structural and termite inspections.

 

4.4.5.                  VACANT, RENTAL OR OTHER PROPERTY REGISTRATION.  Altisource will file registration of REO, vacant, rental property and other registrations as required by state or local regulations.

 

4.5.                            PROPERTY PRESERVATION SERVICES.

 

4.5.1.                  SECURING.  Altisource will initially secure all vacant and abandoned REO Properties with a keypad lock.  All door locks will be changed or disabled, including deadbolts.  Altisource will install a lockbox and / or keypad entry lock at one entrance to each confined area.  Altisource will provide Residential with the lockbox combination within the proprietary platform.

 

4.5.2.                  BOARDING.  Altisource will board all vacant and abandoned REO Properties when reasonably necessary.  Altisource will board all doors, windows and other openings that may provide illegal entrance into the REO Properties.

 

4.5.3.                  WINTERIZATION.  Altisource will winterize all vacant and abandoned REO Properties to minimize freeze damage to plumbing or heating systems as required based on the type of heating system.  Altisource may also perform winterization re-checks as required.

 

4.5.4.                  LAWN MAINTENANCE.  Altisource will maintain the lawn for all vacant and abandoned properties in consideration of local code requirements and consistent with adjacent/surrounding REO Properties.  Altisource will remove all yard waste from the lawn, sidewalks, steps and driveway.  Altisource will remove all snow from the front walkway to the front door.

 

4.5.5.                  POOL MAINTENANCE.  Altisource will maintain or clean and cover pools for all vacant or abandoned REO Properties consistent with any local, state and federal regulations.  Altisource can also provide additional services to repair or remove pools.

 

4.5.6.                  DEBRIS AND HAZARD REMOVAL.  Altisource will remove and properly dispose of non-hazardous waste material and debris from the premises for all vacant and abandoned REO Properties.  Altisource will remove any tires, paint, volatile compounds and other materials which create an environmental or health and life safety risk to the REO Properties from the premises.

 

4.5.7.                  DISCOLORATION REMEDIATION.  Altisource will provide a Discoloration remediation plan to Residential for all vacant and abandoned properties that have Discoloration identified.  Altisource will remediate Discoloration per the Discoloration remediation plan.

 

4.5.8.                 HEALTH AND LIFE SAFETY ISSUE REMEDIATION.  Altisource will remediate health and life safety issues on vacant and abandoned REO Properties as through specific work items.  Examples of health and life safety issues include: roof leaks, falling drywall, damaged gutters, problematic trees, fire hazards, fall risk, electrical hazards, plumbing leaks and flooding, as well as hazardous waste, termites, pests, structural issues, Chinese drywall and other materials and hazards regulated by federal, state or local ordinances.

 

4.5.9.                  MISCELLANEOUS PRESERVATION ACTIVITIES.  Altisource will perform initial janitorial service on all vacant or abandoned properties to ensure all components of the property are presentable.  Altisource will also provide miscellaneous preservation items such as battery replacement, carbon monoxide and/or smoke detector installation and monthly sales cleaning for vacant or abandoned properties.

 

4.5.10.           CASH-FOR-RELOCATION AND EVICTION SERVICES.  Altisource will support Cash-for-Relocation and eviction efforts for occupants to vacate the property and surrender access, including meeting occupants to complete required forms, supporting Cash-for-Relocation negotiations and attending eviction hearings and eviction lockouts.

 

4.5.11.           CASH-FOR-REDEMPTION SERVICES.  Altisource will support Cash-for-Redemption efforts for occupants to vacate the property, waive redemption rights and surrender access, including meeting occupants to complete required forms and supporting Cash-for-Redemption negotiations.

 

4.5.12.           CODE VIOLATION MANAGEMENT AND MITIGATION.  Where code violations exist for vacant and abandoned properties and Altisource has been provided notice of violations, Altisource will manage and mitigate code violations as well as negotiate code violation fines on behalf of Residential.

 

4.5.13.           MANAGEMENT OF UTILITIES AND HOA.  Altisource will provide utility activation and management for gas and electric utilities, and meet service providers where required to activate utilities for vacant property held by Residential.  Altisource will also ensure that any Home Owners Association (“HOA”) fees are paid until sale of the property is completed.

 

2



 

4.5.14.           MARKETING SIGNS.  Altisource will install marketing signs, provide front view pictures and remove signage upon sales close.

 

5.                                      FEES.

 

Altisource shall charge, and Residential agrees to pay, the Fee for the Property Preservation and Inspection Services as set forth on that certain Property Preservation and Inspection Services Fee Schedule, which is attached to the Fee Letter as Schedule B-3.

 

6.                                      PERFORMANCE STANDARDS.

 

6.1.                            WORKMANLIKE MANNER. All Property Inspection Services and Property Preservation Services pursuant to the terms of this Agreement will be performed in a thorough and workmanlike manner in compliance with applicable FHA standards and in compliance with applicable federal, state and local law.

 

6.2.                            STANDARD TURN TIMES.

 

6.2.1.                  PROPERTY INSPECTION SERVICES.  Altisource will complete at least 90% of all orders placed within a calendar month for Property Inspection Services requested pursuant to this SOW within the following standard turn times.

 

Activity

 

Standard
(Business Days)

Occupancy Inspection

 

3 days

Initial REO Inspection

 

5 days

Monthly REO Inspection

 

5 days

Other Inspections

 

Quote

Vacant, Rental or Other Property Registration Service Charge

 

15 days

 

6.2.2.                  PROPERTY PRESERVATION SERVICES.  Altisource will complete at least 90% of all orders placed within a calendar month for Property Preservation Services requested pursuant to this SOW within the following standard turn times.

 

Activity

 

Standard
(Business Days)

Securing

 

 

Initial Securing with Approved Lock

 

5 days

Lock Change/Entry Lock/Securing

 

5 days

Lock Box

 

5 days

Padlock

 

5 days

Dead Bolt

 

5 days

Sliding Door Secure/Slider Lock

 

5 days

Window Lock

 

5 days

Patio Door

 

5 days

Boarding

 

 

Boarding Small Opening

 

5 days

Boarding Medium Opening

 

5 days

Boarding Large Opening

 

5 days

Boarding Sliding Glass or Double Door

 

5 days

Boarding Single Car Garage Door

 

5 days

Boarding Double Car Garage Door

 

5 days

Boarding (over 112 square feet)

 

Quote

Security Door with Hinges & Padlock/Hasp

 

5 days

Boarding Large Front Door

 

5 days

 

3



 

Winterization

 

 

Dry Winterization

 

15 days

Wet Winterization

 

15 days

De-Winterization

 

15 days

Winterization Re-check

 

15 days

Pump Out Water and Dry One-Time Only

 

Quote

Replace Sump Pump

 

5 days

Lawn Maintenance

 

 

Initial Grass Cut - Under 15,000 square feet

 

5 days

Initial Grass Cut - 15,001 square feet to 1 acre

 

5 days

Initial Grass Cut - Over 1 acre

 

Quote

Re-Cut Grass - Under 15,000 square feet

 

5 days

Re-Cut Grass - 15,001 square feet to 1 acre

 

5 days

Re-Cut Grass - Over 1 acre

 

Quote

Snow Removal - Under 15,000 square feet

 

5 days

Snow Removal - 15,001 square feet to 1 acre

 

5 days

Snow Removal - Over 1 acre

 

Quote

Tree or Shrub Trimming

 

5 days

Tree Removal

 

Quote

Weed Removal

 

Quote

Exterior Dry Leaves Removal

 

5 days

Other Landscaping

 

Quote

Pool Maintenance

 

 

Clean and Cover Pool

 

Quote

Maintain Swimming Pool (including chemicals and hardware)

 

Quote

Repair Pool

 

Quote

Remove Pool

 

Quote

Debris and Hazard Removal

 

 

Debris Removal

 

Quote

Automobile Removal

 

5 days

Tire Removal

 

5 days

Hazard Removal

 

Quote

Other Removal

 

Quote

Discoloration Remediation

 

 

Discoloration Remediation

 

Quote

Health and Life Safety Issue Remediation

 

 

Interior Repairs

 

Quote

Exterior Repairs

 

Quote

Structural Repairs

 

Quote

Roof Repairs

 

Quote

Other Life Safety Remediation

 

Quote

Miscellaneous Preservation Activities

 

 

Initial Janitorial Service

 

5 days

 

4



 

Monthly Sales Cleaning

 

5 days

Battery Replacement

 

5 days

Carbon Monoxide Detector Installation

 

5 days

Smoke Detector Installation

 

5 days

Combination Carbon Monoxide/ Smoke Detector Installation

 

5 days

Cash-for-Relocation and Eviction Services

 

 

Meet and Greet (form completion)

 

5 days

Successful Completion of Cash-for-Relocation Negotiation

 

5 days

Eviction Hearing (vendor participation in court hearing)

 

Quote

Eviction Lockout

 

Quote

Cash-for-Redemption Services

 

 

Meet and Greet (form completion)

 

5 days

Successful Completion of Cash-for-Redemption Negotiation

 

5 days

Code Violation Management and Mitigation

 

 

Code Violation Management and Mitigation

 

Quote

Code Violation Fine Negotiation

 

N/A

Management of Utilities and HOA

 

 

Trip Charge if required to meet utility service provider at property

 

Per Utility

Utility Activation Service Charge (per utility)

 

15 days

Utility Payment (per invoice)

 

15 days

HOA Payment (per invoice)

 

15 days

Marketing Signs

 

 

Marketing Sign Installation

 

15 days

Remove Signage

 

15 days

 

7.                                      SPECIAL PROVISIONS.

 

NONE

 

8.                                      INTERPRETATION.

 

8.1.                            CONTROLLING PROVISIONS. Notwithstanding anything set forth in the MSA to the contrary, the Parties agree that the following provisions shall, in connection with Services provided pursuant to this SOW, either are (i) in addition to the terms of the MSA; or (ii) to the extent that this SOW is inconsistent with the terms of the MSA, then the terms of the MSA shall control to the extent of any conflict, unless noted below:

 

NONE

 

All other terms and conditions as set forth in the MSA shall remain in full force and effect.

 

8.2.                            CROSS-REFERENCES. Except for this Section 8 and any other instance which refers to a specific Section of the SOW or the Exhibit(s), all references to the SOW are deemed to refer to the SOW as supplemented by the Exhibit(s).

 

9.                                      COUNTERPARTS, ELECTRONIC SIGNATURES.

 

This SOW may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all of which shall together constitute one and the same SOW. This SOW may be executed by providing an electronic signature under the terms of the Electronic Signatures Act, 15 U.S.C. § 7001 et. seq., and may not be denied legal effect solely because it is in electronic form or permits the completion of the business transaction referenced herein electronically instead of in person.

 

5



 

IN WITNESS WHEREOF, the Parties hereto have executed and delivered this Agreement as of the Contract Date.

 

 

RESIDENTIAL:

 

ALTISOURCE:

 

 

 

 

 

 

ALTISOURCE RESIDENTIAL, L.P.

 

ALTISOURCE SOLUTIONS S.À R.L.

 

 

 

By:

Altisource Residential GP, LLC, its general partner

 

 

By:

Altisource Residential GP Member, LLC, its sole member

 

 

 

 

 

 

 

 

By:

 

 

By:

 

 

 

 

 

 

Name (Print):

 

 

Name:

William B. Shepro

 

 

 

 

 

Title:

 

 

Title:

Manager

 

 

 

 

 

Date:

 

 

Date:

 

 

6



 

STATEMENT OF WORK

 

EXHIBIT 1

(DEFINITIONS)

 

1.                                      INTEGRATION WITH SOW.

 

2.                                      This “Exhibit 1” (“Exhibit 1”) is attached to, and incorporated into, that certain Statement of Work (Property Preservation and Inspection Services), dated as of September         , 2012, by and between Altisource Solutions S.á r.l. (“Altisource”) and Altisource Residential, L.P., a Delaware limited partnership (“Residential”) (the “SOW”).  Neither the SOW nor this Exhibit 1 shall be construed or interpreted without the other.

 

3.                                      DEFINITIONS.

 

For purposes of the SOW, the following defined terms shall have the meanings set forth in this Section.  Unless otherwise defined in this SOW, capitalized terms used herein shall have the meanings ascribed to them in the MSA.

 

3.1.                            CASH-FOR-REDEMPTION. The term “Cash-for-Redemption” means a program by which an occupant of real property is offered money in exchange for the occupant’s waiver of their statutory or equitable redemption rights and the occupant’s agreement to leave the real property voluntarily by an agreed upon deadline.

 

3.2.                            CASH-FOR-RELOCATION. The term “Cash-for-Relocation” means a program by which an occupant of real property is offered money in exchange for the occupant’s agreement to leave the real property voluntarily by an agreed upon deadline.

 

3.3.                            CONTRACT DATE.  The term “Contract Date” means September       , 2012.

 

3.4.                            DELEGATED AUTHORITY MATRIX.  The term “Delegated Authority Matrix” means the matrix establishing the authorized amounts for defined Property Preservation and Inspection costs as well as an escalation process for approvals exceeding authorized amounts.

 

3.5.                            DISCOLORATION.  The term “Discoloration” means localized darkening of the original color of walls, carpet and other interior surfaces caused by accumulation of small particles that are present in the air of homes.  Examples of discoloration include particles from tobacco smoke, wood-burning smoke, dust from construction or household projects, and air-borne particles such as pollution, organic material and automotive exhaust.

 

3.6.                            EFFECTIVE DATE.  The term “Effective Date” means                                    2012.

 

3.7.                            HOA.  The term “HOA” means Home Owners Association, referring to the Home Owners Association associated with a specific REO property.  HOA may also refer to a Condominium Owners Association associated with a specific REO property.

 

3.8.                            MSA.  The term “MSA” has the meaning ascribed to in Section 2.

 

3.9.                            PERFORMANCE STANDARD.  The term “Performance Standard” means any quality standards, service level requirements, specifications and acceptance criteria as may be identified in an SOW.

 

3.10.                     RENTAL PROPERTY.  The term “Rental Property” means the real property owned by Residential which is active in Residential’s rental property program, indicated by an active status in the Propertyware system.

 

3.11.                     REO PROPERTIES.  The term “REO Properties” means real properties owned by Residential but not active in Residential’s rental program.

 

3.12.                     SERVICES.  The term “Services” means the Property Preservation and Inspection Services.

 

3.13.                     SERVICES LETTER.  The term “Services Letter” has the meaning ascribed to in Section 1.

 

{REMAINDER OF PAGE INTENTIONALLY LEFT BLANK}

 

1



 

IN WITNESS WHEREOF, the Parties hereto have executed and delivered this Exhibit 1 as of the Contract Date.

 

 

RESIDENTIAL:

ALTISOURCE:

 

 

 

 

ALTISOURCE RESIDENTIAL, L.P.

ALTISOURCE SOLUTIONS S.À R.L.

 

 

By:

Altisource Residential GP, LLC, its general partner

 

 

By:

Altisource Residential GP Member, LLC, its sole member

 

 

 

 

 

 

 

 

By:

 

 

By:

 

 

 

 

 

 

 

 

 

 

 

Name (Print):

 

 

Name:

William B. Shepro

 

 

 

 

 

 

 

 

 

 

Title:

 

 

Title:

Manager

 

 

 

 

 

 

 

 

 

 

Date:

 

 

Date:

 

 

2


 


 

GRAPHIC

 

STATEMENT OF WORK

(VALUATION SERVICES)

 

SERVICES LETTER - SCHEDULE A-4

 

This Statement of Work (Valuation Services) (the “SOW”) is made by and between ALTISOURCE SOLUTIONS S.À R.L., a Luxembourg private limited liability company (“Altisource”) and ALTISOURCE RESIDENTIAL, L.P., a Delaware limited partnership (“Residential”, and together with Altisource, the “Parties” and each individually, a “Party”), and is dated as of September       , 2012.

 

RECITAL

 

WHEREAS, Residential desires to receive, and Altisource is willing to provide, or cause to be provided, certain Services pursuant to the terms and conditions set forth herein.

 

AGREEMENT

 

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

 

1.                                      INTEGRATION WITH SERVICES LETTER.

 

This SOW is attached to, and incorporated into, that certain Services Letter, dated as of September         , 2012, from Altisource to Residential (the “Services Letter”) as Schedule A-4 to the Services Letter.  Neither the Services Letter nor this SOW shall be construed or interpreted without the other.

 

2.                                      GOVERNED BY MASTER SERVICES AGREEMENT.

 

This SOW is governed by that certain Master Services Agreement by and between Altisource and Residential and dated as of September         , 2012 (the “MSA”), the terms of which are hereby incorporated by this reference.  This SOW shall not be construed or interpreted without the MSA.

 

3.                                      DEFINED TERMS.

 

Definitions of certain capitalized terms used in this SOW are contained in Exhibit 1 to this SOW, attached hereto and incorporated herein by this reference.  Any capitalized term not defined in this SOW, including any exhibits to this SOW, shall have the meaning given that term in the MSA.

 

4.                                          SERVICES.

 

4.1.                            PROVISION OF VALUATION SERVICES.  Subject to the terms and conditions of the MSA, Altisource shall provide, or cause to be provided, to Residential, or any of Residential’s Affiliates, the Valuation Services for REO Properties as well as any other properties owned by Residential.

 

4.2.                            VALUATION PRODUCTS.  Altisource will provide Valuation Services for REO Properties based upon delivery of the following Valuation Products:

 

(a)                                 Appraisal (Form 1004)

 

(b)                                 BPO

 

(c)                                  Exterior (Form 2055)

 

(d)                                 Data

 

(e)                                  CMA

 

(f)                                   Hybrid Valuation

 

(g)                                  Desk Review

 

(h)                                 Forensic Review

 

(i)                                     Urgent Re-review

 

(j)                                    Non-urgent Re-review

 

4.3.                            VALUATION SERVICES FOR REO PROPERTIES.  Altisource will define specific business rules relating to the ordering of Valuation Products for REO Properties.

 

Confidential

 

1



 

4.4.                            STATE GOVERNED RULES.   It is not permissible to order a BPO in the states listed below.  Altisource will order an Exterior Appraisal (2055) or, with written approval, a Hybrid Valuation, in lieu of the BPO in the states listed below.

 

(a)                                       Alabama

 

(b)                                       Connecticut

 

(c)