EXHIBIT 10.9

 

ALTISOURCE RESIDENTIAL CORPORATION

SPECIAL CONVERSION OPTION PLAN

 

SECTION 1.                         PURPOSE

 

1.01                        The purpose of the Special Conversion Option Plan
(the “Plan”) is to enable Altisource Residential Corporation (the “Corporation”)
to grant stock options to employees and board members of Ocwen Financial
Corporation who hold options to purchase Altisource stock prior to the
Separation.

 

SECTION 2.                         DEFINITIONS; CONSTRUCTION

 

2.01                        Definitions.  In addition to the terms defined
elsewhere in the Plan, the following terms as used in the Plan shall have the
following meanings when used with initial capital letters:

 

2.01.1              “Administrator” means the Board or any committee that the
Board designates to administer the Plan.

 

2.01.2              “Altisource” means Altisource Portfolio Solutions S.A.

 

2.01.3              “Altisource Option” means an option to purchase Altisource
common stock, granted under the Altisource Portfolio Solutions S.A. 2009 Equity
Incentive Plan.

 

2.01.4              “Board” means the Corporation’s Board of Directors.

 

2.01.5              “Code” means the Internal Revenue Code of 1986, as amended
from time to time, together with rules, regulations and interpretations
promulgated thereunder.  References to particular sections of the Code shall
include any successor provisions.

 

2.01.6              “Change of Control” shall mean a change in control of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), whether or not the Corporation is then
subject to such reporting requirement.

 

2.01.7              “Common Stock” means the Class B common stock of the
Corporation, par value $0.01 per share, and such other securities of the
Corporation or other corporation or entity as may be substituted for Shares
pursuant to Section 8.01 hereof.

 

2.01.8              “Effective Date” means the date that the Form 10 relating to
the Separation is declared effective by the Securities and Exchange Commission.

 

2.01.9              “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

 

2.01.10       “Fair Market Value” of shares of any stock, including but not
limited to Common Stock, or units of any other securities (herein “shares”),
shall be the mean between the highest and lowest sales prices per share for the
date(s) as established by the Board as of which Fair Market Value is to be
determined in the principal market in which such shares are traded, as

 

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quoted in The Wall Street Journal (or in such other reliable publication as the
Administrator, in its discretion, may determine to rely upon).  If the Fair
Market Value of shares on any date(s) cannot be determined on the basis set
forth in the preceding sentence, or if a determination is required as to the
Fair Market Value on any date of property other than shares, the Administrator
shall in good faith determine the Fair Market Value of such shares or other
property on such date(s).  Fair Market Value shall be determined without regard
to any restriction other than a restriction which, by its terms, will never
lapse.

 

2.01.11       “Ocwen” means Ocwen Financial Corporation.

 

2.01.12       “Option” means a right, granted hereunder, to purchase Shares at a
specified price during specified time periods.

 

2.01.13       “Option Agreement” means a written document evidencing the terms
of an Option, as may be determined by the Administrator and as may be amended
from time to time, subject to and consistent with the terms of the Plan.

 

2.01.14       “Participant” means an individual who is granted an Option under
the Plan.

 

2.01.15       “Person” shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, and
shall include a “group” as defined in Section 13(d) thereof.

 

2.01.16       “Separation” means the spinoff of the Company from Altisource.

 

2.01.17       “Shares” means shares of Common Stock.

 

2.01.18       “Subsidiary” means any corporation in an unbroken chain of
corporations beginning with the Corporation, if each of the corporations other
than the last corporation in the chain owns stock possessing at least 50% of the
total combined voting power of all classes of stock in one of the other
corporations in the chain.

 

2.02                        Construction.  For purposes of the Plan, the
following rules of construction shall apply:

 

2.02.1              The word “or” is disjunctive but not necessarily exclusive.

 

2.02.2              Words in the singular include the plural; words in the
plural include the singular; words in the neuter gender include the masculine
and feminine genders, and words in the masculine or feminine gender include the
other and neuter genders.

 

SECTION 3.                         ADMINISTRATION

 

3.01                        The Plan shall be administered by the
Administrator.  The Administrator shall have complete, full and final authority
to take the following actions, in each case subject to and consistent with the
provisions of the Plan:

 

(i)                                     to designate Participants;

 

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(ii)                                to determine the number of Options to be
granted, the number of Shares to which an Option will relate, the terms and
conditions of any Option (including, but not limited to, any exercise price,
grant price or purchase price, any limitation or restriction, any schedule for
lapse of limitations, forfeiture restrictions or restrictions on exercisability
or transferability, and accelerations or waivers thereof, including in the case
of a Change of Control based in each case on such considerations as the
Administrator shall determine), and all other matters to be determined in
connection with an Option;

 

(iii)                             to determine whether, to what extent and under
what circumstances the exercise price of an Option may be paid in cash, Shares
or other property, or an Option may be accelerated, vested, canceled, forfeited,
exchanged or surrendered;

 

(iv)                            to interpret and administer the Plan Options,
Option Agreements and any instrument or agreement relating to Options;

 

(v)                               to prescribe the form of each Option
Agreement, which need not be identical for each Participant;

 

(vi)                            to adopt, amend, suspend, waive and rescind such
rules and regulations as the Administrator may deem necessary or advisable to
administer the Plan;

 

(vii)                         to correct any defect or supply any omission or
reconcile any inconsistency, and to construe and interpret the Plan, the rules
and regulations, any Option Agreement or other instrument entered into or Option
made under the Plan;

 

(viii)                      to make all other decisions and determinations as
may be required under the terms of the Plan or as the Administrator may deem
necessary or advisable for the administration of the Plan; and

 

(ix)                            to make such filings and take such actions as
may be required from time to time by appropriate state, regulatory and
governmental agencies.  Any action of the Administrator with respect to the Plan
shall be final, conclusive and binding on all Persons, including the
Corporation, Subsidiaries, Participants and any Person claiming any rights under
the Plan from or through any Participants.  The express grant of any specific
power to the Administrator, and the taking of any action by the Administrator,
shall not be construed as limiting any power or authority of the Administrator. 
The Administrator may delegate to officers, managers and/or agents of the
Corporation or any Subsidiary the authority, subject to such terms as the
Administrator shall determine, to perform administrative and other functions
under the Plan.  Each member of the Administrator shall be entitled to, in good
faith, rely or act upon any report or other information furnished to him by an
officer, manager or other employee of

 

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the Corporation or a Subsidiary, the Corporation’s independent certified public
accountants, or any executive compensation consultant or other professional
retained by the Corporation and/or Administrator to assist in the administration
of the Plan.

 

SECTION 4.                         SHARES SUBJECT TO THE PLAN

 

4.01                        The maximum net number of Shares which may be issued
and in respect of which Options may be granted under the Plan shall be limited
to 210,184 shares of Common Stock, subject to adjustment as provided in
Section 8.01, which may be used for all forms of Options.

 

SECTION 5.                         ELIGIBILITY

 

5.01                        Options shall be granted only to individuals who (i)
are employees or members of the board of directors of Ocwen and (ii) hold
Altisource Options as of the Effective Date.

 

SECTION 6.                         SPECIFIC TERMS OF OPTIONS

 

6.01                        General.  Subject to the terms of the Plan and any
applicable Option Agreement, Options shall be granted as set forth in this
Section 6.  In addition, the Administrator may impose on any Option or the
exercise thereof, at the date of grant or thereafter (subject to the terms of
Section 9.01), such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Administrator shall determine.

 

6.02                        Options.  Each holder of an Altisource Option who is
eligible to participate in the Plan shall be granted an Option.  The terms of
such Options shall be as follows:

 

(i)                                                 Grant date.  The Options
shall be granted as of or after the Effective Date and before the completion of
the Separation, subject to the completion of the Separation.

 

(ii)                                              Number of Shares.  Each Option
shall be with respect to the number of shares of Common Stock equal to the
number of shares of Altisource common stock subject to the applicable Altisource
Option divided by three, and rounded down to the nearest whole share.

 

(iii)                                           Exercise Price.  The exercise
price per share of the Option shall be equal to the exercise price of the
applicable Altisource Option multiplied by a fraction, the numerator of which is
the Fair Market Value of a share of Common Stock immediately after the
Separation and the denominator of which is the sum of (A) the Fair Market Value
of a share of Common Stock immediately after the Separation and (B) the Fair
Market Value of a share of Altisource common stock immediately after the
Separation.

 

(iv)                                          Option term.  Each Option shall
have the same term as the applicable Altisource Option.

 

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(v)                                             Times of Exercise.  Each Option
shall be exercisable at the same times as the applicable Altisource Option.

 

(vi)                                          Methods of Exercise.  The
Administrator shall determine the methods by which the exercise price may be
paid or deemed to be paid, and the form of such payment, including, without
limitation, cash, Shares, or other property or any combination thereof, having a
Fair Market Value on the date of exercise equal to the exercise price, provided,
however, that except as otherwise determined by the Administrator, in its
discretion, no shares which have been held for less than six months may be
delivered in payment of the exercise price of an Option.  Delivery of Shares in
payment of the exercise price of an Option, if authorized by the Administrator,
may be accomplished through the effective transfer to the Corporation of Shares
held by a broker or other agent.

 

6.03                        Termination of Employment.  In the case of
Participants, unless otherwise determined by the Administrator and reflected in
the Option Agreement:

 

(i)                                                 if a Participant shall die
while employed or engaged by Ocwen, or a subsidiary of Ocwen or during a period
following termination of employment or engagement during which an Option
otherwise remains exercisable under this Section 6.03, Options granted to the
Participant, to the extent exercisable at the time of the Participant’s death,
may be exercised within two years after the date of the Participant’s death, but
not later than the expiration date of the Options, by the executor or
administrator of the Participant’s estate or by the Person or Persons to whom
the Participant shall have transferred such right by will or by the laws of
descent and distribution;

 

(ii)                                              if the Participant must
terminate employment due to disability, the Options may be exercised within
three years after the date of termination, but not later than the expiration
date of the Options;

 

(iii)                                           if the Participant has attained
the age of 60 and has been an employee of Ocwen for not less than three
(3) years as of or on the date of termination of employment by reason of
retirement, the Options shall vest and shall become immediately exercisable in
full on the date of termination and may be exercised within three years after
the date of retirement, but not later than the expiration date of the Options;

 

(iv)                                          if the employment or engagement of
a Participant with Ocwen shall be involuntarily terminated under circumstances
which would qualify the Participant for benefits under a severance plan of Ocwen
or shall terminate his or her employment or engagement with the written consent
of Ocwen, the Administrator may elect to vest the Options immediately.  Options
granted to the Participant, to the extent exercisable at the date of the
Participant’s termination of employment or engagement, may be exercised within
six months after the date of termination of employment or engagement, but not
later than the expiration date of the Options; and

 

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(v)                                             except to the extent an Option
remains exercisable under paragraphs (A) through (D) above, any Option granted
to a Participant shall terminate six months after the date of termination of
employment or engagement of the Participant with Ocwen.

 

SECTION 7.                         GENERAL TERMS OF AWARDS

 

7.01                        Form of Payment of Options.  Subject to the terms of
the Plan and any applicable Option Agreement, payments or substitutions to be
made by the Corporation upon the grant, exercise or other payment or
distribution of an Option may be made in such forms as the Administrator shall
determine at the time of grant or thereafter (subject to the terms of
Section 9.01), including, without limitation, cash, Shares, or other property or
any combination thereof, in each case in accordance with rules and procedures
established, or as otherwise determined, by the Administrator.

 

7.02                        Limits on Transfer of Options; Beneficiaries.  No
right or interest of a Participant in any Option shall be pledged, encumbered or
hypothecated to or in favor of any Person other than the Corporation, or shall
be subject to any lien, obligation or liability of such Participant to any
Person other than the Corporation or a Subsidiary except as otherwise
established by the Administrator at the time of grant or thereafter.  No Option
and no rights or interests therein shall be assignable or transferable by a
Participant otherwise than by will or the laws of descent and distribution, and
Options shall be exercisable during the Participant’s lifetime only by such
Participant.  A beneficiary, guardian, legal representative or other Person
claiming any rights under the Plan from or through any Participant shall be
subject to all the terms and conditions of the Plan and any Option Agreement
applicable to such Participant as well as any additional restrictions or
limitations deemed necessary or appropriate by the Administrator.

 

7.03                        Registration and Listing Compliance.  No Option
shall be paid and no Shares or other securities shall be distributed with
respect to any Option in a transaction subject to the registration requirements
of the Securities Act of 1933, as amended, or any state securities law or
subject to a listing requirement under any listing agreement between the
Corporation and any national securities exchange, and no Option shall confer
upon any Participant rights to such payment or distribution until such laws and
contractual obligations of the Corporation have been complied with in all
material respects.  Except to the extent required by the terms of an Option
Agreement or another contract between the Corporation and the Participant,
neither the grant of any Option nor anything else contained herein shall
obligate the Corporation to take any action to comply with any requirements of
any such securities laws or contractual obligations relating to the registration
(or exemption therefrom) or listing of any Shares or other securities, whether
or not necessary in order to permit any such payment or distribution.

 

7.04                        Stock Certificates.  All certificates for Shares
delivered under the terms of the Plan shall be subject to such stop-transfer
orders and other restrictions as the Administrator may deem advisable under
federal or state securities laws, rules and regulations thereunder, and the
rules of any national securities exchange or automated quotation system on which
Shares are listed or quoted.  The Administrator may cause a legend or legends to
be

 

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placed on any such certificates to make appropriate reference to such
restrictions or any other restrictions or limitations that may be applicable to
Shares.

 

SECTION 8.                         ADJUSTMENT PROVISIONS

 

8.01                        If a dividend or other distribution shall be
declared upon the Common Stock payable in shares of the Common Stock, the number
of shares of Common Stock then subject to any outstanding Options shall be
adjusted by adding thereto the number of shares of Common Stock which would have
been distributable thereon if such shares had been outstanding on the date fixed
for determining the shareholders entitled to receive such stock dividend or
distribution.

 

If the outstanding shares of Common Stock shall be changed into or exchangeable
for a different number or kind of shares of stock or other securities of the
Corporation or another corporation, or cash or other property, whether through
reorganization, reclassification, recapitalization, stock split-up, combination
of shares, merger or consolidation, then there shall be substituted for each
share of Common Stock subject to any then outstanding Option the number and kind
of shares of stock or other securities (and in the case of outstanding Options,
the cash or other property) into which each outstanding share of the Common
Stock shall be so changed or for which each such share shall be exchangeable.

 

In case of any adjustment or substitution as provided for in this Section 8.01,
the aggregate option price for all Shares subject to each then outstanding
Option prior to such adjustment or substitution shall be the aggregate option
price for all shares of stock or other securities (including any fraction), cash
or other property to which such Shares shall have been adjusted or which shall
have been substituted for such Shares.  Any new option price per share or other
unit shall be carried to at least three decimal places with the last decimal
place rounded upwards to the nearest whole number.

 

If the outstanding shares of the Common Stock shall be changed in value by
reason of any spin-off, split-off or split-up, or dividend in partial
liquidation, dividend in property other than cash, or extraordinary distribution
to shareholders of the Common Stock, the Administrator shall make any
adjustments to any then outstanding Option which it determines are equitably
required to prevent dilution or enlargement of the rights of optionees which
would otherwise result from any such transaction.

 

No adjustment or substitution provided for in this Section 8.01 shall require
the Corporation to issue or sell a fraction of a Share or other security. 
Accordingly, all fractional Shares or other securities which result from any
such adjustment or substitution shall be eliminated and not carried forward to
any subsequent adjustment or substitution.

 

In the event of any other change in or conversion of the Common Stock, the
Administrator may in its discretion adjust the outstanding Options provided in
the Plan in order to prevent the dilution or enlargement of rights of
Participants.

 

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SECTION 9.                         AMENDMENTS TO AND TERMINATION OF THE PLAN

 

9.01                        The Board may amend, alter, suspend, discontinue or
terminate the Plan without the consent of shareholders or Participants, except
that, without the approval of the shareholders of the Corporation, no amendment,
alteration, suspension, discontinuation or termination shall be made if
shareholder approval is required by any federal or state law or regulation or by
the rules of any stock exchange on which the Shares may then be listed, or if
the amendment, alteration or other change materially increases the benefits
accruing to Participants, increases the number of Shares available under the
Plan or modifies the requirements for participation under the Plan, or if the
Board in its discretion determines that obtaining such shareholder approval is
for any reason advisable; provided, however, that no amendment, alteration,
suspension, discontinuation or termination of the Plan may materially and
adversely affect the rights of such Participant under any Option theretofore
granted to him.  The Administrator may, consistent with the terms of the Plan,
waive any conditions or rights under, amend any terms of, or amend, alter,
suspend, discontinue or terminate, any Option theretofore granted, prospectively
or retrospectively; provided, however, that without the consent of a
Participant, no amendment, alteration, suspension, discontinuation or
termination of any Option may materially and adversely affect the rights of such
Participant under any Option theretofore granted to him; and provided further
that, except as provided in Section 8.01 of the Plan, the exercise price of any
outstanding Option may not be reduced, whether through amendment, cancellation
or replacement, unless such reduction is approved by the shareholders of the
Corporation.

 

SECTION 10.                  GENERAL PROVISIONS

 

10.01                 No Shareholder Rights.  No Option shall confer on any
Participant any of the rights of a shareholder of the Corporation unless and
until Shares are in fact issued to such Participant in connection with such
Option.

 

10.02                 Withholding.  To the extent required by applicable
Federal, state, local or foreign law, the Participant or his successor shall
make arrangements satisfactory to the Corporation, in its discretion, for the
satisfaction of any withholding tax obligations that arise in connection with an
Option.  The Corporation shall not be required to issue any Shares or make any
other payment under the Plan until such obligations are satisfied.  The
Corporation is authorized to withhold from any Option granted or any payment due
under the Plan, including from a distribution of Shares, amounts of withholding
taxes due with respect to an Option, its exercise or any payment thereunder, and
to take such other action as the Administrator may deem necessary or advisable
to enable the Corporation and Participants to satisfy obligations for the
payment of such taxes.  This authority shall include authority to withhold or
receive Shares, Options or other property and to make cash payments in respect
thereof in satisfaction of such tax obligations.

 

10.03                 No Right to Employment or Continuation of Service. 
Nothing contained in the Plan or any Option Agreement shall confer, and no grant
of an Option shall be construed as conferring, upon any Participant any right to
continue in the employ or service of Ocwen or to interfere in any way with the
right of Ocwen or shareholders to terminate his

 

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employment or service at any time or increase or decrease his compensation,
fees, or other payments from the rate in existence at the time of granting of an
Option, except as provided in any Option Agreement or other compensation, fee or
other arrangement.

 

10.04                 Unfunded Status of Options; Creation of Trusts.  The Plan
is intended to constitute an “unfunded” plan for incentive compensation.  With
respect to any payments not yet made to a Participant pursuant to an Option,
nothing contained in the Plan or any Option Agreement shall give any such
Participant any rights that are greater than those of a general unsecured
creditor of the Corporation; provided, however, that the Administrator may
authorize the creation of trusts or make other arrangements to meet the
Corporation’s obligations under the Plan to deliver Shares or other property
pursuant to any Option, which trusts or other arrangements shall be consistent
with the “unfunded” status of the Plan unless the Administrator otherwise
determines.

 

10.05                 No Limit on Other Compensatory Arrangements.  Nothing
contained in the Plan shall prevent the Corporation from adopting other or
additional compensation, fee or other arrangements (which may include, without
limitation, employment agreements with executives and arrangements which relate
to Options under the Plan), and such arrangements may be either generally
applicable or applicable only in specific cases.  Notwithstanding anything in
the Plan to the contrary, the terms of each Option shall be construed so as to
be consistent with such other arrangements in effect at the time of the Option.

 

10.06                 No Fractional Shares.  No fractional Shares shall be
issued or delivered pursuant to the Plan or any Option.  The Administrator shall
determine whether cash, other Options or other property shall be issued or paid
in lieu of fractional Shares or whether such fractional Shares or any rights
thereto shall be forfeited or otherwise eliminated.

 

10.07                 Governing Law.  The validity, interpretation, construction
and effect of the Plan and any rules and regulations relating to the Plan shall
be governed by the laws of Maryland (without regard to the conflicts of laws
thereof).

 

10.08                 Severability.  If any provision of the Plan or any Option
is or becomes or is deemed invalid, illegal or unenforceable in any
jurisdiction, or would disqualify the Plan or any Option under any law deemed
applicable by the Administrator, such provision shall be construed or deemed
amended to conform to applicable laws or if it cannot be construed or deemed
amended without, in the determination of the Administrator, materially altering
the intent of the Plan or Option, it shall be deleted and the remainder of the
Plan or Option shall remain in full force and effect; provided, however, that,
unless otherwise determined by the Administrator, the provision shall not be
construed or deemed amended or deleted with respect to any Participant whose
rights and obligations under the Plan are not subject to the law of such
jurisdiction or the law deemed applicable by the Administrator.

 

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SECTION 11.                  EFFECTIVE DATE OF THE PLAN

 

11.01                 The effective date and date of adoption of the Plan shall
be December 21, 2012, the date of adoption of the Plan by the Board, provided
that such adoption of the Plan is approved by a majority of the votes cast at a
duly held meeting of shareholders at which a quorum representing a majority of
the outstanding voting stock of the Corporation is, either in person or by
proxy, present and voting.  Notwithstanding anything else contained in the Plan
or in any Option Agreement, no Option granted under the Plan may be exercised,
and no Shares may be distributed pursuant to any Option granted under the Plan,
prior to such shareholder approval.

 

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