Document:

Exhibit 10.02

Exhibit 10.02

SUPPLY AND LICENSE AGREEMENT

THIS SUPPLY AND LICENSE AGREEMENT (“Agreement”) entered into as of January 1, 2004 (the
“Effective Date”) by and between NOVARTIS CONSUMER HEALTH, INC., 200 Kimball Drive, Parsippany, NJ
07054, a Delaware corporation (“Novartis”) and LECTEC CORPORATION, 10701 Red Circle Drive,
Minnetonka, MN 55343, a Minnesota corporation (“LecTec”).

Recitals

	A.	 	LecTec is a manufacturer of medical and health-related consumer products, including a line of
proprietary patch products for the over-the-counter market which emit vapors which, when
inhaled, provide relief of cough and cold symptoms (the “Vapor Patches”). LecTec manufactures
and sells such patch products under its own trade names and also manufactures and sells
certain of such patch products to third parties.

	B.	 	Novartis is a manufacturer and reseller of health-related consumer products.

	C.	 	The parties entered into a Supply and Non-Exclusive License Agreement dated as of May 8, 2002
(the “Prior Agreement”) pursuant to which Novartis undertook to purchase, and LecTec undertook
to manufacture and sell to Novartis, certain LecTec patch products. As used herein “Products”
shall mean Vapor Patches for sale to the pediatric market (the “Field of Use”) in the United
States, Canada and Mexico (the “Territory”). The licensed patents are shown in Exhibit C
(the “Licensed Patents”) and made a part of this Agreement. All capitalized terms used herein
and not otherwise defined have the meanings ascribed to them in the Prior Agreement.

	D.	 	Pursuant to the terms of the Prior Agreement, Novartis provided financial assistance to
LecTec in the form of advance payments of the purchase price of the Products and LecTec issued
the Advance Payment Note to Novartis and granted a security interest and a non-exclusive
license to Novartis for the purpose of securing LecTec’s performance and repayment
obligations.

	E.	 	LecTec is indebted to Novartis for (i) an unpaid balance of the Advance Payment Note due and
payable as of December 31, 2003 (as extended by mutual agreement of the parties) in the amount
of one million thirty thousand twenty-one and 00/100 dollars ($1,030,021.00); (ii) an
additional obligation defined in the Prior Agreement and referred to herein as the “Recall
Debt;”

	 	 	 
	**	 	The appearance of a double asterisk denotes confidential information that has
been omitted from the exhibit and filed separately, accompanied by a confidential treatment
request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

	F.	 	and (iii) the balance of the net advance payments of the purchase price of the Products made
to LecTec subsequent to December 31, 2003, after credit has been given for the aggregate
purchase price of all Products delivered by LecTec to Novartis.

	F.	 	LecTec has informed Novartis that it intends to discontinue its manufacturing operations and
wind up its business and that it desires to do so in a manner that (i) will enable it to
discontinue such operations in an orderly manner consistent with the preservation of the value
of LecTec’s assets, and (ii) will provide for an orderly transition from LecTec to Novartis
(or to a contract manufacturer designated by Novartis) of the manufacturing function with
regard to the Products.

	G.	 	Novartis has been providing and is willing to continue to provide financial assistance to
LecTec, pursuant to the terms set forth in this Agreement, by way of additional advance
payments for Products, which financial assistance is required by LecTec to enable it to
accomplish the discontinuance of manufacturing operations as described above.

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be bound,
hereby agree as follows:

Article 1

Inventory Requirements and Other Obligations

1.1 Production and Sale of Product Inventory. From the Effective Date until
February 5, 2005 or such earlier or later date as the parties may mutually agree upon (the
“Manufacturing Period”), LecTec shall manufacture, sell and cause to be delivered to Novartis,
Products in the quantities set forth in the Purchase Order and Novartis shall purchase such
Products in the quantities and at the prices set forth in the Purchase Order. As used herein,
“Purchase Order” shall mean the order by Novartis for Products at the prices and upon the delivery
schedule to be purchased by Novartis during the Manufacturing Period as set forth in Exhibit
1.1 hereto and made a part hereof.

1.2 Exclusivity. LecTec shall manufacture and sell the Products exclusively to Novartis,
provided, however, that the term “exclusively” as used herein shall be limited to mean that LecTec
may not manufacture the Products or any other Vapor Patches (collectively, “Comparable Products”)
for sale to any other customers for pediatric use (the “Field of Use”) in the United States, Canada
or Mexico (the “Territory”). Novartis shall have the option until March 31, 2005 to extend the
Territory and the exclusive Field of Use to the adult cough/cold category at no additional cost and
under the same terms and conditions set forth in this Agreement.

 

 

 

1.3 Regulatory Compliance. As set forth below, LecTec shall be responsible for regulatory
compliance in the manufacture of the Products and supply of same to Novartis. Novartis shall be
responsible for regulatory compliance in the proper labeling, promotion, and advertising of the
Products and the sale of same to end users according to existing OTC monograph requirements,
directly or indirectly, which shall be under the exclusive control of Novartis. The parties shall
cooperate in good faith to achieve such regulatory compliance.

1.4 Production Standards. All Products sold and delivered to Novartis hereunder shall (a)
conform in all material respects with the specifications set forth in that certain Quality
Assurance Agreement by and between Novartis and LecTec, dated as of May 5, 2000 (the “QA
Agreement”), and with such further specifications as shall be agreed to by all parties in writing
(the “Specifications”); (b) be manufactured, packaged and sold to Novartis without any material
deviation from or breach of (i) the QA Agreement, and (ii) any applicable laws, regulations, and
requirements of any government or governmental agency; and (iii) be subject to the warranties set
forth in this Agreement.

1.5 Brand Name. Novartis intends to market the Products under the proprietary names “Vapor
Patch” or “VaporPatch” (as selected by Novartis in its own discretion). LecTec hereby acknowledges
that it has no objection to Novartis seeking to register such names at its own expense and risk
with the United States Trademark Office, or with other authorities, and shall file its consent
thereto, as requested in writing by Novartis, but LecTec does not warrant or imply that such marks
are otherwise available or will be granted. LecTec shall give commercially reasonable cooperation
to Novartis to manufacture and label the Products with such name or names or other names as
Novartis, in its sole discretion, may designate from time to time during the term of this
Agreement. However, subject to the foregoing, nothing herein shall be deemed to authorize the use
of any LecTec trade name or trademark or any other mark that would dilute or reasonably tend to
dilute any such LecTec trade name or trademark.

1.6 Amendment of Purchase Order. LecTec shall use its commercially reasonable efforts to
accommodate any Novartis requests for delivery of Products in excess of the quantities described in
the Purchase Order, or for delivery of Products sooner than that allowed or specified in the
Purchase Order. If Novartis’ business conditions necessitate reduction or delay in its
requirements for Products, then LecTec shall use its commercially reasonable efforts to implement
such requested changes. Notwithstanding the foregoing, LecTec shall not take any action in response
to any such requests which would result in charges to Novartis in addition to those set forth in
the respective purchase order without Novartis’ prior written consent.

 

 

 

Article 2

Payment

2.1 Prices. In consideration of the satisfactory manufacture and delivery to Novartis of
the ordered quantities of Products, Novartis shall pay LecTec for the Products in accordance with
the prices set forth in Exhibit 2.1. Subject to the
provisions of Section. 2.5 hereof, Novartis shall make such payments within thirty (30) days of the date of each LecTec
invoice issued upon shipment of the Products. Such payments shall be without prejudice to the
inspection and credit rights of Novartis under Article 3 of this Agreement.

2.2 Taxes. Novartis shall bear the cost of taxes of any kind, nature or description
whatsoever applicable to the sale of any Products by LecTec to Novartis (other than taxes based
upon the income of LecTec or LecTec’s employees or due to the fact that LecTec conducts business or
otherwise is present in a particular tax jurisdiction), unless Novartis is exempt therefrom and
provides to LecTec tax exemption certificates or permits acceptable to the appropriate taxing
authorities.

2.3 Shipment. Shipping terms for the Products are F.O.B., LecTec’s manufacturing
facilities in either Minnetonka or Edina, Minnesota. Novartis shall designate in writing the
carrier(s) it selects to take delivery of the Products at such facilities and shall provide LecTec
with commercially reasonable shipping and packing instructions as Novartis deems appropriate. Risk
of loss of any Products shall pass to Novartis upon delivery to the carrier designated by Novartis.

2.4 Late Delivery Discount. Subject to Section 12.11, if LecTec fails to deliver the
Products in the quantities ordered within seven (7) days of the any delivery date specified in the
Purchase Order, then Novartis shall be entitled to a discount of five percent (5%) of the price of
the late-delivered Products for each week that delivery is delayed, up to a maximum discount of
twenty percent (20%); provided, however, that if such delay in delivery is caused by Novartis’
batch record review or release of a releasable Batch (as used in this Agreement, “Batch” shall mean
525 cases of the Products as provided to Novartis for subsequent packaging for retail sale),
Novartis shall not be entitled to any discount hereunder. For purposes of this Agreement, delivery
of a shipment of Products shall occur when LecTec tenders such shipment to Novartis’ designated
carrier at LecTec’s facility, and any delay incurred thereafter by Novartis’ designated carrier
shall be deemed beyond LecTec’s control or responsibility.

2.5 Advance Payments. In order to provide LecTec with working capital funds necessary to
enable it to manufacture and deliver Products to Novartis pursuant to this Agreement, Novartis
shall advance funds (each such advance, an “Advance Payment” and, collectively, the “Advance
Payments”) to LecTec for use by LecTec (a) to pay current accounts payable and expenses not
exceeding $2,000,000.00 in the aggregate and thereafter (b) exclusively for the manufacture and
delivery of Products. Subject to the full and timely performance by LecTec of the Product shipment
requirements set forth in the Purchase Order and all other obligations of LecTec under this
Agreement, Novartis shall disburse the Advance Payments to LecTec in installments in accordance
with the schedule designated as “LecTec Payments” in Exhibit 2.5.

 

 

 

Novartis shall have no obligation to disburse any Advance Payment (x) if LecTec shall fail to
make any delivery of Products to Novartis in strict compliance with the provisions of the Purchase
Order, time being of the essence or (y) if such Advance
Payment would cause the unpaid principal balance of the New Advance Payment Note, as defined
in Section 2.5.1 to exceed $2,000,000.00 In the event that Novartis shall withhold any Advance
Payment by reason of clause (y) in the preceding sentence, Novartis shall thereafter disburse the
withheld Advance Payment, in whole or in part, from time to time at the request of LecTec at such
time or times as the making of such disbursement will not cause the unpaid principal balance of the
New Advance Payment Note to exceed $2,000,000.00, provided that Novartis shall have no obligation
to disburse such withheld Advance Payment unless LecTec shall be in compliance with its obligations
under this Agreement at the time of its request therefore.

2.5.1 The Advance Payments disbursed to LecTec as provided in Section 2.5 together with the
outstanding balance of advances made by Novartis to LecTec on and after the date of the
Prior Agreement, including such amounts advanced subsequent to December 31, 2003, as set
forth in Schedule 2.5.1 (“Schedule of Inventory Payments”) annexed hereto and made a part
of this Agreement shall be deemed to be a loan from Novartis to LecTec. On the Effective
Date, LecTec shall execute and deliver to Novartis (a) a promissory note in the principal
amount of $2,000,000.00 in the form attached hereto as Exhibit 2.5.1(a) (the “New
Advance Payment Note”), (b) a security agreement in the form attached hereto as Exhibit
2.5.1(b) (“New Security Agreement”), and (c) such other documents as shall reasonably
be deemed necessary by Novartis to perfect its security interests in the assets of LecTec
as provided in the Security Agreement.

2.5.2 Unless otherwise prepaid in accordance with the terms of the Advance Payment Note,
LecTec shall repay the principal amount of the New Advance Payment Note (or so much thereof
as shall actually have been disbursed to it in accordance with the provisions of Section
2.5) in monthly installments equal to the aggregate purchase price of all Products
delivered by LecTec to Novartis during such calendar month pursuant to the Purchase Order.
Novartis shall credit the aggregate purchase price of Products delivered, determined as
provided in this Agreement, against the payment obligations of LecTec under or by reason
of (a) first, the outstanding balance as of the Effective Date of advances made to LecTec
until such balance and all obligations of LecTec under the Advance Payment Note shall have
been fully satisfied and (b) second, the New Advance Payment Note, and such credits shall
constitute full payment by Novartis of the purchase price of such Products until such time
as all of LecTec’s obligations under Section 2.5.1 shall have been paid in full.

2.5.3 Notwithstanding the provisions of Section 10.2 of this Agreement, LecTec shall be
deemed to be in default of its obligations under Section 2.5.2: (a) if, during the
Manufacturing Period, two consecutive Batches, as defined in Section 2.4 or any three
Batches, as so defined, are rejected by Novartis based upon a commercially reasonable
determination by Novartis, made without regard to the procedures set forth in Article 3 of
this Agreement, that such Batches, as so defined, fail to comply with the Product quality
provisions of Section 8.1 of this Agreement, or (b) if LecTec shall fail to deliver any
Batch, as so defined, by the
later of (i) the thirty (30) day period commencing upon Novartis’ QA release or rejection
and (ii) thirty (30) days following the date specified for delivery in the Purchase Order,
unless such failure to make timely delivery is attributable exclusively to changes ordered
by Novartis in Product specifications or Product packaging specifications.

 

 

 

Article 3

Inspections and Acceptance

3.1 Inspection; Right of Rejection. Novartis shall accept any delivery of Products
hereunder if, in Novartis’ sole and reasonable discretion, Novartis determines that the delivery
complies fully with the Purchase Order, the Specifications and the requirements of this Agreement.
Novartis shall have the right to inspect all Products delivered hereunder within thirty (30) days
of its receipt of the Products and all required documentation. Novartis shall provide LecTec with
written notice of its acceptance or rejection of the shipment within sixty (60) days of receipt of
the Products and all required documentation. Any notice of rejection shall specify the reason(s)
therefor. Except in the event of any investigation, corrective action or retesting of a shipment,
if Novartis fails to provide LecTec with written notice of its acceptance or rejection of the
shipment within sixty (60) days of receipt of the Products and all required documentation, then the
shipment shall be deemed to have been accepted by Novartis. Novartis’ prior payment of any invoice
for a shipment which is timely rejected under this Section 3.1 shall not prejudice Novartis’ right
under Section 3.2 to seek replacement Products or a credit or refund, as Novartis may deem
appropriate, with respect to any such rejected Products.

3.2 Replacements. If Novartis notifies LecTec that any Products, or any part thereof, are
rejected pursuant to Section 3.1, then, at Novartis’ option, (a) LecTec shall, at no additional
charge, deliver replacement Products to Novartis as soon as reasonably practicable thereafter (but,
in any event, within ninety (90) days after the initial notification by Novartis); or (b) the
quantity of Products so rejected shall be deemed to have been deleted from the Purchase Order, and
Novartis shall not be obligated to make any payments to LecTec with respect to such quantity or
the rejected shipment (or, if payment has already been made for such Products, then Novartis shall
be entitled to a credit in such amount). Novartis shall give commercially reasonable cooperation
to LecTec to determine the nature and extent of any problem giving rise to a rejection of Products,
including, without limitation, prompt samples of any allegedly non-conforming Products.

3.3 Returns. Novartis shall not return any rejected Products to LecTec except upon a
return material authorization (“RMA”) from LecTec. LecTec shall pay the freight to deliver
replacement Products to Novartis for rightfully rejected Products, and LecTec shall pay the freight
to return to LecTec or its designee rejected Products for which LecTec has provided to Novartis an
RMA.

 

 

 

Article 4

Documentation and Information

4.1 Confirmation. LecTec shall submit to Novartis the batch manufacturing and testing
documents relating to any Products ordered hereunder, within ten (10) days of the completion of the
manufacturing process with respect to any particular batch of Products. LecTec shall provide such
documentation as reasonably requested by Novartis solely (a) to assist Novartis in determining
whether any manufactured or delivered Products comply fully with the Specifications and the
requirements of this Agreement; (b) to assist Novartis in obtaining any and all regulatory
approvals necessary to market the Products in the Territory; or (c) to enable Novartis to comply
with any statutory or regulatory requirements or with a request by any governmental or regulatory
authority in the Territory. Such records and reports shall be subject to the confidentiality
provisions of Article 7 of this Agreement, shall be deemed LecTec’s Confidential Information, and
shall be subject to the requirements of Section 1.3 of the QA Agreement.

4.2 Certificate of Analysis. Every shipment of the Products to Novartis shall be
accompanied by a Certificate of Analysis from LecTec to certify the active ingredients therein.
LecTec shall warrant the accuracy of each such Certificate of Analysis to a reasonable degree of
scientific certainty.

4.3 Books and Records. During the Manufacturing Period, LecTec shall keep on file all
books and records in connection with the manufacture and testing of the Products, including, but
not limited to, those books and records relating to cross-over cleaning, process validation,
installation qualification, operational qualification and cleaning validation for a period of seven
(7) years, plus the active year, from the time of generation of such documents.

Article 5

Production Procedures

5.1 No Reworked Products. LecTec shall not rework or reprocess any non-conforming Products
without the prior written approval of Novartis.

5.2 Product Packaging. The Products shall be delivered to Novartis packaged in accordance
with the Specifications and the production schedule set forth in
Exhibit 1.1. At a time
designated by Novartis, it shall have the Products packaged with another packager and the cost of
the Products from LecTec shall be reduced as set forth in Exhibit 2.1. Notwithstanding
the foregoing, Novartis shall have the right to require any special or varied packing that it
believes is reasonably necessary to meet customs or regulatory requirements. Reasonable
incremental costs which result directly from any packing changes required by Novartis will be borne
by Novartis.

 

 

 

5.3 Production Procedures. LecTec’s production procedures for the Products (“Production
Procedures”) have previously been approved by the parties. Such
Production Procedures include the manufacturing site, manufacturing equipment, manufacturing
process, manufacturing conditions and testing procedures for the manufacture of the Products. If
LecTec wishes to make any material change in any of the Production Procedures so documented and
approved, LecTec shall provide notice thereof to a designated Novartis employee, and shall permit
such designated Novartis employee to review such proposed changes at LecTec’s facility, at least
thirty (30) days prior to its first production run under such revised Production Procedures. All
such changes to the Production Procedures must be approved in writing by Novartis prior to being
implemented, which approval shall not unreasonably be withheld.

5.4 Waste Disposal. LecTec represents and warrants, to the best of its knowledge, and
shall take all commercially reasonable actions necessary to ensure, that all facilities, equipment
and practices used to perform LecTec’s responsibilities under this Agreement by or on behalf of
LecTec, or by any of LecTec’s contractors of any rank (including, without limitation, environmental
or safety and health consultants or waste management or disposal firms) (each a “LecTec
Contractor”) will be during the term of this Agreement, in full compliance with all health, safety
and environmental laws, statutes, ordinances, regulations, rules, permits and pronouncements.
LecTec assumes responsibility for disposing of any and all waste generated during the performance
of its responsibilities under this Agreement (including, without limitation, during any
manufacturing, storage and transportation activities) in accordance with all legal and professional
standards.

5.4.1 LecTec shall Dispose or arrange for the Disposal of Waste and at an Approved Disposal
Facility. Novartis shall have the right to unilaterally modify any designation of any
Approved Disposal Facility at any time based upon audit and inspection results. LecTec
shall only transport Waste to an Approved Disposal Facility by means of a transporter
lawfully permitted to transport the particular types of Waste at issue. LecTec shall be
solely responsible for the proper Disposal of Waste. For purposes of this Section 5.4.1,

5.4.1.1 “Dispose” or “Disposal” shall mean any discharge, deposit, injection,
dumping, spilling, leaking, or placing of any Waste into or on any land or water
and the arrangement of any of the foregoing, and shall include any storage,
pretreatment, treatment (including incineration), any other actual disposal, use,
sale, sampling or other transfer or application of Waste of any kind or nature
whatsoever;

5.4.1.2 “Waste” shall mean, for purposes of this Agreement only, all materials that
are produced or generated in connection with the manufacture of any chemical
compounds pursuant to this Agreement and for which Disposal is required, including
but not limited to materials that are Hazardous Waste, co-product, by-product,
chemical compounds that fail to conform to the requirements of this Agreement,
wastewaters, residues, wastes, bottoms and other remainders and materials,
packaging of, or components of the chemical compounds, and components of any
chemical compounds that are not used in the manufacture of the chemical compounds;

 

 

 

5.4.1.3 “Hazardous Waste” shall mean (a) any material or substance defined as or
containing materials defined as a “hazardous substance” pursuant to any applicable
laws or regulations, including the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, the Resource Conservation and Recovery
Act, as amended, and any similar successor or supplementary legislation, and the
regulations promulgated thereunder, or (b) any material or substance that is
radioactive; and

5.4.1.4 “Approved Disposal Facility” shall mean a disposal facility approved by
Novartis, which approval shall not be unreasonably withheld.

5.4.2 Notwithstanding anything to the contrary herein, (i) if LecTec and/or any LecTec
Contractor fails to comply with the obligations set forth in this Section 5.4, then LecTec
shall be responsible for any claims, suits, or liabilities resulting therefrom (including,
without limitation, those based on strict liability and joint and several liability), and
LecTec shall indemnify, defend and save Novartis (including officers, directors, employees
and agents of Novartis) harmless from and against any and all such claims, suits, and
liabilities; and (ii) LecTec shall indemnify, defend and save Novartis (including officers,
directors, employees and agents of Novartis) harmless from and against any and all claims,
suits, and liabilities which arise directly or indirectly from the storage, release,
transportation or disposal of chemicals, raw materials, product, waste or any other
substance by LecTec and/or any LecTec Contractor.

Article 6

Ownership, Patent and License Provisions

6.1 Novartis Property. All materials, inventions, know-how, trademarks, information, data,
writings and other property, in any form whatsoever, which is provided to LecTec by and/or on
behalf of Novartis, or which is used by LecTec with respect to the performance of its obligations
hereunder, and which was owned by Novartis prior to being provided to LecTec, shall remain the
property of Novartis (the “Novartis Property”). LecTec shall have a royalty-free license to use any
Novartis Property supplied to it solely to the extent necessary to enable LecTec to perform its
obligations hereunder. LecTec shall not acquire any other right, title or interest in the Novartis
Property as a result of its performance hereunder. Without limiting the foregoing, Novartis
Property shall include the copyrights and trademarks used in the packaging of the Products
(“Packaging IP Rights”).

 

 

 

6.2 License to Novartis.

6.2.1 A promissory note issued by LecTec to Novartis to evidence the Recall Debt of LecTec
to Novartis in the amount of $250,000 (the “Recall Debt Note”) became due and payable, by
its terms, on December 31, 2003.

6.2.2 Upon the signing of this Agreement by both parties, Novartis shall release the
Recall Debt and forgive and relinquish any claim for payment of any of the obligations of
LecTec under the Recall Debt Note in partial consideration of the sale by LecTec to
Novartis of the license described in Section 6.2.3.

6.2.3 On the Effective Date, LecTec shall grant to Novartis, and Novartis shall accept, a
license (the “License”) to all of the intellectual property of LecTec used or useful in the
production of the Products including, without limitation, the trade name “Triaminic Vapor
Patch,” the Licensed Patents listed in Exhibit C, designs, bills of material, manufacturing
procedures, and know-how associated with the Products, together with copies of any
documentary materials embodying the know-how used in the design, packaging, testing and
production of the Products (collectively, the “Intellectual Property”). For the sake of
clarity, the Intellectual Property shall not include any other LecTec trade names and shall
not extend to the foregoing materials used in the design and production of Comparable
Products (as such term is defined in Section 1.2 hereof) to the extent such Intellectual
Property is not also used or useful in the design and production of the Products. The
License shall give Novartis the exclusive right to manufacture and sell the Products for
the Field of Use within the Territory. The term of the License shall be co-terminous with
the duration of any patents included in the Intellectual Property and, with respect to all
other elements of the Intellectual Property, shall be for the maximum duration permitted
under applicable law, and shall continue beyond the end of the Manufacturing Period of
Section 1.1 and Exhibit 1.1. All terms, conditions and obligations of this Agreement that
are required, or relate to, or are appropriate for this License, including but not limited
to the Royalties of Section 6.2.3.1 shall continue in full force and effect beyond the
Manufacturing Period and until the term of this License expires. Upon the expiration of
the patents included in the Intellectual Property, Novartis shall have a non-revocable,
perpetual, fully paid-up, royalty-free license to the Intellectual Property.

The License shall include the right of Novartis to grant sublicenses to any Novartis
Affiliate or any other third party contract manufacturer of the Products, provided, in each
case (i) such sublicensee shall manufacture the Products only for Novartis; (ii) Novartis
shall give written notice to LecTec of the grant of such sublicense at least ten (10) days
prior to the effective date of such sublicense; (iii) such sublicense shall terminate when
the License terminates; and (iv) Novartis shall give prompt written notice to LecTec if
Novartis becomes aware that there has been a material breach of any of the foregoing terms
by a sublicensee. The License shall be assignable by Novartis to any Novartis Affiliate or
to any entity that is a successor to Novartis by merger or sale of all or substantially all
of the assets of Novartis or to any entity that acquires from Novartis the rights to
manufacture, distribute or sell the Product so long as (i) such acquiror or
successor in interest agrees in writing to be bound by all the terms and conditions hereof;
and (ii) Novartis shall first give LecTec written notice of any such assignment. Any
purported assignment, transfer, or attempt to assign or transfer any interest or right
hereunder except in compliance with this Section 6.2.3 shall be null, void and of no
effect. Any such assignment shall be subject to the limitations on duration and scope of
the License set forth in Article 6.

 

 

 

6.2.3.1 Licensing Fee and License Royalty Rate. The Licensing Fee for the
License described in Section 6.2.3 shall be $ 1,065,000.00. This amount shall be paid
to Lectec by (i) forgiveness of the Recall Debt Note as stated under Section 6.2.2,
(ii) payment of $407,500.00 in cash within ten (10) days of execution of this Agreement
and (iii) payment of $407,500.00 in cash on October 1, 2004. Commencing on January 1,
2005 Novartis shall pay Royalties to LecTec based on net semi-annual sales of Products
by Novartis for each year the license is in effect. The term “net sales” as used in
Section 6.2.3.1 shall mean gross revenues from the arms-length sale to unaffiliated
third-parties of Products manufactured by or on behalf of Novartis pursuant to the
License less transportation charges to customers, including insurance; sales, excise
and taxes and duties paid or allowed and any other governmental charges imposed upon
the sale of any Products; Product royalties to any party other than LecTec, normal and
customary trade, quantity and cash discounts allowed; allowances, chargebacks and
credits to customers on account of rejection or return of Product. Royalties pursuant
to Section 6.2.3.1 shall be payable semi-annually not later than ninety (90) days
following the end of Novartis’ two-quarter period by certified check or wire transfer
payable to LecTec or its assignee. Novartis shall furnish to LecTec or its assignee,
at the time of each semi-annual royalty payment, an accounting of its net sales of
Product in reasonable detail. Royalty Rates are based on semi-annual sales and are
shown in Exhibit 6.2.3.1 hereto and made a part hereof. For the sake of clarity,
Novartis shall not owe any royalty payments for any vapor patch products distributed by
Novartis that would not infringe or contribute to the infringement of a valid,
enforceable claim of the licensed patents listed in Exhibit C.

Solely to ensure proper accounting for and payment of the royalties due LecTec under
Article 6, LecTec may request, not more than once per calendar year during the term of
the License, reasonable access during normal business hours and upon at least ten (10)
days prior written notice by LecTec’s independent certified accountants, reasonably
acceptable to Novartis(“LecTec Auditor”), to examine and copy the records of Novartis
relating to the sale of Products during the term of the License. The LecTec Auditor
may not disclose any such Novartis records to LecTec but shall report to LecTec and
Novartis only the results of its audit in respect of whether Novartis has properly
accounted for and paid the royalties due to LecTec under Article 6, which report shall
be final and binding upon the parties. Except in the case of fraud or manifest error,
LecTec shall bear the cost of any such audit by the
LecTec Auditor. If such audit determines that Novartis has underpaid any royalties,
Novartis shall promptly pay the amount underpaid and simple interest thereon at the
rate of ** per annum and also the LecTec audit cost in the event such underpayment
exceeds ** of the royalties due. Any other provision of this Section 6.3.2.1 to the
contrary not withstanding, LecTec may not request the audit of Novartis records for any
royalty period more than two (2) years prior to the date of such request.

 

 

 

6.3 Third Party Obligation — Reduction in Royalties. In the event Novartis is required
or enters into a settlement agreement to obtain a license from any unaffiliated third party
under any patent or other intellectual property right and is obligated to pay a royalty to
such unaffiliated third party or parties in any country in respect of the Product or its
method of use, for which royalties are due under this Agreement, and such third party patent
or intellectual property right overlaps the patents of Exhibit C then Novartis shall have the
right to deduct the amount of such royalties which Novartis pays to such unaffiliated party or
parties for such product in such country from the royalties to be paid to LecTec under this
Agreement for such product in such country, the deduction being limited to a maximum of ** of
the royalties to be paid to LecTec for sale in such country provided that Novartis’ combined
royalty payments to LecTec and such unaffiliated party or parties do not exceed a total of **.
Any excess in the amount of royalties paid by Novartis to an unaffiliated third party or
parties over the amount of royalties payable to LecTec under this Agreement, shall be carried
forward to future royalty payments until such excess amounts are fully exhausted.

LecTec warrants that it has no licenses to third party patent holders or royalty
obligations to third parties that concern the manufacture, sale, offer for sale, use or
import of the Product. Without limiting the generality of the foregoing, LecTec shall
remain responsible for any royalty obligations due to third parties under LecTec Patent
Rights which have been licensed to LecTec and are sub-licensed to Novartis hereunder.
LecTec will not be entitled to add such royalties due to third parties to the Novartis
royalty rates.

6.4 Third Party Competition. In the event competition in the sale of a Product that
would, in the opinion of Novartis patent counsel, infringe the patents of Exhibit C
(“Competitive Product”) occur in the Territory, LecTec shall, at the request of Novartis,
commence legal action against, or settlement negotiations with, the independent third party to
cause the cessation of the making, having made, selling or distributing the Competitive
Product, or to reach a settlement with the independent third party. Should such Competitive
Product achieve ** ACV (All Commodity Volume) distribution in any Food or Drug or Mass (FDM)
channel in any country in the Territory, then any royalty otherwise payable for said country
shall be suspended until such time that the independent third party ceases to make, have made,
sell or distribute the Competitive Product in said country. Such suspension of royalty
payments shall be effective on the date of Novartis’ written notification to LecTec of the
aforesaid distribution level of such Competitive
Product. Upon cessation of manufacturing and distribution of the Competitive Product by the
third party or settlement with the third party, any suspended Royalty payments shall resume
as if never suspended.

 

 

 

6.5 Notification. Each party hereto shall promptly inform the other party of any
infringement of the LecTec Patent Rights of which it has knowledge.

6.6 Right to bring action. Novartis shall have the right, in its sole discretion, to
initiate legal action in respect of any infringement of the LecTec Patent Rights in the Field
of Use in the Territory. In any suit against an infringement brought by either party, the
prosecuting party shall have the right to control such suit and to join as a party to such
suit the other party to the Agreement, and such other party shall reasonably cooperate in any
such suit.

6.7 Costs and Expenses: Recovery. The costs and expenses (including attorneys’ fees) of
any suit against an infringement brought in accordance with this Section 6 shall be borne by
the party controlling the prosecution of such suit. Any monetary recovery in connection with
such infringement action shall first be applied to reimburse Novartis and LecTec for their
out-of-pocket expenses (including reasonable attorneys’ fees) in prosecuting such infringement
action. Once the parties have been reimbursed for their out-of-pocket expenses, the remainder
will be apportioned in proportion to damages incurred by the parties.

6.8 LecTec shall promptly advise Novartis of any additions to, or deletions from the list of
LecTec’s Patents set forth in Exhibit C, including the issuance of patents upon any patent
applications included therein.

6.9 LecTec shall, at its expense, diligently take all steps and incur all costs necessary to
maintain the LecTec Patents on Exhibt C in full force and effect. If LecTec shall elect not
maintain any of such Patents, it shall promptly notify Novartis of that election and shall, at
Novartis’ request, assign to Novartis or its designee all right, title and interest in and to
such Patents, and the payment of a royalty hereunder shall cease.

6.10 LecTec Property. Subject to the provisions of Sections 6.2 and 6.9, all materials,
inventions, know-how, trademarks, information, data, writings and other property, in any form
whatsoever, which is provided to Novartis by or on behalf of LecTec, or which is used by
LecTec with respect to the performance of its obligations hereunder, and which was owned by
LecTec prior to its performance or is developed or acquired in the course of such performance
hereunder, shall remain the property of LecTec (the “LecTec Property”). Novartis shall acquire
no right, title or interest in the LecTec Property as a result of LecTec’s performance
hereunder except as provided in Sections 6.2 and 6.9. Without limiting the foregoing, as
between the parties hereto, all the intellectual property rights for the Products other than
the Packaging IP Rights shall be deemed to be LecTec Property subject to the License granted
to Novartis under Section 6.2 hereof.

 

 

 

Article 7

Trade Secrets; Confidentiality and Publicity

7.1 Confidential Information. During the period that this Agreement is in effect and
thereafter, LecTec and Novartis shall not disclose to anyone in any manner whatsoever or use for
any purpose other than its performance of this Agreement or for a purpose which is otherwise
authorized under this Agreement (except as authorized in writing by the disclosing party) any
information it receives from the other party (“Confidential Information”), including, without
limitation, intellectual property, inventions, works of authorship, trade secrets or know-how or
other information relating in any way to the Products, processes, and services of the other party.

7.2 Limitations. Each party shall limit disclosure of Confidential Information received
hereunder to only those of its employees who are directly concerned with the performance of any
activities with respect to which the Confidential Information was disclosed. Each party agrees to
advise those of its employees who receive any other party’s Confidential Information that such
Confidential Information (a) is proprietary and confidential to such party and (b) shall not be
disclosed to anyone except as authorized by this Agreement or otherwise authorized by such party in
writing. Each party further agrees to take at least such precautions as it normally takes with its
own Confidential Information to prevent unauthorized disclosure of the other party’s Confidential
Information.

7.3 Injunctive Relief. Each party acknowledges that any unauthorized disclosure of any
portion of the other party’s Confidential Information shall cause irreparable injury to the other
party and that no adequate or complete remedy shall be available at law to such other party to
compensate for such injury. Accordingly, each party hereby also acknowledges that the other party
shall be entitled to seek injunctive relief in the event of such unauthorized disclosure by a party
or any of its employees in addition to whatever other remedies it might have at law.

7.4 Effect of Termination. Upon termination of this Agreement, each party shall return to
the other all copies of the other party’s Confidential Information, and shall make no further use
of such Confidential Information, except for one copy which may be retained in the receiving
party’s confidential files. This provision shall not apply if Novartis terminates this Agreement
for breach of contract pursuant to Section 10.2.

7.5 Exceptions. The obligations of this Section 7 shall not apply to information

7.5.1 that is or has been in the possession of the recipient prior to receipt of
the same from the disclosing party as evidenced by recipient’s written records;

7.5.2 which the recipient lawfully obtains from any third party not under an
obligation to the disclosing party to hold the same in confidence;

 

 

 

7.5.3 that is published or becomes part of the public domain without breach of any
undertakings discussed hereinabove;

7.5.4 that is independently developed by personnel of the recipient without any use
of or reliance upon the disclosing party’s Confidential Information; or

7.5.5 solely to the extent that it is required to be disclosed pursuant to judicial
process, court order or administrative request, or that it is otherwise required
for any regulatory filing, provided that the recipient shall notify the other party
sufficiently prior to disclosing such Confidential Information as to permit such
other party to seek a protective order.

7.6 Press Releases. LecTec shall not issue any press release or other public statement
disclosing the existence of or relating to this Agreement without prior written consent of
Novartis, which consent shall not be unreasonably withheld or delayed. The foregoing shall not
limit LecTec’s rights to make such disclosures as reasonably required by applicable securities laws
or the rules of any stock exchange where its securities are traded, provided that LecTec provides a
written opinion from outside counsel stating that disclosure is required.

Article 8

Quality of Products; Compliance with Law

8.1 Representations and Warranties. LecTec hereby represents and warrants that:

8.1.1 No Products constituting or being a part of any shipment hereunder shall at the time
of any such shipment be (i) adulterated or misbranded within the meaning of the Federal
Food, Drug and Cosmetic Act, as amended from time to time (the “Act”), or regulations
promulgated thereunder, as such law or regulation is constituted and in effect at the time
of any such shipment, or (ii) an article which may not, under the provisions of Sections
404, 505 or 512 of the Act, be introduced into interstate commerce;

8.1.2 all Products furnished to Novartis hereunder shall be in full compliance with the
Specifications, and shall remain in full compliance with the Specifications for the full
period of the expected shelf-life of such Products, so long as the Products are stored in
accordance with the Specifications;

 

 

 

8.1.3 LecTec shall perform its obligations hereunder in compliance with any materially
applicable federal, state and local laws and regulations, including
without limitation the Act, the FDA’s then-current Good Manufacturing Practices (“cGMP”),
and any health, safety and environmental laws and regulations applicable to LecTec’s
manufacture and packaging of the Products and its other performance hereunder;

8.1.4 all Products furnished to Novartis hereunder shall have been manufactured in
accordance with the terms of the QA Agreement;

8.1.5 LecTec’s manufacturing, laboratory and packaging facilities shall remain in
compliance with CGMP at all times during the term of this Agreement to the extent
applicable to the manufacture and packaging of the Products; and

8.1.6 LecTec owns or has the right to use all necessary copyright, trademark, patents,
trade secrets and other intellectual property rights which it shall use to perform its
obligations hereunder with respect to sales of the Products in the United States, Canada
and Mexico.

8.2 Disclaimer. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, LECTEC MAKES
NO WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, CONCERNING THE PRODUCTS, OR THE MERCHANTABILITY OR
FITNESS THEREOF FOR ANY PURPOSE.

8.3 Remedy. In the event that Products are delivered to Novartis by LecTec that are not in
compliance with the warranties made in Section 8.1 then, at Novartis’s option (i) LecTec shall
replace the non-compliant Products at no additional charge (which replacement Products shall be
delivered to Novartis as soon as reasonably practicable, but in no event more than ninety (90) days
after the initial notification by Novartis); or (ii) LecTec shall credit Novartis’s account in the
amount of the price of the non-compliant Products. Novartis shall give commercially reasonable
cooperation to LecTec to determine the nature and extent of any problem giving rise to a breach of
warranties, including, without limitation, prompt samples of any allegedly non-compliant Products.
Returns of non-compliant Products shall be subject to the provisions of Section 3.3.

8.4 Quality Assurance Representative. Novartis shall have the right, at its expense, to
place a quality assurance representative in the manufacturing facilities of LecTec at all times or
from time to time during the term of this Agreement as determined by Novartis. LecTec shall
provide complete access to its manufacturing operations respecting the Products to such
representative and shall permit such representative to conduct such inspections of materials and
processes as such representative shall determine to be appropriate to assure Novartis that LecTec
is at all times in compliance with the representations and warranties made in Section 8.1.

 

 

 

Article 9

Indemnification and Insurance

9.1 Novartis Indemnification. Novartis shall defend, indemnify and hold LecTec harmless
against any and all claims, damages, expenses, reasonable attorneys’ fees, settlement costs and
judgments arising out of any death, personal injury, bodily injury or property damage to a third
party alleged to have been caused by the Products, except to the extent that such injury or damage
was the result of any breach of this Agreement by LecTec, including any warranty contained herein,
or the result of any latent defects in the Products caused by the negligence or willful misconduct
of LecTec. LecTec shall promptly notify Novartis of any such claim or action, shall reasonably
cooperate with Novartis in the defense of such claim or action, and shall permit Novartis to
control the defense and settlement of such claim or action, all at Novartis’ cost and expense. For
the sake of clarity, the foregoing indemnification, subject to its stated exclusions, shall extend
during the License Phase to any Products made by Novartis or any Novartis Affiliate under the
License and to any Products made for Novartis or any Novartis Affiliate by a third party contract
manufacturer under any sublicense of the License.

9.2 LecTec Indemnification. LecTec shall defend, indemnify and hold Novartis harmless
against any and all claims, damages, expenses, reasonable attorneys’ fees, settlement costs and
judgments arising out of any death, personal injury, bodily injury or property damage to a third
party to the extent that such death, injury or damage is the result of (i) any breach of this
Agreement by LecTec, including any warranty contained herein; (ii) any claim regarding a
work-related death or injury to any LecTec employee; (iii) any claim regarding latent defects in
the Products caused by the negligence or willful misconduct of LecTec; or (iv) any claim that the
Products, or any means used to manufacture the Products, infringe any third party’s patent, trade
secret, trademark, copyright, or other proprietary interest in the Territory. Novartis shall
promptly notify LecTec of any such claim or action, shall reasonably cooperate with LecTec in the
defense of such claim or action, and shall permit LecTec to control the defense and settlement of
such claim or action, all at LecTec’s cost and expense.

9.3 Product Recalls and Withdrawals. Each party shall promptly notify the other party of
any legal and/or factual circumstances which might, under applicable laws and regulations,
necessitate a field correction, recall or withdrawal of any Products (collectively, a “Regulatory
Recall”) and shall consult with each other regarding the appropriate steps to be taken. Novartis
shall determine whether any Regulatory Recall shall take place. Novartis shall notify all
regulatory authorities of any such Regulatory Recall, and shall take all steps necessary to
effectuate such Regulatory Recall. LecTec shall assist Novartis in each of these activities to the
extent reasonably requested by Novartis. LecTec shall reimburse Novartis for the costs of any such
Regulatory Recall to the extent such Regulatory Recall was made necessary by the actions or
inaction of LecTec. If LecTec is unable in good faith to obtain the recall insurance required by
Section 9.4.6 for a reasonable premium, then the maximum amount which LecTec shall be required to
reimburse Novartis pursuant to the preceding sentence shall be $500,000 per Regulatory Recall, not
including the cost of any replacement Products made necessary by the applicable Regulatory Recall.
Novartis shall reimburse LecTec for the costs of any such Regulatory Recall to the extent such
Regulatory Recall was made necessary by the actions or inaction of Novartis. Any claim for such
reimbursement of
costs incurred in such a Regulatory Recall shall be subject to audit by Novartis’ CPA Firm.

 

 

 

9.4 LecTec’s Insurance Coverage. LecTec shall obtain, at its own expense, policies of
insurance in amounts no less than those specified below and shall cause its carrier or carriers to
name Novartis as an additional insured on those coverages marked with an (*) below:

9.4.1 *general liability insurance with combined limits of not less than $1,000,000 per
occurrence and $1,000,000 per accident for bodily injury, including death, and property
damage;

9.4.2 workers’ compensation and disability insurance in the amounts required by the law of
the state(s) in which its workers are located, and employer’s liability insurance with
limits of not less than $1,000,000 per occurrence;

9.4.3 *automobile liability insurance (in the event that the use of an automobile by LecTec
is required in the performance of this Agreement) with combined limits of not less than
$1,000,000 per occurrence and $1,000,000 per accident for bodily injury, including death,
and property damage is required;

9.4.4 *product liability insurance with limits not less than $5,000,000;

9.4.5 property insurance for the replacement value of the facilities and equipment used to
produce the Products;

9.4.6 *excess insurance with limits not less than $5,000,000.

9.5 Documentation of Coverage. Upon request, LecTec shall provide to Novartis evidence of
its insurance or self insurance. LecTec shall provide Novartis thirty (30) days prior written
notice of any cancellation or material change in coverage.

9.6 Novartis’ Insurance Coverage. Novartis warrants and represents to LecTec that Novartis
maintains a policy or program of insurance or self-insurance at levels sufficient to support the
indemnification obligations assumed herein. Upon request, Novartis shall provide to LecTec
evidence of its insurance or self-insurance. Novartis shall provide to LecTec thirty (30) days
prior written notice of any cancellation or material change in coverage.

Article 10

Term and Termination

10.1 Initial Term; Renewal. This Agreement shall commence on the Effective Date and shall
continue in effect until the end of the Manufacturing Period as defined in Section 1.1 except that
the provisions hereof respecting the License granted to Novartis
as provided in Section 6.2.3 hereof shall continue in effect until the conclusion of the term of
the License.

 

 

 

10.2 Termination for Cause. If either party materially breaches this Agreement, the other
party shall give such breaching party written notice thereof with reasonable detail. If the
breaching party fails to cure such breach within forty-five (45) days of its receipt of such
notice, then the non-breaching party may terminate this Agreement at no cost upon written
notice thereof.

10.3 Termination on Insolvency. Either party may terminate the Agreement without notice
if the other party becomes insolvent, makes or has made an assignment for the benefit of
creditors, is the subject of proceedings in voluntary or involuntary bankruptcy instituted on
behalf of or against such party (except for involuntary bankruptcies which are dismissed
within ninety (90) days), or has a receiver or trustee appointed for substantially all of its
property.

Without limitation, Novartis’ rights under this Agreement shall include those rights
afforded by 11 U.S.C. § 365(n) of the United States Bankruptcy Code (the “USBC”) and any
successor thereto. If the bankruptcy trustee of LecTec as a debtor or debtor-in-possession
rejects this Agreement under 11 U.S.C. § 365(o) of the USBC, Novartis may elect to retain
its rights licensed from LecTec hereunder (and any other supplementary agreements hereto)
for the duration of this Agreement and avail itself of all rights and remedies to the full
extent contemplated by this Agreement and 11 U.S.C. § 365(n) of the USBC, and any other
relevant laws.

10.4 In the event that Novartis terminates this agreement pursuant to Article 10.2 (Termination
For Cause), Novartis shall retain all its rights to license the Intellectual Property as set
forth in Article 6 on a royalty free basis. In the event that LecTec terminates this
agreement pursuant to Article 10.2 (Termination For Cause), LecTec shall retain all rights to
license the Intellectual Property to other third parties.

Article 11

Audit and Inspection Rights

11.1 Audit, Inspection and Observation. During the term of this Agreement, Novartis shall
have the right, at its sole cost and expense, to send Novartis representatives to audit, inspect
and observe the manufacture, storage, disposal and transportation of the Products, and all other
materials reasonably related thereto or used in connection therewith, upon reasonable prior notice
to LecTec and during LecTec’s normal business hours. Such Novartis representatives shall have no
responsibility or authority for supervision of LecTec employees performing such manufacture,
storage, disposal or transportation operations. Such Novartis representatives shall comply with
any reasonable LecTec health, safety or security rules or policies while at LecTec’s premises. The
audit,
inspection and observations rights set forth in this Section 11.1 are solely for the purpose of
determining LecTec’s compliance with the terms of this Agreement and the QA Agreement.

 

 

 

11.2 Action Plan. If, as a result of any such audit, inspection or observation under
Section 11.1, Novartis reasonably concludes that LecTec is not in compliance with any of its
obligations hereunder, it shall so notify LecTec in writing, specifying such areas of
non-compliance in reasonable detail. LecTec shall provide to Novartis within thirty (30) days of
Novartis’ request a written action plan with a time line for resolution of the problems identified
within a reasonable, mutually agreed upon time frame.

11.3 Government Inspections. LecTec shall inform Novartis within twenty-four (24) hours of
any notification to LecTec of any site visits to the LecTec facility by the FDA, state or federal
regulatory agencies or any other governmental or regulatory agency, relating, directly or
indirectly, to the manufacture of the Products, and shall provide to Novartis all other materials
related thereto or used in connection therewith. Novartis shall have the option of participating
in any site visit by any governmental or regulatory agency (except to the extent such governmental
or regulatory agency visitor objects) if the site visit relates, directly or indirectly, to the
manufacturing, storage, disposal and transportation of the Products. If Novartis does not
participate in the site visit for any reason, LecTec shall report in writing the results of the
visit to Novartis within seven (7) days of the occurrence thereof. In the event that any such
governmental or regulatory agency finds that the site is deficient or unsatisfactory in any
material respect, LecTec shall cure all such material deficiencies within the earlier of ninety
(90) days or such cure period as ordered by the government or regulatory agency. If all such
deficiencies are not cured by LecTec within the required time frame, Novartis may deem such
condition to be a material breach of this Agreement without the required 45-day cure period in
Section 10.2 of this Agreement and thus may immediately terminate this Agreement.

Article 12

Miscellaneous

12.1 Waiver. Each party acknowledges and agrees that any failure on the part of the other
party to enforce at any time, or for any period of time, any of the provisions of this Agreement
shall not be deemed or construed to be a waiver of such provisions or of the right of such other
party thereafter to enforce each an every such provision.

12.2 Enforcement. If and to the extent that any provision of this Agreement is determined
by any legislature, court or administrative agency to be, in whole or in part, invalid or
unenforceable, such provision or part thereof shall be deemed to be surplusage and, to the extent
not so determined to be invalid or unenforceable, each provision hereof shall remain in full force
and effect unless the purposes of this Agreement cannot be achieved. In the event any provisions
shall be held invalid, illegal or unenforceable the parties shall use commercially reasonable
efforts to substitute a valid, legal and enforceable provision which insofar as practical
implements the purposes hereof.

 

 

 

12.3 Choice of Law. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Minnesota as though made and to be fully performed in said State.

12.4 Notices. All notices required or permitted hereunder shall be given in writing and
sent by confirmed facsimile transmission, or mailed postage prepaid by first-class certified or
registered mail, or sent by a nationally recognized express courier service, or hand-delivered to
the following addressees:

	 	 	 
	Novartis:

	 	Novartis Consumer Health, Inc.
	 

	 	200 Kimball Drive 
	 

	 	Parsippany, NJ 07054
	 

	 	Attn: General Counsel
	 
	 	 
	LecTec:

	 	LecTec Corporation
	 

	 	10701 Red Circle Dr. 
	 

	 	Minnetonka, MN 55343
	 

	 	Attn: Chief Executive Officer

or to such other address as may be specified in a notice given to the other party in accordance
with this Section 12.4. Any notice, if sent properly addressed, postage prepaid, shall be deemed
made three (3) days after the date of mailing as indicated on the certified or registered mail
receipt, or on the next business day if sent by express courier service or on the date of delivery
or transmission (if delivered or sent during ordinary business hours, otherwise on the next
business day) if hand-delivered or sent by confirmed facsimile transmission.

12.5 Captions. The captions of each section of this Agreement are inserted only as a
matter of convenience and for reference and in no way shall be deemed to define, limit, enlarge, or
describe the scope of this Agreement and the relationship of the parties hereto, and shall not in
any way affect this Agreement or the construction of any provisions herein.

12.6 Entire Agreement; Amendment. This Agreement, including all Exhibits annexed hereto
(which are incorporated herein by reference), represents and incorporates the entire understanding
between the parties hereto with respect to the subject matter of this Agreement and supersedes any
prior offers, proposals, drafts or other communications with respect thereto including, without
limitation, the Prior Agreement. Each party acknowledges that there are no warranties,
representations, covenants or understandings of any kind, nature or description whatsoever made by
any party to any other, except such as are expressly hereinabove set forth. This Agreement shall
not be subject to change or modification except by the execution of a writing specified to be an
explicit amendment to this Agreement duly executed by all parties hereto.

 

 

 

12.7 Effect of Forms. The parties recognize that, during the term of this Agreement, a
purchase order, acknowledgment form or similar routine document (collectively,
“Forms”) may be used to implement or administer provisions of this Agreement. Therefore, the
parties agree that the terms of this Agreement shall prevail in the event of any conflict between
this Agreement and the printed provisions of such Forms, or typed provisions of Forms that appear
to add to, vary, modify or conflict with the provisions of this Agreement.

12.8 Relationship. Nothing in this Agreement shall create between the parties a
partnership, joint venture or principal-agent relationship and, for the avoidance of doubt, each of
LecTec and Novartis now confirms and accepts that it is an independent contractor trading for and
on its own behalf.

12.9 Assignment. LecTec may not assign or otherwise transfer this Agreement or any
interest herein or any right hereunder (other than to an affiliate) without the prior written
consent of Novartis, which consent shall not be unreasonably withheld, except that LecTec may
assign this Agreement in connection with the transfer or sale of all or substantially all of its
assets or business or its merger or consolidation with another company, so long as (i) such
acquirer or successor in interest agrees in writing to be bound by all the terms and conditions
hereof; and (ii) LecTec shall first give Novartis written notice of any such assignment, and
fifteen (15) days to object thereto. The only grounds upon which Novartis may object to such an
assignment are if such acquirer or successor in interest is (a) a direct competitor of Novartis; or
prior to the end of the Manufacturing Period (b) in Novartis’ reasonable discretion, is not a
manufacturer which has a proven record of operational quality at least equal to that of LecTec; or
prior to the end of the Manufacturing Period (c) in Novartis’ reasonable discretion, does not have
sufficient financial wherewithal. Any purported assignment, transfer, or attempt to assign or
transfer any interest or right hereunder except in compliance with this Section 12.9 shall be null,
void and of no effect.

12.10 Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall constitute an original and all of which together shall constitute a single instrument.

12.11 Force Majeure. A party shall not be liable for delayed performance or
non-performance of this Agreement (other than payment of money when due) if such condition is due
to events beyond its reasonable control, including, without limitation, fire, flood, storm,
earthquake, any other Act of God, electrical or computer failures, supply or labor shortages,
strikes, riot, civil disorder, war or government order or decree.

12.11.1 A party claiming relief under this Section 12.11 shall give prompt written notice
thereof to the other party, together with its best estimate of when such condition will end
and its full performance may be resumed.

 

 

 

12.11.2 In the event of a Force Majeure, or if for any other reason LecTec experiences any
shortage and is therefore unable to supply Novartis with the full quantity of Products and
with the delivery date as ordered by Novartis, then Novartis shall be entitled to the same
proportionate quantity of available Vapor
Patches as the quantity of Products purchased by Novartis from LecTec in the twelve (12)
months preceding the shortage bears to all orders for Vapor Patches received by LecTec from
all its customers during such period, including LecTec’s sales to Novartis, and including
LecTec’s sales of Comparable Products directly to retailers under its “TheraPatch” trade
name, or under any Other LecTec Trade Name.

12.11.3 Notwithstanding the foregoing, if such condition continues without change for more
than ninety (90) days, the other party may then elect to treat such delayed performance or
non-performance as a material breach of this Agreement.

12.12 Survival of Terms. Sections 6, 7, 9, 10.3 and 10.4 shall survive and continue in
full force and effect in accordance with their respective terms notwithstanding any termination of
this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 	 	 	 	 
	 	 	NOVARTIS CONSUMER HEALTH, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	LECTEC CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its:
	 	 	 	 

 

 

 

Exhibit C

LICENSED PATENTS

1. U.S. Pat. No. 6,090,403

2. U.S. Pat. Nos. 5,536,263; 5,741,510; 6,096,333; 6,096,334 and 6,361,790.

3. CA Pat. No. 2 133 598

4. MX Pat. No. 187839

5. Any reexamination and reissue of the above-listed patents, if applicable.

 

 

 

Exhibit 1.1

Production Schedule

See Attached

 

 

 

Exhibit 2.1

Product Packaging Pricing

LecTec Pricing — Vapor Patch

United States and Mexico

Pricing for lots through and including Lot 171.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	SIX PATCHES	 	 	SIX PATCHES	 	 	 	 
	 	 	WITH CARTON	 	 	WITHOUT	 	 	PRICE	 
	MARKET	 	AND STICKERS	 	 	CARTON	 	 	DIFFERENCE	 
	UNITED STATES
	 	$	1.214	 	 	$	0.93	 	 	$	0.28	 
	MEXICO
	 	$	1.140	 	 	$	0.93	 	 	$	0.21	 

Pricing for lots 172 through 200.

	 	 	 	 	 
	 	 	SIX PATCHES	 
	 	 	WITHOUT	 
	MARKET	 	CARTON	 
	UNITED STATES
	 	$	1.104	 
	MEXICO
	 	$	1.104	 

Effective Lot 172 the price will increase by $.029 for each patch.

All prices are in U.S. Dollars.

 

 

 

Exhibit 2.5

Advance Payments and Delivery Schedule

See Attached

 

 

 

Section 2.5.1(a)

Form of New Advance Payment Note

PROMISSORY NOTE

January 1, 2004

Minnetonka, Minnesota

FOR VALUE RECEIVED, the undersigned, LECTEC CORPORATION, a Minnesota corporation with a
mailing address of 10701 Red Circle Drive, Minnetonka, MN 55343 (hereinafter referred to as the
“LecTec”), promises to pay to the order of NOVARTIS CONSUMER HEALTH, INC. with a mailing address of
200 Kimball Drive, Parsippany, NJ 07054 (hereinafter referred to as “Novartis”), the lesser of the
sum of Two Million ($2,000,000.00) Dollars or so much thereof as has been advanced and remains
outstanding pursuant to Section 2.5 of the Supply and License Agreement between LecTec and Novartis
dated as of January 1, 2004, (the “Agreement”) together with interest and costs thereon as set
forth below, such interest and costs being payable only in the event of default by LecTec
hereunder.

All amounts outstanding under this Note, together with interest thereon, shall be repaid in
full on upon Novartis’ acceptance of final shipment of Product delivered by LecTec under the
Agreement. This Note may be subject to mandatory prepayment under circumstances as set forth in
the Agreement.

Interest on the principal amount outstanding hereunder shall begin to accrue as of the date
hereof, and shall be payable only in the event of default by LecTec hereunder on the date of such
default whether or not any judgment has been issued thereon. Such default interest shall be
payable at the rate per annum which shall be two (2) percentage points higher than the “prime” rate
as reported in The Wall Street Journal on the first business day of each month, adjusted monthly.

This Note is the New Advance Payment Note as defined in the Agreement, to which reference may
be made for a description of the terms and conditions of advances of principal hereof and the
method of payment by way of credits for products sold and
delivered by LecTec to Novartis. The indebtedness described herein shall have the benefit of
the Collateral as set forth in a Security Agreement between LecTec and Novartis of even date
herewith.

 

 

 

This Note may be prepaid, at any time, in whole or in part, without premium or fee. If this
Note is not paid when due, LecTec agrees to pay all costs of collection, including reasonable
attorneys’ fees. LecTec hereby waives demand, presentment, notice of dishonor, protest, and notice
of protest.

WITHOUT LIMITING OTHER RIGHTS ACCORDED TO NOVARTIS HEREUNDER, LECTEC HEREBY CERTIFIES THAT THE
TRANSACTION CONTEMPLATED BY THIS NOTE IS A COMMERCIAL TRANSACTION AND HEREBY WAIVES (A) ITS RIGHTS
TO NOTICE AND HEARING AS OTHERWISE ALLOWED BY LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH
NOVARTIS MAY DECIDE TO USE, AND (B) ALL RIGHTS AS OTHERWISE ALLOWED BY LAW TO REQUEST THAT NOVARTIS
POST A BOND, WITH OR WITHOUT SURETY, TO PROTECT LECTEC OR ANY OTHER PERSON OR ENTITY LIABLE UNDER
THIS NOTE AGAINST DAMAGES THAT MAY BE CAUSED BY ANY PREJUDGMENT REMEDY SOUGHT OR OBTAINED BY
NOVARTIS BY VIRTUE OF ANY DEFAULT OR PROVISION OF THIS NOTE OR THE AGREEMENT, AND LECTEC HEREBY
CONSENTS TO THE ISSUANCE OF ANY SUCH PREJUDGMENT REMEDY WITHOUT SUCH A BOND.

IN WITNESS WHEREOF, the undersigned has executed and delivered this Note as of the date and
year first above written.

	 	 	 	 	 	 	 	 	 
	 	 	LECTEC CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 

	 	Its:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 

 

 

 

Section 2.5.1(b)

Form of New Security Agreement

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (“Security Agreement”) dated as of January 1, 2004 between NOVARTIS
CONSUMER HEALTH, INC., 200 Kimball Drive, Parsippany, NJ 07054 (“Creditor”), a Delaware
corporation, and LECTEC CORPORATION, 10701 Red Circle Drive, Minnetonka, MN 55343 (“Debtor”), a
Minnesota corporation.

Recitals

	A.	 	Creditor has agreed to advance funds to Debtor as provided in a certain Supply and License
Agreement of even date herewith (“Supply Agreement”) and Debtor is otherwise indebted to
Creditor. Debtor has issued it a promissory note (the “Note”) to Creditor evidencing Debtor’s
obligation to repay advances made or to be made by Creditor to Debtor and such other
indebtedness of Debtor to Creditor.

	B.	 	Debtor has agreed to grant a security interest in its assets as provided in this Security
Agreement to secure its payment obligations under the Note.

NOW, THEREFORE, the parties hereby agree as follows:

1. Security Interest. To secure the full and prompt payment to Creditor of the obligations
of Borrower under the Note (hereinafter, the “Liabilities”), Debtor has granted and hereby grants
to Creditor a continuing security interest in and to all of Debtor’s accounts receivable,
inventory, equipment and general intangibles (hereinafter, the “Collateral”), whether now owned or
existing or hereafter acquired or arising, the proceeds of the Collateral, and all books and
records (including, without limitation, customer lists, credit files, computer programs,
print-outs, and other computer materials and records) of Debtor pertaining to the Collateral.

2. Disclosure of Security Interest. Debtor shall make appropriate entries upon its
financial statements disclosing Creditor’s security interest in the Collateral.

3. Financing Statements. At Creditor’s request, Debtor shall execute or deliver to
Creditor, at any time or times hereafter, all supplemental documentation that Creditor may
reasonably request relating to the perfection of the security interest granted in Section 1, in
form and substance acceptable to Creditor, and pay the costs of any recording or filing of the
same.

4. Perfection and Priority; Location of Collateral. Debtor represents that:

	(A)	 	None of the Collateral is subject to any lien, security interest or other encumbrance,
except as disclosed on Exhibit A attached hereto and made a part hereof;

 

 

 

	(B)	 	The address specified above is Debtor’s chief executive office and principal place of
business and Debtor is incorporated under the laws of the state of Minnesota.

5. Event of Default. The occurrence of any one or more of the following events shall
constitute an “Event of Default:”

(A) Debtor fails to pay the Liabilities when due and payable as provided in the Note;

	(B)	 	Debtor fails or neglects to perform, keep or observe any other term, provision, condition,
covenant, warranty or representation contained in this Security Agreement which is required to
be performed, kept or observed and the same is not cured to Creditor’s satisfaction within ten
(10) days after Creditor gives Debtor written notice thereof;

	(C)	 	Any material representation by Debtor to Creditor concerning its financial condition is not
true and correct when made, in all material respects;

	(D)	 	The Collateral or any other of Debtor’s material assets are attached, seized, levied upon or
subjected to a writ or distress warrant, or come within the possession of any receiver,
trustee, custodian or assignee for the benefit of creditors and the same is not cured within
sixty (60) days thereafter; an application is made by any person other than Debtor for the
appointment of a receiver, trustee, or custodian for the Collateral or any other of Debtor’s
assets and the same is not dismissed within sixty (60) days after the application therefore;

	(E)	 	An application is made by Debtor for the appointment of a receiver, trustee or custodian for
the Collateral or any other of Debtor’s assets; a petition under any section or chapter of the
Bankruptcy Code or any similar law or regulation shall be filed by Debtor; Debtor makes an
assignment for the benefit of its creditors or any case or proceeding is filed by Debtor for
its dissolution, liquidation, or termination; or

	(F)	 	Debtor ceases to conduct its business as now conducted or is enjoined, restrained or in any
way prevented by court order from conducting all or any material part of its business affairs;
a petition under any section or chapter of the Bankruptcy Code or any similar law or
regulation is filed against any Debtor or any case or proceeding is filed against Debtor for
its dissolution or liquidation and such injunction, restraint or petition is not dismissed
within sixty (60) days after the entry or filing thereof.

6. Remedies. Upon and after an Event of Default, Creditor shall have the following rights
and remedies:

	(A)	 	All the rights and remedies of a secured party under the Uniform Commercial Code as in effect
at the time in Minnesota, all of which rights and remedies shall be cumulative, and none
exclusive, to the extent permitted by law, in addition to any other rights and remedies
contained in this Security Agreement.

 

 

 

	(B)	 	The right to sell or to otherwise dispose of all or any Collateral in its then condition, or
after any further manufacturing or processing thereof, at public or private sale or sales,
with such notice as may be required by law, in lots or in bulk, for cash or on credit, all as
Creditor, in its sole discretion, may deem advisable; such sales may be adjourned from time to
time with or without notice. Creditor shall have the right to conduct such sales on the
premises of Debtor or elsewhere and shall have the right to use Debtor’s premises without
charge for such sales for such time or times as Creditor may see fit. Creditor is hereby
granted a license or other right to use, without charge, Debtor’s labels, patents, copyrights,
rights of use of any name, trade secrets, trade names, trademarks and advertising matter, or
any property of a similar nature, as it pertains to the Collateral; provided, however, that
the grant of license and right to use herein shall be subject to the license provisions of the
Supply Agreement. Creditor shall have the right to sell, lease or otherwise dispose of the
Collateral, or any part thereof, for cash, credit or any combination thereof and Creditor may
purchase all or any part of the Collateral at public or, if permitted by law, private sale and
in lieu of actual payment of such purchase price, may setoff the amount of such price against
the Liabilities. The proceeds realized from the sale of any Collateral shall be applied first
to the reasonable costs, expenses (including attorneys’ fees and expense) incurred by Creditor
for collection and for acquisition, completion, protection, removal, storage, sale and
delivery of the Collateral; second to interest due upon any of the Liabilities; third to the
principal of the Liabilities; fourth to the holder of any junior lien or any of the
Collateral. If any deficiency shall arise, Debtor shall remain liable to Creditor therefore.
Notwithstanding anything else in this Agreement, Creditor shall not sell, lease or otherwise
dispose of that portion of the Collateral consisting of the Intellectual Property, as that
term is defined in the Supply Agreement, in whole or in part, so long as the Supply Agreement
is in effect.

7. Subordination by Creditor. On no more than a single occasion and upon the written
request of Debtor, Creditor shall subordinate its security interest in the Collateral to a security
interest that Debtor may propose to grant to an institutional lender to secure a new loan to Debtor
in a principal amount of not less than $1,000,000. Such subordination shall have the effect only of
making Creditor’s security interest in the Collateral junior to the security interest granted to
such new lender notwithstanding the priority of the perfection of Creditor’s security interest and
shall not otherwise affect any of Creditor’s rights under the Note or this Security Agreement.

8. Waiver. Each party acknowledges and agrees that any failure on the part of the other
party to enforce at any time, or for any period of time, any of the provisions of this Security
Agreement shall not be deemed or construed to be a waiver of such provisions or of the right of
such other party thereafter to enforce each and every such provision.

9. Enforcement. If and to the extent that any provision of this Security Agreement is
determined by any legislature, court or administrative agency to be, in whole or in part, invalid
or unenforceable, such provision or part thereof shall be deemed to be surplusage and, to the
extent not so determined to be invalid or unenforceable, each provision hereof shall remain in full
force and effect unless the purposes of this Security Agreement cannot be achieved. In the event
any provisions shall be held invalid, illegal or
unenforceable the parties shall use commercially reasonable efforts to substitute a valid, legal
and enforceable provision which insofar as practical implements the purposes hereof.

 

 

 

10. Choice of Law. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Minnesota as though made and to be fully performed in said State.

11. Notices. All notices required or permitted hereunder shall be given in writing and
sent by confirmed facsimile transmission, or mailed postage prepaid by first-class certified or
registered mail, or sent by a nationally recognized express courier service, or hand-delivered to
the following addressees:

	 	 	 
	Creditor:

	 	Novartis Consumer Health, Inc.
	 

	 	200 Kimball Drive 
	 

	 	Parsippany, New Jersey 07054
	 

	 	Attn: General Counsel
	 
	 	 
	Debtor:

	 	LecTec Corporation
	 

	 	10701 Red Circle Dr. 
	 

	 	Minnetonka, Minnesota 55343
	 

	 	Attn: Chief Executive Officer

or to such other address as may be specified in a notice given to the other party in accordance
with this Section 11. Any notice, if sent properly addressed, postage prepaid, shall be deemed made
three (3) days after the date of mailing as indicated on the certified or registered mail receipt,
or on the next business day if sent by express courier service or on the date of delivery or
transmission (if delivered or sent during ordinary business hours, otherwise on the next business
day) if hand-delivered or sent by confirmed facsimile transmission.

12. Captions. The captions of each section of this Security Agreement are inserted only as
a matter of convenience and for reference and in no way shall be deemed to define, limit, enlarge,
or describe the scope of this Security Agreement and the relationship of the parties hereto, and
shall not in any way affect this Security Agreement or the construction of any provisions herein.

 

 

 

13. Entire Agreement; Amendment. This Security Agreement, including Exhibit A
annexed hereto, and the Supply Agreement represent and incorporate the entire understanding between
the parties hereto with respect to the subject matter of this Security Agreement and supersedes any
prior offers, proposals, drafts or other communications with respect thereto. In the event of a
conflict between the terms of this Security Agreement and the Supply Agreement, the provisions of
the Supply Agreement shall prevail. Each party acknowledges that there are no warranties,
representations, covenants or understandings of any kind, nature or description whatsoever made by
any
party to any other, except such as are expressly hereinabove set forth. This Security Agreement
shall not be subject to change or modification except by the execution of a writing specified to be
an explicit amendment to this Security Agreement duly executed by all parties hereto.

14 Counterparts. This Security Agreement may be executed in two or more counterparts, each
of which shall constitute an original and all of which together shall constitute a single
instrument.

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first
above written.

	 	 	 	 	 	 	 
	LECTEC CORPORATION	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	NOVARTIS CONSUMER.HEALTH, INC.	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 

 

 

 

Exhibit 6.2.3.1

License Royalty Rates

	 	 	 	 	 
	Novartis Net Semi-Annual Sales	 	Royalty Percentage	 
	 
	 	 	 	 
	Less than **
	 	 	**	 
	 
	 	 	 	 
	**
	 	 	**	 
	 
	 	 	 	 
	over **
	 	 	**EX-10.1

Exhibit 10.1

 

 

SEPARATION AGREEMENT

By and Between

OCWEN FINANCIAL CORPORATION

and

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

Dated as of August 10, 2009

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	ARTICLE I             DEFINITIONS	 	 	1	 
	 
	 	 	 	 	 	 
	ARTICLE II           THE SEPARATION	 	 	8	 
	 
	 	 	 	 	 	 
	Section 2.01
	 	Separation Transactions	 	 	8	 
	Section 2.02
	 	Certain Agreements Govern	 	 	8	 
	Section 2.03
	 	Termination of Agreements	 	 	8	 
	Section 2.04
	 	Transfer of Agreements; Consent	 	 	9	 
	Section 2.05
	 	Certain Licenses and Permits	 	 	9	 
	Section 2.06
	 	Lease Amendments	 	 	10	 
	Section 2.07
	 	Disclaimer of Representations and Warranties	 	 	10	 
	Section 2.08
	 	Inadvertent or Incorrect Transfers or Omissions of Assets or	 	 	 	 
	 
	 	Liabilities	 	 	10	 
	 
	 	 	 	 	 	 
	ARTICLE III          ACTIONS PENDING THE DISTRIBUTION	 	 	11	 
	 
	 	 	 	 	 	 
	Section 3.01
	 	Actions Prior to the Distribution	 	 	11	 
	Section 3.02
	 	Conditions Precedent to Consummation of the Distribution	 	 	12	 
	 
	 	 	 	 	 	 
	ARTICLE IV          THE DISTRIBUTION	 	 	13	 
	 
	 	 	 	 	 	 
	Section 4.01
	 	The Distribution	 	 	13	 
	Section 4.02
	 	Sole Discretion of OCWEN	 	 	14	 
	 
	 	 	 	 	 	 
	ARTICLE V           MUTUAL RELEASES; INDEMNIFICATION	 	 	14	 
	 
	 	 	 	 	 	 
	Section 5.01
	 	Release of Pre-Closing Claims	 	 	14	 
	Section 5.02
	 	Indemnification by ALTISOURCE	 	 	16	 
	Section 5.03
	 	Indemnification by OCWEN	 	 	17	 
	Section 5.04
	 	Indemnification of Third Party Claims	 	 	17	 
	Section 5.05
	 	Indemnification Obligations Net of Insurance Proceeds and Other Amounts	 	 	17	 
	Section 5.06
	 	Procedures for Indemnification of Third Party Claims	 	 	18	 
	Section 5.07
	 	Additional Matters	 	 	19	 
	Section 5.08
	 	Remedies Cumulative	 	 	20	 
	Section 5.09
	 	Survival of Indemnities	 	 	20	 
	Section 5.10
	 	Limitation on Liability	 	 	20	 
	 
	 	 	 	 	 	 
	ARTICLE VI           EXCHANGE OF INFORMATION; CONFIDENTIALITY	 	 	20	 
	 
	 	 	 	 	 	 
	Section 6.01
	 	Agreement for Exchange of Information; Archives	 	 	20	 

-i-

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	Section 6.02
	 	Ownership of Information	 	 	21	 
	Section 6.03
	 	Compensation for Providing Information	 	 	21	 
	Section 6.04
	 	Limitations on Liability	 	 	21	 
	Section 6.05
	 	Other Agreements Providing for Exchange of Information	 	 	22	 
	Section 6.06
	 	Production of Witnesses; Records; Cooperation	 	 	22	 
	Section 6.07
	 	Confidentiality	 	 	23	 
	Section 6.08
	 	Protective Arrangements	 	 	23	 
	 
	 	 	 	 	 	 
	ARTICLE VII           DISPUTE RESOLUTION	 	 	24	 
	 
	 	 	 	 	 	 
	Section 7.01
	 	Disputes	 	 	24	 
	Section 7.02
	 	Escalation; Mediation	 	 	24	 
	Section 7.03
	 	Court Actions	 	 	24	 
	 
	 	 	 	 	 	 
	ARTICLE VIII          FURTHER ASSURANCES AND ADDITIONAL COVENANTS	 	 	25	 
	 
	 	 	 	 	 	 
	Section 8.01
	 	Further Assurances	 	 	25	 
	Section 8.02
	 	Insurance Matters	 	 	26	 
	 
	 	 	 	 	 	 
	ARTICLE IX           TERMINATION	 	 	26	 
	 
	 	 	 	 	 	 
	Section 9.01
	 	Termination	 	 	26	 
	Section 9.02
	 	Effect of Termination	 	 	26	 
	 
	 	 	 	 	 	 
	ARTICLE X            MISCELLANEOUS	 	 	26	 
	 
	 	 	 	 	 	 
	Section 10.01
	 	Counterparts; Entire Agreement; Corporate Power	 	 	26	 
	Section 10.02
	 	Governing Law	 	 	27	 
	Section 10.03
	 	Assignability	 	 	27	 
	Section 10.04
	 	Third Party Beneficiaries	 	 	27	 
	Section 10.05
	 	Notices	 	 	27	 
	Section 10.06
	 	Severability	 	 	28	 
	Section 10.07
	 	Publicity	 	 	28	 
	Section 10.08
	 	Expenses	 	 	28	 
	Section 10.09
	 	Headings	 	 	28	 
	Section 10.10
	 	Survival of Covenants	 	 	28	 
	Section 10.11
	 	Waivers of Default	 	 	29	 
	Section 10.12
	 	Specific Performance	 	 	29	 

-ii-

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	Section 10.13
	 	Amendments	 	 	29	 
	Section 10.14
	 	Interpretation	 	 	29	 
	Section 10.15
	 	Jurisdiction; Service of Process	 	 	29	 
	Section 10.16
	 	Waiver of Jury Trial	 	 	30	 
	 
	 	 	 	 	 	 
	SCHEDULE I
	 	Separation Transactions	 	 	 	 

-iii-

 

SEPARATION AGREEMENT

          SEPARATION AGREEMENT, dated as of August 10, 2009, between OCWEN FINANCIAL CORPORATION, a
Florida corporation (“OCWEN”), and ALTISOURCE PORTFOLIO SOLUTIONS S.A., a société anonyme
organized under the laws of the Grand Duchy of Luxembourg and a wholly-owned subsidiary of OCWEN
(formerly known as Ocwen Luxembourg S.à. r.l.) (“ALTISOURCE”). Capitalized terms used
herein and not otherwise defined shall have the respective meanings assigned to them in Article
I.

RECITALS

          WHEREAS, the board of directors of OCWEN has determined that it is in the best interests of
OCWEN and its shareholders to separate the existing businesses of OCWEN into two independent
businesses, to contribute the ALTISOURCE Business to ALTISOURCE, and to distribute all of the
capital stock of ALTISOURCE to the shareholders of OCWEN and to the Convertible Noteholders;

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

          WHEREAS, the Distribution is intended to qualify as a tax-free spin-off under Section 355 of
the Code; and

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

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

ARTICLE I

Definitions

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

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

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

1

 

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

          “Agreement” means this Separation Agreement.

          “ALTISOURCE” has the meaning set forth in the caption.

          “ALTISOURCE Business” means the knowledge process outsourcing business (consisting of
the mortgage servicing business, the financial servicing business and the technology products
business) conducted (i) prior to the Separation, by OCWEN and certain members of the OCWEN Group
and (ii) from and after the Separation, by the ALTISOURCE Group, including the businesses
contributed by OCWEN to ALTISOURCE pursuant to Article II, which, for the avoidance of
doubt, shall not include the businesses currently conducted by BMS Holdings, Inc. and Global
Servicing Solutions LLC.

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

          “ALTISOURCE Group” means ALTISOURCE and any Subsidiary of ALTISOURCE immediately after
the Distribution.

          “ALTISOURCE Indemnitees” has the meaning set forth in Section 5.03.

          “Ancillary Agreements” means the Employee Matters Agreement, the Transition Services
Agreement, the Tax Matters Agreement, the Intellectual Property Agreement, the Data Center and
Disaster Recovery Agreement, the Services Agreements and any instruments, assignments and other
documents and agreements executed in connection with the implementation of the transactions
contemplated by this Agreement, including Article II.

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

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

          (b) all apparatus, computers and other electronic data processing equipment, fixtures,
machinery, furniture, office and other equipment, automobiles, trucks, aircraft, rolling stock,
vessels, motor vehicles and other transportation equipment, special and general tools, test
devices, prototypes and models and other tangible personal property;

          (c) all inventories of materials, parts, raw materials, supplies, work-in-process and finished
goods and products;

2

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          “Convertible Notes” means OCWEN’s outstanding 3.25% Contingent Convertible Unsecured
Senior Notes due 2024.

          “Convertible Noteholders” means holders of Convertible Notes.

          “Data Center and Disaster Recovery Agreement” means the Data Center and Disaster
Recovery Agreement to be entered into between OCWEN and Solutions.

          “Distribution” means the distribution by OCWEN to the Record Holders of all the
outstanding shares of ALTISOURCE Common Stock owned by OCWEN on the Distribution Date (i) on a pro
rate basis, with respect to the Record Stockholders and (ii) in accordance with the indenture
governing the Convertible Notes with respect to the Record Noteholders.

          “Distribution Date” means the date determined in accordance with Section 3.02
on which the Distribution occurs.

          “Employee Matters Agreement” means the Employee Matters Agreement to be entered into
between OCWEN and Solutions.

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

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

          “Form 10” means the registration statement on Form 10 filed by ALTISOURCE with the
Commission to effect the registration of ALTISOURCE Common Stock pursuant to the

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Exchange Act in connection with the Distribution, as such registration statement may be
amended or supplemented from time to time.

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

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

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

          “Indemnifying Party” has the meaning set forth in Section 5.05(a).

          “Indemnitee” has the meaning set forth in Section 5.05(a).

          “Indemnity Payment” has the meaning set forth in Section 5.05(a).

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

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

          “India Services Agreement” means the Services Agreement to be entered into between
Ocwen Financial Services Private Limited, a company incorporated under the laws of India, and Ocwen
Business Solutions Private Limited (to be renamed Altisource Business Solutions Private Limited), a
company incorporated under the laws of India.

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

          “Insurance Proceeds” means those monies:

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

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

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

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

          “Intellectual Property Agreement” means the Intellectual Property Agreement to be
entered into between OCWEN and Solutions.

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

          “NASDAQ” means The NASDAQ Stock Market LLC.

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

          “OCWEN” has the meaning set forth in the caption.

          “OCWEN Business” means (a) the business and operations of OCWEN and its Subsidiaries
and other Affiliates (including the businesses currently conducted by BMS Holdings, Inc. and Global
Servicing Solutions LLC) immediately after the Distribution and (b) except as otherwise expressly
provided herein, any terminated, divested or discontinued businesses or operations of OCWEN and its
Subsidiaries and other Affiliates.

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

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

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          “OCWEN Indemnitees” has the meaning set forth in Section 5.02.

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

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

          “Record Date” means the close of business on the date determined by the OCWEN board of
directors as the record date for determining (i) the shares of OCWEN Common Stock and (ii)
Convertible Notes, in each case in respect of which shares of ALTISOURCE Common Stock will be
distributed pursuant to the Distribution.

          “Record Holders” means the Record Stockholders and the Record Noteholders,
collectively.

          “Record Noteholders” means holders of record as of the Record Date of all of the
Convertible Notes that were outstanding on the Record Date.

          “Record Stockholders” means holders of record as of the Record Date of all of the
shares of OCWEN Common Stock that were outstanding on the Record Date.

          “Securities Act” means the Securities Act of 1933, as amended, together with the rules
and regulations promulgated thereunder.

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

          “Services Agreements” means the Services Agreement and the Technology Products
Services Agreement, each to be entered into between OCWEN and Solutions, and the India Services
Agreement.

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

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

          “Subsidiary” of any Person means any corporation or other organization whether
incorporated or unincorporated of which at least a majority of the securities or interests having
by the terms thereof ordinary voting power to elect at least a majority of the board of directors
or others performing similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such Person or by any one or more of its

7

 

Subsidiaries, or by such Person and one or more of its Subsidiaries; provided,
however, that no Person that is not directly or indirectly wholly owned by any other Person
shall be a Subsidiary of such other Person unless such other Person controls, or has the right,
power or ability to control, that Person.

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

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

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

          “Transaction Indemnitees” has the meaning set forth in Section 5.04.

          “Transaction Third Party Claim” has the meaning set forth in Section 5.04.

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

          “Transition Services Agreement” means the Transition Services Agreement dated as of
the Distribution Date between OCWEN and Solutions.

ARTICLE II

The Separation

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

          Section 2.02 Certain Agreements Govern. Each of OCWEN and ALTISOURCE agrees on behalf
of itself and its Subsidiaries that the provisions of the (i) Tax Matters Agreement shall
exclusively govern the allocation of Assets and Liabilities related to Taxes, (ii) the Employee
Matters Agreement shall exclusively govern the allocation of Assets and Liabilities related to the
existing U.S. and Indian employee benefits and pension plans of OCWEN, which plans cover employees
and former employees of members of both the OCWEN Group and the ALTISOURCE Group and (iii) the
Intellectual Property Agreement shall exclusively govern the transfer and licensing by OCWEN to
ALTISOURCE of certain specified intellectual property.

          Section 2.03 Termination of Agreements.

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          (a) Except as set forth in Section 2.03(b), in furtherance of the releases and other
provisions of Section 5.01, each of ALTISOURCE, on the one hand, and OCWEN, on the other
hand, shall terminate, or cause to be terminated, effective as of the Distribution Date, any and
all agreements, arrangements, commitments and understandings (including all intercompany accounts
payable or accounts receivable (“Intercompany Accounts”) accrued as of the Distribution
Date) whether or not in writing, between or among ALTISOURCE and/or any other member of the
ALTISOURCE Group, on the one hand, and OCWEN and/or any other member of the OCWEN Group, on the
other hand. No such terminated Intercompany Account, agreement, arrangement, commitment or
understanding (including any provision thereof that purports to survive termination) shall be of
any further force or effect after the Distribution Date.

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

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

          (a) OCWEN shall Transfer or cause to be Transferred all of the rights, title and interest in
and to all of the Exclusive Assigned Contracts to ALTISOURCE.

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

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

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

          Section 2.06 Lease Amendments. On or prior to the Distribution Date, each of OCWEN
and ALTISOURCE shall use reasonable efforts to execute amendments to each of the leases (to the
extent that the counterparties to such leases are agreeable to such amendments) to which OCWEN is a
party and which provide for the lease of real or personal property representing exclusively
ALTISOURCE Assets or relating exclusively to the ALTISOURCE Business, which amendments will provide
for the substitution of ALTISOURCE for OCWEN as lessee or lessor, as the case may be, and to the
extent agreeable to the other party to the lease excuse OCWEN from any further Liabilities or
responsibilities with respect thereto.

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

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

          (a) In the event that it is discovered after the Distribution that there was an inadvertent or
incorrect omission of the Transfer or assignment by or on behalf of one Party to or on behalf of
the other Party of any Asset or Liability that, in the sole judgment of OCWEN, had the Parties
given specific consideration to such Asset or Liability prior to the Distribution, would have
otherwise been listed on an appropriate Schedule hereto or otherwise caused to be so Transferred or
assigned pursuant to this Agreement or any Ancillary Agreement, then upon such

10

 

a determination by OCWEN, the Parties shall promptly effect such Transfer or assignment of
such Asset or Liability, without payment of separate consideration therefor.

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

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

ARTICLE III

Actions Pending the Distribution

          Section 3.01 Actions Prior to the Distribution. (a) Subject to Section 3.02
and Section 4.02, OCWEN and ALTISOURCE shall use reasonable efforts to consummate the
Distribution, including by taking the actions specified in this Section 3.01.

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

          (c) ALTISOURCE shall prepare and file, and shall use reasonable efforts to have approved prior
to the Distribution Date, an application for the listing of the ALTISOURCE Common Stock to be
distributed in the Distribution on NASDAQ or another national securities exchange, subject to
official notice of distribution.

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

          (e) OCWEN and ALTISOURCE shall cooperate in preparing, filing with the Commission and causing
to become effective any registration statements or amendments thereof which are necessary or
appropriate in order to effect the transactions contemplated hereby or to reflect the establishment
of, or amendments to, any employee benefit and other plans contemplated by the Employee Matters
Agreement requiring registration under the Securities Act.

          (f) Prior to the Distribution Date, OCWEN shall duly elect, as members of the ALTISOURCE board
of directors, the individuals listed as members of the ALTISOURCE board

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of directors in the Information Statement, and such individuals shall continue to be members
of the ALTISOURCE board of directors on the Distribution Date.

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

          Section 3.02 Conditions Precedent to Consummation of the Distribution. The
obligations of the Parties to consummate the Distribution shall be conditioned on the satisfaction,
or waiver by OCWEN, of the following conditions:

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

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

          (c) The ALTISOURCE Common Stock shall have been accepted for listing on NASDAQ or another
national securities exchange, subject to official notice of issuance.

          (d) A favorable opinion from O’Melveny & Myers LLP in form and substance satisfactory to OCWEN
in its sole discretion shall have been obtained that, among other things, confirms (i) the
Distribution’s tax-free status under Section 355 of the Code and (ii) for U.S. federal income tax
purposes, the non-recognition of gain or loss by, and the non-inclusion in the income of, any
shareholder of OCWEN Common Stock upon the receipt by such shareholder of shares of ALTISOURCE
Common Stock pursuant to the Distribution, except to the extent such shareholder receives cash in
lieu of fractional shares of ALTISOURCE Common Stock.

          (e) The Separation shall have been completed.

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

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

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

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

          (j) The actions set forth in Section 3.01(b), (d) , Section 3.01(f),
and Section 3.01(g) shall have been completed.

The foregoing conditions are for the sole benefit of OCWEN and shall not give rise to or create any
duty on the part of OCWEN or the OCWEN board of directors to waive or not waive such conditions or
in any way limit the right of OCWEN to terminate this Agreement as set forth in Article XI
or alter the consequences of any such termination from those specified in such Article. Any
determination made by the OCWEN board of directors prior to the Distribution concerning the
satisfaction or waiver of any or all of the conditions set forth in this Section 3.02 shall
be conclusive.

ARTICLE IV

The Distribution

          Section 4.01 The Distribution. (a) ALTISOURCE shall cooperate with OCWEN to
accomplish the Distribution and shall, at the direction of OCWEN, promptly take any and all actions
necessary or desirable to effect the Distribution. OCWEN shall select any manager in connection
with the Distribution, as well as any financial printer, solicitation and/or exchange agent and
financial, legal, accounting and other advisors for OCWEN. OCWEN and ALTISOURCE, as the case may
be, will provide, or cause the applicable member of its Group to provide, to the Agent all share
certificates and any information required in order to complete the Distribution.

          (b) Subject to the terms and conditions set forth in this Agreement, (i) on or prior to the
Distribution Date, OCWEN shall deliver to the Agent for the benefit of the Record Holders all the
issued and outstanding shares of ALTISOURCE Common Stock then owned by OCWEN or any other member of
the OCWEN Group and book-entry transfer authorizations for such shares and (ii) on the Distribution
Date, OCWEN shall instruct the Agent to distribute, (x) with respect to Record Stockholders, by
means of a pro rata dividend to each Record Stockholder (or such Record Stockholder’s bank or
brokerage firm on such Record Stockholder’s behalf) electronically, by direct registration in
book-entry form, one share of ALTISOURCE Common Stock for every three shares of OCWEN Common Stock
held by such Record Holder, and (y) with respect to Record Noteholders, by means of a pro rata
distribution to each Record Noteholder (or to the agent or trustee under the indenture governing
the Convertible Notes, for the benefit of such Record Noteholders) electronically, by direct
registration in book-entry form, one share of ALTISOURCE Common Stock for every three shares of
OCWEN Common Stock deemed owned by such Record Noteholder for purposes of the Distribution as
described in the indenture governing the Convertible Notes, in the case of each of (x) and (y),
subject to Section 4.01(c) below. It is the intent of the foregoing that the Distribution
be effected on a pro rata, as if converted basis. The Distribution shall be effective at 11:59
p.m. New York City time on the Distribution Date. On or immediately following the Distribution
Date, the Agent will mail an account statement indicating the number of shares of ALTISOURCE Common
Stock that have

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been registered in book-entry form in the name of each (A) Record Holder that holds physical
share certificates representing its shares of OCWEN Common Stock and that is the registered holder
of the shares represented by those certificates and (B) Record Noteholder (in each case, including
the amount of cash in lieu of fractional shares as provided in Section 4.01(c) below).

          (c) Record Holders who, after aggregating the number of shares of ALTISOURCE Common Stock (or
fractions thereof) to which such Record Holder would be entitled on the Record Date, would be
entitled to receive a fraction of a share of ALTISOURCE Common Stock in the Distribution, will
receive cash in lieu of fractional shares. Fractional shares of ALTISOURCE Common Stock will not be
distributed in the Distribution nor credited to book-entry accounts. The Agent shall, as soon as
practicable after the Distribution Date (a) determine the number of whole shares and fractional
shares of ALTISOURCE Common Stock allocable to each Record Holder, (b) aggregate all such
fractional shares into whole shares and sell the whole shares obtained thereby in open market
transactions at then prevailing trading prices on behalf of holders who would otherwise be entitled
to fractional share interests, and (c) distribute to each such holder, or for the benefit of each
such beneficial owner, such holder’s or owner’s ratable share of the net proceeds of such sale,
based upon the average gross selling price per share of ALTISOURCE Common Stock after making
appropriate deductions for any amount required to be withheld for United States federal income tax
purposes. OCWEN shall bear the cost of brokerage fees and transfer taxes incurred in connection
with these sales of fractional shares, which such sales shall occur as soon after the Distribution
Date as practicable and as determined by the Agent. None of OCWEN, ALTISOURCE or the applicable
Agent will guarantee any minimum sale price for the fractional shares of ALTISOURCE Common Stock.
Neither OCWEN nor ALTISOURCE will pay any interest on the proceeds from the sale of fractional
shares. The Agent will have the sole discretion to select the broker-dealers through which to sell
the aggregated fractional shares and to determine when, how and at what price to sell such shares.
Neither the Agent nor the selected broker-dealers will be Affiliates of OCWEN or ALTISOURCE. Any
ALTISOURCE Common Stock or cash in lieu of fractional shares with respect to ALTISOURCE Common
Stock that remains unclaimed by any holder of record one hundred-eighty (180) days after the
Distribution Date shall be delivered to ALTISOURCE. ALTISOURCE shall hold such ALTISOURCE Common
Stock and/or cash for the account of such holder of record and any such holder of record shall look
only to ALTISOURCE for such ALTISOURCE Common Stock and/or cash, if any, in lieu of fractional
share interests, subject in each case to applicable escheat or other abandoned property laws.

          (d) From and after the date hereof, ALTISOURCE covenants and agrees that it shall, upon
request of OCWEN, deliver or cause to be delivered to OCWEN or to the Agent that number of
additional shares of ALTISOURCE Common Stock, if any, necessary for the aforementioned distribution
transactions to comply with the terms of the indenture governing the Convertible Notes.

          Section 4.02 Sole Discretion of OCWEN. OCWEN shall, in its sole and absolute
discretion, determine the Distribution Date and all terms of the Distribution, including the form,
structure and terms of any transactions and/or offerings to effect the Distribution and the timing
of and conditions to the consummation thereof. In addition and notwithstanding anything to the
contrary set forth herein, OCWEN may at any time and from time to time until the completion of the
Distribution decide to abandon the Distribution or modify or change the

14

 

terms of the Distribution, including by accelerating or delaying the timing of the
consummation of all or part of the Distribution.

ARTICLE V

Mutual Releases; Indemnification

          Section 5.01 Release of Pre-Closing Claims. (a) Except as provided in Section
5.01(c), effective as of the Distribution Date, ALTISOURCE does hereby, for itself and each
other member of the ALTISOURCE Group, their respective Affiliates (other than any member of the
OCWEN Group), successors and assigns, and all Persons who at any time prior to the Distribution
Date have been shareholders, directors, officers, agents or employees of any member of the
ALTISOURCE Group (in each case, in their respective capacities as such), release and forever
discharge OCWEN and the other members of the OCWEN Group, their respective Affiliates (other than
any member of the ALTISOURCE Group), successors and assigns, and all Persons who at any time prior
to the Distribution Date have been shareholders, directors, officers, agents or employees of any
member of the OCWEN Group (in each case, in their respective capacities as such), and their
respective heirs, executors, administrators, successors and assigns, from any and all Liabilities
whatsoever, whether at law or in equity (including any right of contribution), whether arising
under any contract or agreement, by operation of law or otherwise, existing or arising from any
acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur
or any conditions existing or alleged to have existed on or before the Distribution Date, including
in connection with the transactions and all other activities to implement the Separation or the
Distribution.

          (b) Except as provided in Section 5.01(c), effective as of the Distribution Date,
OCWEN does hereby, for itself and each other member of the OCWEN Group, their respective Affiliates
(other than any member of the ALTISOURCE Group), successors and assigns, and all Persons who at any
time prior to the Distribution Date have been shareholders, directors, officers, agents or
employees of any member of the OCWEN Group (in each case, in their respective capacities as such),
release and forever discharge ALTISOURCE, the other members of the ALTISOURCE Group, their
respective Affiliates (other than any member of the OCWEN Group), successors and assigns, and all
Persons who at any time prior to the Distribution Date have been shareholders, directors, officers,
agents or employees of any member of the ALTISOURCE Group (in each case, in their respective
capacities as such), and their respective heirs, executors, administrators, successors and assigns,
from any and all Liabilities whatsoever, whether at law or in equity (including any right of
contribution), whether arising under any contract or agreement, by operation of law or otherwise,
existing or arising from any acts or events occurring or failing to occur or alleged to have
occurred or to have failed to occur or any conditions existing or alleged to have existed on or
before the Distribution Date, including in connection with the transactions and all other
activities to implement the Separation or the Distribution.

          (c) Nothing contained in Section 5.01(a) or (b) shall impair any right of any
Person to enforce this Agreement, any Ancillary Agreement or any agreements, arrangements,
commitments or understandings that are specified in Section 2.03(b) not to terminate as of
the

15

 

Distribution Date, in each case in accordance with its terms. Nothing contained in
Section 5.01(a) or (b) shall release any Person from:

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

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

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

          (iv) any Liability the release of which would result in the release of any Person other
than a Person released pursuant to this Section 5.01.

In addition, nothing contained in Section 5.01(a) shall release OCWEN from honoring its
existing obligations to indemnify any director, officer or employee of ALTISOURCE or any of its
Subsidiaries on or prior to the Distribution Date who was a director, officer or employee of OCWEN
or any of its Subsidiaries on or prior to the Distribution Date, to the extent such director,
officer or employee becomes a named defendant in any litigation involving OCWEN or any of its
Subsidiaries and was entitled to such indemnification pursuant to then existing obligations.

          (d) ALTISOURCE shall not make, and shall not permit any other member of the ALTISOURCE Group
to make, any claim or demand, or commence any Action asserting any claim or demand, including any
claim of contribution or any indemnification, against OCWEN or any other member of the OCWEN Group,
or any other Person released pursuant to Section 5.01(a), with respect to any Liabilities
released pursuant to Section 5.01(a). OCWEN shall not, and shall not permit any other
member of the OCWEN Group, to make any claim or demand, or commence any Action asserting any claim
or demand, including any claim of contribution or any indemnification against ALTISOURCE or any
other member of the ALTISOURCE Group, or any other Person released pursuant to Section
5.01(b), with respect to any Liabilities released pursuant to Section 5.01(b).

          (e) It is the intent of each of OCWEN and ALTISOURCE, by virtue of the provisions of this
Section 5.01, to provide for a full and complete release and discharge of all Liabilities
existing or arising from all acts and events occurring or failing to occur or alleged to have
occurred or to have failed to occur and all conditions existing or alleged to have existed on or
before the Distribution Date, between or among ALTISOURCE or any other member of the ALTISOURCE
Group, on the one hand, and OCWEN or any other member of the OCWEN

16

 

Group, on the other hand (including any contractual agreements or arrangements existing or
alleged to exist between or among any such members on or before the Distribution Date), except as
expressly set forth in Section 5.01(c). At any time, at the reasonable request of the
other Party, each Party shall cause each member of its respective Group to execute and deliver
releases reflecting the provisions hereof.

          Section 5.02 Indemnification by ALTISOURCE. Except as provided in Section
5.05, ALTISOURCE shall indemnify, defend and hold harmless OCWEN, each other member of the
OCWEN Group and each of their respective former and current directors, officers and employees, and
each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the
“OCWEN Indemnitees”), from and against any and all Liabilities of the OCWEN Indemnitees
relating to, arising out of or resulting from any of the following items (without duplication):

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

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

          Section 5.03 Indemnification by OCWEN. Except as provided in Section 5.05,
OCWEN shall indemnify, defend and hold harmless ALTISOURCE, each other member of the ALTISOURCE
Group and each of their respective former and current directors, officers and employees, and each
of the heirs, executors, successors and assigns of any of the foregoing (collectively, the
“ALTISOURCE Indemnitees”), from and against any and all Liabilities of the ALTISOURCE
Indemnitees relating to, arising out of or resulting from any of the following items (without
duplication):

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

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

          Section 5.04 Indemnification of Third Party Claims. Except as provided in Section
5.05 and subject to any contrary provision in any Ancillary Agreement, each Party shall
indemnify, defend and hold harmless the other Party, each other member of such other Party’s Group
and each of their respective former and current directors, officers and employees, and each of the
heirs, executors, successors and assigns of any of the foregoing (collectively, the
“Transaction Indemnitees”), from and against any Liabilities of the Transaction Indemnitees
relating to, arising out of or resulting from any Third Party Claim as to which such Transaction
Indemnitees are entitled to indemnification under this Agreement, including any Third Party

17

 

Claim relating to, arising out of or resulting from any untrue statement or alleged untrue
statement of a material fact contained in any Specified Document or any omission or alleged
omission to state a material fact in any Specified Document required to be stated therein or
necessary to make the statements therein not misleading (any such Third Party Claim, a
“Transaction Third Party Claim”).

          Section 5.05 Indemnification Obligations Net of Insurance Proceeds and Other Amounts.
(a) The Parties intend that any Liability subject to indemnification or reimbursement pursuant to
this Article V will be net of Insurance Proceeds that actually reduce the amount of, or are
paid to the applicable Indemnitee in respect of, such Liability. Accordingly, the amount that
either Party (an “Indemnifying Party”) is required to pay to any Person entitled to
indemnification hereunder (an “Indemnitee”) will be reduced by any Insurance Proceeds
theretofore actually recovered by or on behalf of the Indemnitee in respect of the related
Liability. If an Indemnitee receives a payment (an “Indemnity Payment”) required by this
Agreement from an Indemnifying Party in respect of any Liability and subsequently receives
Insurance Proceeds in respect of such Liability, then the Indemnitee will pay to the Indemnifying
Party an amount equal to the excess of the Indemnity Payment received over the amount of the
Indemnity Payment that would have been due if such Insurance Proceeds had been received, realized
or recovered before the Indemnity Payment was made.

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

          Section 5.06 Procedures for Indemnification of Third Party Claims. (a) If an
Indemnitee shall receive notice or otherwise learn of a Third Party Claim with respect to which an
Indemnifying Party may be obligated to provide indemnification to such Indemnitee pursuant to
Section 5.02, Section 5.03 or Section 5.04 or any other Section of this
Agreement or any Ancillary Agreement, such Indemnitee shall give such Indemnifying Party written
notice thereof within 10 days after becoming aware of such Third Party Claim. Any such notice
shall describe the Third Party Claim in reasonable detail. Notwithstanding the foregoing, the
failure of any Indemnitee or other Person to give notice as provided in this Section
5.06(a) shall not relieve the related Indemnifying Party of its obligations under this
Article V, except to the extent that such Indemnifying Party is actually prejudiced by such
failure to give notice.

          (b) An Indemnifying Party may elect to defend, at such Indemnifying Party’s own expense
(subject to the requirement to share expenses related to the defense of Transaction Third Party
Claims pursuant to Section 5.04) and by such Indemnifying Party’s own counsel, any Third
Party Claim. Within 20 days after the receipt of notice from an Indemnitee in accordance with
Section 5.06(a) (or sooner, if the nature of such Third Party Claim so requires), the
Indemnifying Party shall notify the Indemnitee of its election as to whether the Indemnifying Party
will assume responsibility for defending such Third Party Claim. After notice from an

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Indemnifying Party to an Indemnitee of its election to assume the defense of a Third Party
Claim, such Indemnitee shall have the right to employ separate counsel and to participate in (but
not control) the defense, compromise, or settlement thereof, but (subject to Section 5.04)
the fees and expenses of such counsel shall be the expense of such Indemnitee, except that the
Indemnifying Party shall be liable for the fees and expenses of counsel employed by the Indemnitee
for any period during which the Indemnifying Party has not assumed the defense of such Third Party
Claim (other than during any period in which the Indemnitee shall have failed to give notice of the
Third Party Claim in accordance with Section 5.06(a)).

          (c) If an Indemnifying Party elects not to assume responsibility for defending a Third Party
Claim, or fails to notify an Indemnitee of its election as provided in Section 5.06(b),
such Indemnitee may defend such Third Party Claim at the cost and expense of the Indemnifying Party
(subject to the requirement to share expenses related to the defense of Transaction Third Party
Claims pursuant to Section 5.04).

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

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

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

          (g) The provisions of Section 5.06 (other than this Section 5.06(g)) and
Section 5.07 shall not apply to Taxes (which are covered by the Tax Matters Agreement).

          Section 5.07 Additional Matters. (a) Any claim on account of a Liability that does
not result from a Third Party Claim shall be asserted by written notice given by the Indemnitee to
the related Indemnifying Party. Such Indemnifying Party shall have a period of 30 days after the
receipt of such notice within which to respond thereto. If such Indemnifying Party does not
respond within such 30-day period, such Indemnifying Party shall be deemed to have refused to
accept responsibility to make payment. If such Indemnifying Party does not respond within such
30-day period or rejects such claim in whole or in part, such Indemnitee shall be free to pursue
such remedies as may be available to such party as contemplated by this Agreement and the Ancillary
Agreements.

          (b) In the event of payment by or on behalf of any Indemnifying Party to any Indemnitee in
connection with any Third Party Claim, such Indemnifying Party shall be subrogated to and shall
stand in the place of such Indemnitee as to any events or circumstances

19

 

in respect of which such Indemnitee may have any right, defense or claim relating to such
Third Party Claim against any claimant or plaintiff asserting such Third Party Claim or against any
other Person. Such Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner,
and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right,
defense or claim.

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

          Section 5.08 Remedies Cumulative. The remedies provided in this Article V
shall be cumulative and, subject to the provisions of Article VIII, shall not preclude
assertion by any Indemnitee of any other rights or the seeking of any and all other remedies
against any Indemnifying Party.

          Section 5.09 Survival of Indemnities. The rights and obligations of each of OCWEN and
ALTISOURCE and their respective Indemnitees under this Article V shall survive the sale or
other transfer by any party of any assets or businesses or the assignment by it of any Liabilities.

          Section 5.10 Limitation on Liability. Except as may expressly be set forth in this
Agreement or any Ancillary Agreement, none of OCWEN, ALTISOURCE or any other member of either Group
shall in any event have any Liability to the other or to any other member of the other’s Group, or
to any other OCWEN Indemnitee or ALTISOURCE Indemnitee, as applicable, for any incidental,
indirect, special, punitive or consequential damages, whether or not caused by or resulting from
negligence or breach of obligations hereunder or under any Ancillary Agreement and whether or not
informed of the possibility of the existence of such damages, provided, however,
that the provisions of this Section shall not limit an Indemnifying Party’s indemnification
obligations hereunder or in any Ancillary Agreement with respect to any Liability any Indemnitee
may have to any third party not affiliated with any member of the OCWEN Group or the ALTISOURCE
Group for any incidental, indirect, special, punitive or consequential damages.

ARTICLE VI

Exchange of Information; Confidentiality

          Section 6.01 Agreement for Exchange of Information; Archives. (a) Each of OCWEN and
ALTISOURCE, on behalf of its Group, agrees to provide, or cause to be provided, to the other Group,
at any time before the Distribution Date or until the sixth anniversary thereof,

20

 

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

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

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

          Section 6.02 Ownership of Information. Any Information owned by one Group that is
provided to a requesting Party pursuant to Section 6.01 shall be deemed to remain the
property of the providing Party. Unless specifically set forth herein, nothing contained in this
Agreement shall be construed as granting or conferring rights of license or otherwise in any such
Information.

21

 

          Section 6.03 Compensation for Providing Information. Except as set forth in
Section 6.01(c), the Party requesting Information agrees to reimburse the other Party for
the reasonable costs, if any, of creating, gathering and copying such Information, to the extent
that such costs are incurred for the benefit of the requesting Party. Except as may be otherwise
specifically provided elsewhere in this Agreement or in any other agreement between the Parties,
such costs shall be computed in accordance with the providing Party’s standard methodology and
procedures.

          Section 6.04 Limitations on Liability. Neither Party shall have any liability to the
other Party in the event that any Information exchanged or provided pursuant to this Agreement that
is an estimate or forecast, or that is based on an estimate or forecast, is found to be inaccurate
in the absence of willful misconduct by the Party providing such Information. Neither Party shall
have any liability to the other Party if any Information is destroyed after reasonable efforts by
such Party to comply with the provisions of Section 6.01.

          Section 6.05 Other Agreements Providing for Exchange of Information. The rights and
obligations granted under this Article VI are subject to any specific limitations,
qualifications or additional provisions on the sharing, exchange, retention or confidential
treatment of Information set forth in any Ancillary Agreement.

          Section 6.06 Production of Witnesses; Records; Cooperation. (a) After the
Distribution Date, except in the case of an adversarial Action by one Party against the other
Party, each Party shall use reasonable efforts to make available to the other Party, upon written
request, the former, current and future directors, officers, employees, other personnel and agents
of the members of its Group as witnesses and any books, records or other documents within its
control or that it otherwise has the ability to make available, to the extent that any such person
(giving consideration to business demands of such directors, officers, employees, other personnel
and agents) or books, records or other documents may reasonably be required in connection with any
Action in which the requesting Party may from time to time be involved, regardless of whether such
Action is a matter with respect to which indemnification may be sought hereunder. The requesting
Party shall, except as otherwise required by Article V, bear all costs and expenses in
connection therewith.

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

          (c) Without limiting any provision of this Section, each of the Parties agrees to cooperate,
and to cause each member of its Group to cooperate, with the other Party in the defense of any
infringement or similar claim with respect to the Intellectual Property (as defined in the
Intellectual Property Agreement), including any claim of infringement of any mark using

22

 

the word “Ocwen,” “Altisource” or any derivation thereof and shall not acknowledge, or permit
any member of its Group to acknowledge, the validity or infringing use of any intellectual property
of a third Person in a manner that would hamper or undermine the defense of such infringement or
similar claim.

          (d) The obligation of the Parties to provide witnesses pursuant to this Section 6.06
is intended to be interpreted to facilitate cooperation and shall include the obligation to provide
as witnesses inventors and other officers without regard to whether the witness or the employer of
the witness could assert a possible business conflict (subject to the exception set forth in the
first sentence of Section 6.06(a)).

          (e) In connection with any matter contemplated by this Section 6.06, the Parties will
enter into a mutually acceptable joint defense agreement so as to maintain to the extent
practicable any applicable attorney-client privilege or work product immunity of any member of
either Group.

          Section 6.07 Confidentiality. (a) Subject to Section 6.08, each of OCWEN and
ALTISOURCE, on behalf of itself and each other member of its Group, agrees to hold, and to cause
its directors, officers, employees, agents, accountants, counsel and other advisors and
representatives to hold, in strict confidence, with at least the same degree of care that applies
to confidential and proprietary information of OCWEN pursuant to policies in effect as of the
Distribution Date, all Information concerning the other Group that is either in its possession
(including Information in its possession prior to the Distribution Date) or furnished by the other
Group or its directors, officers, employees, agents, accountants, counsel and other advisors and
representatives at any time pursuant to this Agreement, any Ancillary Agreement or otherwise, and
shall not use any such Information other than for such purposes as shall be expressly permitted
hereunder or thereunder, except, in each case, to the extent that such Information has been (i) in
the public domain through no fault of such Party or any other member of such Group or any of their
respective directors, officers, employees, agents, accountants, counsel and other advisors and
representatives, (ii) later lawfully acquired from other sources by such Party (or any other member
of such Party’s Group), which sources are not known by such Party to be themselves bound by a
confidentiality obligation, or (iii) independently generated without reference to any proprietary
or confidential Information of any member of the other Group.

          (b) Each Party agrees not to release or disclose, or permit to be released or disclosed, any
such Information (excluding Information described in clauses (i), (ii) and (iii) of Section
6.07(a)) to any other Person, except its directors, officers, employees, agents, accountants,
counsel and other advisors and representatives who need to know such Information (who shall be
advised of their obligations hereunder with respect to such Information), except in compliance with
Section 6.08. Without limiting the foregoing, when any Information is no longer needed for
the purposes contemplated by this Agreement or any Ancillary Agreement, each Party will promptly,
after request of the other Party, either return the Information to the other Party in a tangible
form (including all copies thereof and all notes, extracts or summaries based thereon) or certify
to the other Party that any Information not returned in a tangible form (including any such
Information that exists in an electronic form) has been destroyed (and such copies thereof and such
notes, extracts or summaries based thereon).

23

 

          Section 6.08 Protective Arrangements. In the event that either Party or any other
member of its Group either determines on the advice of its counsel that it is required to disclose
any Information pursuant to applicable law or receives any demand under lawful process or from any
Governmental Authority to disclose or provide Information of the other Party (or any other member
of the other Party’s Group) that is subject to the confidentiality provisions hereof, such Party
shall, to the extent permitted by law, notify the other Party as soon as practicable prior to
disclosing or providing such Information and shall cooperate, at the expense of the requesting
Party, in seeking any reasonable protective arrangements requested by such other Party. Subject to
the foregoing, the Person that received such request may thereafter disclose or provide Information
to the extent required by such law (as so advised by counsel) or by lawful process or such
Governmental Authority.

ARTICLE VII

Dispute Resolution

          Section 7.01 Disputes. Subject to Section 10.12 and except as otherwise
specifically provided in any Ancillary Agreement, the procedures for discussion, negotiation and
mediation set forth in this Article VII shall apply to all disputes, controversies or
claims (whether arising in contract, tort or otherwise) that may arise out of or relate to, or
arise under or in connection with, this Agreement or any Ancillary Agreement, or the transactions
contemplated hereby or thereby (including all actions taken in furtherance of the transactions
contemplated hereby or thereby on or prior to the date hereof), or the commercial or economic
relationship of the parties relating hereto or thereto, between or among any members of the OCWEN
Group, on the one hand, and any members of the ALTISOURCE Group, on the other hand.

          Section 7.02 Escalation; Mediation. (a) It is the intent of the Parties to use
reasonable efforts to resolve expeditiously any dispute, controversy or claim between or among them
with respect to the matters covered hereby that may arise from time to time on a mutually
acceptable negotiated basis. In furtherance of the foregoing, a Party involved in a dispute,
controversy or claim may deliver a notice (an “Escalation Notice”) demanding an in-person
meeting involving representatives of the Parties at a senior level of management (or if the Parties
agree, of the appropriate strategic business unit or division within such entity). A copy of any
such Escalation Notice shall be given to the General Counsel, or like officer or official, of the
Party involved in the dispute, controversy or claim (which copy shall state that it is an
Escalation Notice pursuant to this Agreement). Any agenda, location or procedures for such
discussions or negotiations between the Parties may be established by the Parties from time to
time; provided, however, that the Parties shall use reasonable efforts to meet
within 30 days of the Escalation Notice.

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

24

 

involved in the matter, except that each Party shall be responsible for its own expenses.
Mediation shall be a prerequisite to the commencement of any Action by either Party against the
other Party.

          (c) In the event that any resolution of any dispute, controversy or claim pursuant to the
procedures set forth in Section 7.02(a) or (b) in any way affects an agreement or
arrangement between either of the Parties and a third party insurance carrier, the consent of such
third party insurance carrier to such resolution, to the extent such consent is required, shall be
obtained before such resolution can take effect.

          Section 7.03 Court Actions. (a) In the event that either Party, after complying with
the provisions set forth in Section 7.02, desires to commence an Action, such Party may
submit the dispute, controversy or claim (or such series of related disputes, controversies or
claims) to any court of competent jurisdiction.

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

ARTICLE VIII

Further Assurances and Additional Covenants

          Section 8.01 Further Assurances. (a) In addition to the actions specifically provided
for elsewhere in this Agreement, each of the Parties shall, subject to Section 3.02 and
Section 4.02, use reasonable efforts, prior to, on and after the Distribution Date, to
take, or cause to be taken, all actions, and to do, or cause to be done, all things, reasonably
necessary, proper or advisable under applicable laws, regulations and agreements to consummate and
make effective the transactions contemplated by this Agreement and the Ancillary Agreements.

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

25

 

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

          (d) The Parties agree to take any reasonable actions necessary in order for the Distribution,
the Separation and any other transaction contemplated by this Agreement or any Ancillary Agreement
that is intended by the Parties to be tax-free to qualify as a tax-free transaction pursuant to
Sections 355, 361(a) and 368(a)(1)(D) of the Code.

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

          Section 8.02 Insurance Matters. (a) OCWEN and ALTISOURCE agree to cooperate in good
faith to provide for an orderly transition of insurance coverage from the date hereof through the
Distribution Date and for the treatment of any Insurance Policies that will remain in effect
following the Distribution Date on a mutually agreeable basis. In no event shall OCWEN, any other
member of the OCWEN Group or any OCWEN Indemnitee have liability or obligation whatsoever to any
member of the ALTISOURCE Group or any ALTISOURCE Indemnitee in the event that any Insurance Policy
or other contract or policy of insurance shall be terminated or otherwise cease to be in effect for
any reason, shall be unavailable or inadequate to cover any Liability of any member of the
ALTISOURCE Group or any ALTISOURCE Indemnitee for any reason whatsoever or shall not be renewed or
extended beyond the current expiration date.

ARTICLE IX

Termination

          Section 9.01 Termination. This Agreement may be terminated by OCWEN at any time, in
its sole discretion, prior to the Distribution Date.

          Section 9.02 Effect of Termination. In the event of any termination of this Agreement
prior to the Distribution Date, neither Party (or any of its directors or officers) shall have any
Liability or further obligation to the other Party.

ARTICLE X

Miscellaneous

          Section 10.01 Counterparts; Entire Agreement; Corporate Power. (a) This Agreement and
each Ancillary Agreement may be executed in one or more counterparts, including by facsimile or by
e-mail delivery of a “.pdf” format data file, all of which shall be

26

 

considered one and the same agreement, and shall become effective when one or more
counterparts have been signed by each party hereto or thereto and delivered to the other parties
hereto or thereto.

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

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

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

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

          Section 10.02 Governing Law. This Agreement and, unless expressly provided therein,
each Ancillary Agreement, shall be governed by and construed and interpreted in accordance with the
internal laws of the State of New York applicable to contracts made and to be performed wholly in
such State and irrespective of the choice of law principles of the State of New York, as to all
matters (other than with respect to the corporate action of the OCWEN board of directors attendant
to the declaration and payment of the dividend of the ALTISOURCE Common Stock, which shall be
governed by the law of the State of Florida.)

          Section 10.03 Assignability. Except as set forth in any Ancillary Agreement, this
Agreement and each Ancillary Agreement shall be binding upon and inure to the benefit of the
parties hereto and thereto and their respective successors and permitted assigns; provided,
however, that no party hereto or thereto may assign its rights or delegate its obligations
under this Agreement or any Ancillary Agreement without the express prior written consent of the
other parties hereto or thereto.

          Section 10.04 Third Party Beneficiaries. Except for the indemnification rights under
this Agreement of any OCWEN Indemnitee or ALTISOURCE Indemnitee in their respective capacities as
such, (a) the provisions of this Agreement and each Ancillary Agreement are solely for the benefit
of the parties hereto or thereto and are not intended to confer upon any Person except the parties
hereto or thereto any rights or remedies hereunder or thereunder and (b) there are no third party
beneficiaries of this Agreement or any Ancillary Agreement and neither this Agreement nor any
Ancillary Agreement shall provide any third person with any

27

 

remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing
without reference to this Agreement or any Ancillary Agreement.

          Section 10.05 Notices. All notices or other communications under this Agreement or
any Ancillary Agreement shall be in writing and shall be deemed to be duly given when (a) delivered
in person, (b) sent by telecopier (except that, if not sent during normal business hours for the
recipient, then at the opening of business on the next business day for the recipient) to the fax
numbers set forth below or (c) deposited in the United States mail or private express mail, postage
prepaid, addressed as follows:

If to OCWEN, to:

Ocwen Financial Corporation

1661 Worthington Road, Suite 100

West Palm Beach, Florida 33409

Attn: Corporate Secretary

Fax No.: (561) 471-4264

If to ALTISOURCE to:

Altisource Portfolio Solutions S.A.

2-8 Avenue Charles De Gaulle

L-1653 Luxembourg

Attn: Corporate Secretary

Fax No.: 352-2744-9499

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

          Section 10.06 Severability. If any provision of this Agreement or any Ancillary
Agreement or the application thereof to any Person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or
thereof, or the application of such provision to Persons or circumstances or in jurisdictions other
than those as to which it has been held invalid or unenforceable, shall remain in full force and
effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or
legal substance of the transactions contemplated hereby or thereby, as the case may be, is not
affected in any manner materially adverse to either Party. Upon any such determination, the
Parties shall negotiate in good faith in an effort to agree upon a suitable and equitable provision
to effect the original intent of the Parties.

          Section 10.07 Publicity. Prior to the Distribution, each of ALTISOURCE and OCWEN
shall consult with each other prior to issuing any press releases or otherwise making public
statements with respect to the Distribution or any of the other transactions contemplated hereby
and prior to making any filings with any Governmental Authority with respect thereto.

28

 

          Section 10.08 Expenses. Except as expressly set forth in this Agreement or in any
Ancillary Agreement, all third party fees, costs and expenses paid or incurred in connection with
the Separation and the Distribution will be paid by OCWEN.

          Section 10.09 Headings. The article, section and paragraph headings contained in this
Agreement and in the Ancillary Agreements are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement or any Ancillary Agreement.

          Section 10.10 Survival of Covenants. Except as expressly set forth in this Agreement
or any Ancillary Agreement, (a) the covenants in this Agreement and the liabilities for the breach
of any obligations in this Agreement and (b) any covenants, representations or warranties contained
in any Ancillary Agreement and any liabilities for the breach of any obligations contained in any
Ancillary Agreement, in each case, shall survive each of the Separation and the Distribution and
shall remain in full force and effect.

          Section 10.11 Waivers of Default. Waiver by any party hereto or to any Ancillary
Agreement of any default by any other party hereto or thereto of any provision of this Agreement or
such Ancillary Agreement shall not be deemed a waiver by the waiving party of any subsequent or
other default.

          Section 10.12 Specific Performance. Subject to Section 4.02 and
notwithstanding the procedures set forth in Article VII, in the event of any actual or
threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement
or any Ancillary Agreement, the party or parties who are to be hereby or thereby aggrieved shall
have the right to specific performance and injunctive or other equitable relief of its rights under
this Agreement or such Ancillary Agreement, in addition to any and all other rights and remedies at
law or in equity, and all such rights and remedies shall be cumulative. The other party or parties
shall not oppose the granting of such relief. The parties to this Agreement and any Ancillary
Agreement agree that the remedies at law for any breach or threatened breach hereof or thereof,
including monetary damages, are inadequate compensation for any loss and that any defense in any
action for specific performance that a remedy at law would be adequate is waived. Any requirements
for the securing or posting of any bond with such remedy are waived.

          Section 10.13 Amendments. No provisions of this Agreement or any Ancillary Agreement
shall be deemed waived, amended, supplemented or modified by any party hereto or thereto, unless
such waiver, amendment, supplement or modification is in writing and signed by the authorized
representative of the party against whom it is sought to enforce such waiver, amendment, supplement
or modification.

          Section 10.14 Interpretation. Words in the singular shall be held to include the
plural and vice versa and words of one gender shall be held to include the other genders as the
context requires. The terms “hereof,” “herein, “and “herewith” and words of similar import, unless
otherwise stated, shall be construed to refer to this Agreement or the applicable Ancillary
Agreement as a whole (including all of the schedules, exhibits and appendices hereto or thereto)
and not to any particular provision of this Agreement or such Ancillary Agreement. Article,
Section, Exhibit, Schedule and Appendix references are to the articles, sections, exhibits,
schedules and appendices of or to this Agreement or the applicable Ancillary Agreement unless

29

 

otherwise specified. Any reference herein to this Agreement or any Ancillary Agreement,
unless otherwise stated, shall be construed to refer to this Agreement or such Ancillary Agreement
as amended, supplemented or otherwise modified from time to time, as
permitted by Section 10.14 and the terms of any applicable provision in any Ancillary Agreement. The word “including” and
words of similar import when used in this Agreement (or the applicable Ancillary Agreement) shall
mean “including, without limitation,” unless the context otherwise requires or unless otherwise
specified. The word “or” shall not be exclusive. There shall be no presumption of interpreting
this Agreement or any provision hereof against the draftsperson of this Agreement or any such
provision.

          Section 10.15 Jurisdiction; Service of Process. Any action or proceeding arising out
of or relating to this Agreement or any Ancillary Agreement shall be brought in the courts of the
State of New York located in the County of New York or in the United States District Court for the
Southern District of New York (if any party to such action or proceeding has or can acquire
jurisdiction), and each of the parties hereto or thereto irrevocably submits to the exclusive
jurisdiction of each such court in any such action or proceeding, waives any objection it may now
or hereafter have to venue or to convenience of forum, agrees that all claims in respect of the
action or proceeding shall be heard and determined only in any such court and agrees not to bring
any action or proceeding arising out of or relating to this Agreement or any Ancillary Agreement in
any other court. The parties to this Agreement or any Ancillary Agreement agree that any of them
may file a copy of this paragraph with any court as written evidence of the knowing, voluntary and
bargained agreement between the parties hereto and thereto irrevocably to waive any objections to
venue or to convenience of forum. Process in any action or proceeding referred to in the first
sentence of this Section may be served on any party to this Agreement or any Ancillary Agreement
anywhere in the world.

          Section 10.16 Waiver of Jury Trial. EACH PARTY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY, WAIVES (TO THE EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT AND AGREES THAT ANY SUCH DISPUTE
SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.

* * * * *

30

 

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

	 	 	 	 	 
	 	OCWEN FINANCIAL CORPORATION

 	 
	 	By  	/s/ Ronald M. Faris
 	 
	 	 	Name:  	Ronald M. Faris 	 
	 	 	Title:  	President 	 
	 
	 	ALTISOURCE PORTFOLIO SOLUTIONS S.A.

 	 
	 	By  	/s/ William B. Shepro
 	 
	 	 	Name:  	William B. Shepro 	 
	 	 	Title:  	Director 	 
	 

1

 

Schedule I

Separation Transactions

	1.	 	NCI Holdings, Inc. will change its name to Altisource US Holdings, Inc.
(“Altisource US Holdings”) and form a new, wholly-owned Delaware corporation named
Altisource Solutions, Inc. (“Altisource Solutions”).
	 
	2.	 	Altisource US Holdings forms a new, wholly-owned Georgia corporation named Altisource
US Data, Inc. (“Altisource US Data”).
	 
	3.	 	Altisource US Holdings forms one or more new, wholly-owned corporations (solely if
required for licensing reasons) named Altisource US Broker/Trustee Corp. (“Altisource
US Broker/Trust”).
	 
	4.	 	Ocwen Fulfillment Operations LLC (“Ocwen Fulfillment”) changes its name to
Altisource Fulfillment Operations LLC (“Altisource Fulfillment”) and Ocwen Asset
Investment Corp. (“Ocwen Asset Invest Co.”) dividends cash in an amount equal to
(or otherwise required to achieve based on otherwise-available cash on hand) the fair value
purchase price of Altisource Fulfillment (the “Fulfillment Purchase Amount”) to
Investors Mortgage Insurance Holding Company (“Investors Mortgage Co.”).
	 
	5.	 	Investors Mortgage Co. dividends the Fulfillment Purchase Amount to Ocwen.
	 
	6.	 	Ocwen contributes the Fulfillment Purchase Amount to Altisource US Holdings.
	 
	7.	 	Altisource US Holdings purchases Altisource Fulfillment by paying the Fulfillment
Purchase Amount to Ocwen Asset Invest Co. in exchange for its equity interest in Altisource
Fulfillment.
	 
	8.	 	Ocwen contributes its equity interests in (i) Premium Title Services, Inc.
(“Premium Title”) and (ii) REALHome Services and Solutions, Inc.
(“REALHome”) to Altisource US Holdings.
	 
	9.	 	Ocwen purchases Portfolio Management Outsourcing Solutions, LLC (“Portfolio
Mgt”) by paying an amount equal to (or otherwise required to achieve based on
otherwise-available cash on hand) the fair value purchase price of
Portfolio Mgt (the “Portfolio Purchase Amount”) to RMSI, Inc. (“RMSI”) in exchange for its
equity interest in Portfolio Mgt.
	 
	10.	 	RMSI dividends the Portfolio Purchase Amount to Ocwen.
	 
	11.	 	Ocwen forms a new, wholly-owned Delaware limited liability company named Altisource
Holdings, LLC (“Altisource Holdings”) and contributes an amount of cash equal to
not less than 00.01% of the fair value purchase price of Ocwen Outsourcing Solutions (100%
of such fair value purchase price being the “Solutions Purchase Amount”).

1

 

	12.	 	Ocwen Capital Management, LLC (“Ocwen Capital Mgt”) and Ocwen Loan Servicing,
LLC (“Ocwen Loan Srvc”) form Altisource Outsourcing Solutions S.R.L.
(“Altisource Outsourcing Solutions”), with Ocwen Capital Mgt owning a 99.99%
interest and Ocwen Loan Srvc owning a 0.01% interest.
	 
	13.	 	Ocwen Capital Mgt dividends cash in an amount equal to (or otherwise required to
achieve based on otherwise-available cash on hand) 99.99% of the Solutions Purchase Amount
to Ocwen.
	 
	14.	 	Altisource Holdings purchases 0.01% of the equity interest in Altisource Outsourcing
Solutions by paying 0.01% of the Solutions Purchase Amount to Ocwen Loan Srvc.
	 
	15.	 	Ocwen purchases 99.99% of the equity interest in Altisource Outsourcing Solutions by
paying 99.99% of the Solutions Purchase Amount to Ocwen Capital Mgt.
	 
	16.	 	Altisource Portfolio Solutions S.à r.l. (formerly Ocwen Luxembourg S.à r.l.) converts
to a Société Anonyme (“Altisource”).
	 
	17.	 	Ocwen Business Solutions Private Limited changes its name to Altisource Business
Solutions Private Limited (“ABSPL”) and the Altisource Solutions business of Ocwen
Financial Solutions Private Limited (“OFSPL”) is demerged into ABSPL.
	 
	18.	 	ABSPL issues shares to Ocwen Asia Holdings Ltd. (the shareholder of OFSPL) as
consideration for the demerger.
	 
	19.	 	Altisource forms Altisource Solutions S.à r.l., a Luxembourg company (“Altisource
Solutions”).
	 
	20.	 	Altisource Solutions forms Altisource Asia Holdings Ltd., a Mauritius company
(“Altisource Asia Holdings”).
	 
	21.	 	Ocwen purchases Altisource Asia Holdings for fair value (the “Altisource Asia
Holdings Purchase Amount”) from Altisource Solutions.
	 
	22.	 	Altisource Solutions distributes the Altisource Asia Holdings Purchase Amount to
Altisource.
	 
	23.	 	Altisource distributes the Altisource Asia Holdings Purchase Amount to Ocwen.
	 
	24.	 	Ocwen forms Ocwen Luxembourg S.à r.l. II (“Ocwen Lux II”) and contributes
Altisource Asia Holdings to Ocwen Lux II.
	 
	25.	 	Ocwen lends cash in an amount equal to the fair value purchase price of OFSPL (the
“OFSPL Purchase Amount”) to Altisource Asia Holdings in exchange for a promissory
note; Altisource Asia Holdings purchases OFSPL from Ocwen Asia Holdings.
	 
	26.	 	Ocwen Asia Holdings distributes the OFSPL Purchase Amount to Altisource.

2

 

	27.	 	Altisource distributes the OFSPL Purchase Amount to Ocwen.
	 
	28.	 	Ocwen transfers intellectual property of the Altisource Solutions business to
Altisource Solutions in exchange for shares in Altisource Solutions.
	 
	29.	 	Ocwen contributes its shares in Altisource Solutions to
Altisource in exchange for shares in Altisource.
	 
	30.	 	Ocwen lends cash in an amount equal to the fair value purchase price of (i) ABSPL (the
“ABSPL Purchase Amount”) plus (ii) Ocwen Asia Holdings (the “Ocwen Asia
Holdings Purchase Amount”) to Altisource Solutions in exchange for a promissory note.
	 
	31.	 	Altisource Solutions purchases ABSPL by paying the ABSPL Purchase Amount borrowed from
Ocwen to Ocwen Asia Holdings. Ocwen Asia Holdings distributes the ABSPL Purchase Amount to
Altisource.
	 
	32.	 	Altisource Solutions purchases Ocwen Asia Holdings by paying the Ocwen Asia Holdings
Purchase Amount to Altisource.
	 
	33.	 	Altisource lends cash in an amount equal to the ABSPL Purchase Amount to Ocwen Asia
Holdings in exchange for a promissory note. Ocwen Asia Holdings purchases ABSPL by paying
the ABSPL Purchase Amount to Altisource Solutions.
	 
	34.	 	Altisource contributes the Ocwen Asia Holdings Purchase Amount to Altisource Solutions
in exchange for additional share capital; Altisource Solutions repays Ocwen the ABSPL
Purchase Amount and the Ocwen Asia Holdings Purchase Amount, and Ocwen discharges
Altisource Solutions’ promissory note.
	 
	35.	 	Altisource Asia Holdings changes its name to Ocwen Asia Holdings I Ltd. and Ocwen Asia
Holdings Ltd. changes its name to Altisource Asia Holdings I Ltd.
	 
	36.	 	Ocwen contributes to Altisource its equity interests in (i) Altisource US Holdings,
(ii) Western Progressive Trustee, LLC (“Western Progressive”), (iii) Portfolio Mgt,
(iv) Altisource Outsourcing Solutions (its 99.99% interest) and (v) Altisource Holdings in
exchange for additional shares of Altisource.
	 
	37.	 	Altisource contributes to Altisource Solutions its equity interests in (i) Altisource
US Holdings, (ii) Western Progressive, (iii) Portfolio Mgt, (iv) Altisource Outsourcing
Solutions (its 99.99% interest) and (v) Altisource Holdings in exchange for additional shares of Altisource Solutions.
	 
	38.	 	Intentionally Omitted.
	 
	39.	 	Ocwen contributes the promissory note made in step 25 by Altisource Asia Holdings (now
known as Ocwen Asia Holdings I Ltd.) to Ocwen Lux II in exchange for additional shares of
Ocwen Lux II.

3

 

	40.	 	Ocwen Lux II contributes the promissory note made by Altisource Asia Holdings (now
known as Ocwen Asia Holdings I Ltd.) to Ocwen Asia Holdings I Ltd. in exchange for
additional shares of Ocwen Asia Holdings I Ltd.
	 
	41.	 	Ocwen discharges the note made by Altisource Asia Holdings (now known as Ocwen Asia
Holdings I Ltd.).
	 
	42.	 	Altisource contributes the promissory note made in step 33 by Ocwen Asia Holdings (now
known as Altisource Asia Holdings I Ltd.) to Altisource Solutions in exchange for
additional shares of Altisource Solutions.
	 
	43.	 	Altisource Solutions contributes the promissory note made by Ocwen Asia Holdings (now
known as Altisource Asia Holdings I Ltd.) to Altisource Asia Holdings I Ltd. in exchange
for additional shares of Altisource Asia Holdings I Ltd.
	 
	44.	 	Altisource discharges the note made by Ocwen Asia Holdings (now known as Altisource
Asia Holdings I Ltd.).

4

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