Exhibit 10.1

 

 

 

January 29, 2014

 

Red Mountain Capital Partners LLC

10100 Santa Monica Boulevard, Suite 925

Los Angeles, California 90067  

Ladies and Gentlemen:

1.Red Mountain Capital Partners LLC, a Delaware limited liability company (“Red
Mountain”), and Destination XL Group, Inc., a Delaware corporation (the
“Company” and, together with Red Mountain, the “Parties”), understand and agree
that, subject to the terms of, and in accordance with, this letter agreement,
the Company has agreed and expects to provide Red Mountain with certain
information about its properties, employees, finances, businesses and operations
(including monthly financial information and the information and materials
provided or made available to the board of directors of the Company (the
“Board”) during the time when any person affiliated with Red Mountain serves on
the Board); provided that nothing in this letter agreement obligates the Company
to disclose any information if such disclosure would be unlawful or result in a
breach by the Company or one of its subsidiaries of a confidentiality agreement
with a third party.  Any such information provided by the Company shall be used
by Red Mountain and its Affiliates (as defined below) solely to enable Red
Mountain and its Affiliates to make non-publicly disclosed suggestions to the
Board regarding the Company’s ongoing business and corporate strategies and
policies.

2.All information about the Company or any third party that is furnished by the
Company or its Representatives (as defined below) to Red Mountain before the
date hereof, now or in the future, and regardless of the manner in which it is
furnished, is referred to in this letter agreement as “Proprietary
Information”.  Proprietary Information does not include, however, any
information that (i) is or becomes generally available to the public other than
as a result of a disclosure by Red Mountain, any of its Affiliates or any of
their respective Representatives in violation of this letter agreement; (ii) was
available to Red Mountain, any of its Affiliates or any of their respective
Representatives on a non-confidential basis prior to its disclosure by the
Company or its Representatives; (iii) becomes available to Red Mountain, any of
its Affiliates or any of their respective Representatives from a person other
than the Company or its Representatives who is not subject to any legally
binding obligation to keep such information confidential; or (iv) was
independently developed by Red Mountain, any of its Affiliates or any of their
respective Representatives without reference to or use of the Proprietary
Information.  For purposes of this letter agreement, (x) “Affiliates” of Red
Mountain shall mean (A) Red Mountain Partners, L.P., a Delaware limited
partnership, (B) RMCP GP LLC, a Delaware limited liability company, (C) Red
Mountain Capital Management, Inc., and (D) Willem Mesdag, a natural person, (y)
“Representative” shall mean, as to any person, its directors, officers,
employees, agents and attorneys; and (z) “person” shall be broadly

 

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interpreted to include, without limitation, any corporation, company,
partnership, other entity or individual.

3.Subject to paragraph 4 below, unless otherwise agreed to in writing by the
Company, Red Mountain shall, (i) except as required by law, keep all Proprietary
Information confidential and not disclose or reveal any Proprietary Information
to any person (other than to its Affiliates, its Representatives and
Representatives of its Affiliates who have a need to know such information for
purposes of assisting in Red Mountain’s evaluation of the Company, provided that
each such Affiliate and Representative shall keep confidential all Proprietary
Information that is so disclosed or revealed to him or her in accordance with
Red Mountain’s confidentiality obligations hereunder with respect to such
Proprietary Information); (ii) not use Proprietary Information for any purpose
other than enabling Red Mountain to make non-publicly disclosed suggestions to
the Board regarding the Company’s ongoing business and corporate strategies and
policies; and (iii) except as required by law or legal process, not disclose to
any person the fact that Proprietary Information has been disclosed to Red
Mountain, provided that, for the avoidance of doubt, the disclosure of the
existence of this letter agreement and the filing of this letter agreement as an
exhibit to any Schedule 13D or amendment thereto shall not be deemed to be a
breach of the foregoing clause (iii).  Red Mountain will be responsible for any
violation of the confidentiality provisions of this letter agreement by its
Affiliates, its Representatives and the Representatives of its Affiliates as if
they were parties hereto.  The obligations of Red Mountain contained in this
paragraph 3 to keep Proprietary Information confidential shall survive any
termination or expiration of this letter agreement solely for a period of one
year from and after such termination or expiration.

4.In the event that Red Mountain, any of its Affiliates or any of their
respective Representatives is requested pursuant to, or required by, applicable
law or regulation (including, without limitation, any rule, regulation or policy
statement of any national securities exchange, market or automated quotation
system applicable to Red Mountain or any of its Affiliates) or by legal process
to disclose any Proprietary Information, Red Mountain shall provide the Company
with prompt notice of such request or requirement in order to enable the Company
(i) to seek an appropriate protective order or other remedy, (ii) to consult
with Red Mountain with respect to the Company’s taking steps to resist or narrow
the scope of such request or legal process or (iii) to waive compliance, in
whole or in part, with the terms of this letter agreement.  In the event that
such protective order or other remedy is not timely sought or obtained, or the
Company waives compliance, in whole or in part, with the terms of this letter
agreement, Red Mountain shall (x) use commercially reasonable efforts to
disclose only that portion of the Proprietary Information which is legally
required to be disclosed and to ensure that all Proprietary Information that is
so disclosed will be accorded confidential treatment and (y) provide the Company
with the text of such required disclosure as far in advance of its disclosure as
reasonably practicable and consider in good faith the Company’s suggestions
concerning the nature and scope of the information to be contained therein.  In
the event that Red Mountain shall have complied, in all material respects, with
the provisions of this paragraph 4, such disclosure may be made

 

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by Red Mountain, such Affiliate or such Representative, as applicable, without
any liability hereunder.

5.For a period commencing on the date of this letter agreement and ending on the
later to occur of (i) December 31, 2014 or (ii) (A) the date upon which no
persons affiliated with Red Mountain are serving on the Board (in the case of
subparagraph (a) below) and (B) three months after such date (in the case of
subparagraphs (b) through (h) below), none of Red Mountain or any person
affiliated with Red Mountain shall, without the prior written consent of the
Company or the Board, directly or indirectly:

 

(a)

acquire, offer to acquire, or agree to acquire, directly or indirectly, by
purchase or otherwise, (i) any additional common stock of the Company or direct
or indirect rights to acquire common stock of the Company, such that Red
Mountain, its Affiliates and any other person affiliated with Red Mountain
collectively would beneficially own, directly or indirectly, for purposes of
Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and Rule 13d-3 thereunder (or any comparable or successor law or
regulation), after giving effect to such acquisition, in excess of 15% of the
amount of the issued and outstanding common stock of the Company, provided that,
for the avoidance of doubt, any increase in percentage beneficial ownership of
common stock of the Company beyond 15% that is caused by a reduction in the
number of issued and outstanding common stock of the Company from time to time
shall not be deemed to be a violation of this subparagraph (a), or (ii) any
assets of the Company or any subsidiary thereof or any successor to or person in
control of the Company;

 

(b)

make, or in any way participate, directly or indirectly, in any “solicitation”
of “proxies” to vote (as such terms are used in the rules of the Securities and
Exchange Commission), or seek to advise or influence any person or entity with
respect to the voting of any voting securities of the Company;

 

(c)

nominate, or seek to nominate, directly or indirectly, any person to the Board;

 

(d)

make any public announcement with respect to, or submit a proposal for, or offer
of (with or without conditions) any extraordinary transaction involving the
Company or any of its securities or assets (including, for the avoidance of
doubt and without limitation, a tender offer);

 

(e)

form, join or in any way participate in a “group” as defined in Section 13(d)(3)
of the Exchange Act in connection with any of the foregoing; provided that, for
the avoidance of doubt, the existence of a group consisting of Red Mountain, its
Affiliates and other persons affiliated with Red Mountain shall not be deemed to
be a violation of this subparagraph (e);

 

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(f)

otherwise act or seek to control or influence the Board or the management or
policies of the Company (provided that the taking of any action described in
subparagraph (a) after the expiration of the restrictions thereunder shall not,
by itself, be deemed a violation of this subparagraph (f));

 

(g)

take any action that could reasonably be expected to require the Company to make
a public announcement regarding the possibility of any of the events described
in subparagraphs (a) through (e) above (provided that the taking of any action
described in subparagraph (a) after the expiration of the restrictions
thereunder shall not, by itself, be deemed a violation of this subparagraph
(g)); or

 

(h)

request that the Company or any of its Representatives, directly or indirectly,
to amend or waive any provision of this paragraph 5.

For the avoidance of doubt, if Mr. Mesdag or any other person affiliated with
Red Mountain serves on the Board, the provisions of this paragraph 5 are not
intended to be construed to limit Mr. Mesdag or such person’s confidential
communications with the Company or the Board in his capacity as a member of the
Board.

6.Notwithstanding anything to the contrary herein, Red Mountain may, in its sole
discretion, terminate the provisions of paragraph 5 of this letter agreement
(including all restrictions thereunder on the activities in which Red Mountain,
its Affiliates and other persons affiliated with Red Mountain may engage with
respect to the Company) by delivering written notice of such termination to the
Company at any time after the approval by the Board of:

 

(a)

any sale of more than 20% of the assets of the Company and its subsidiaries,
taken as a whole;

 

(b)

the beneficial ownership (as defined by Rule 13d-3 under the Exchange Act) by
any person of more than 20% of any class of outstanding equity securities of the
Company, including any equity issuance, tender offer, exchange offer or other
transaction or series of transactions that, if consummated, would result in any
person beneficially owning more than 20% of any class of outstanding equity
securities of the Company; or

 

(c)

any merger, consolidation or other business combination involving the Company or
any of its subsidiaries and a third party, other than any such transaction where
(i) the holders of equity securities of the Company outstanding immediately
prior to such transaction continue to hold a majority of the equity securities
of the surviving or resulting company or its ultimate parent immediately after
giving effect to the transaction, and (ii) does not otherwise involve either (A)
any sale of more than 20% of the assets of the Company and its subsidiaries,
taken as a whole or (B) where no person after such transaction will beneficially
own (within the meaning

 

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of Rule 13d-3 under the Exchange Act) more than 20% of any class of outstanding
equity securities of the Company.

In addition, if the Board undertakes a formal process to solicit proposals with
respect to any of the foregoing or, with respect to unsolicited proposals,
determines that any proposal relating to any of the foregoing is reasonably
likely to be approved, the Company shall notify Red Mountain that paragraph 5(h)
has been waived by the Company.

7.To the extent that any Proprietary Information may include material subject to
the attorney-client privilege, work product doctrine or any other applicable
privilege concerning pending or threatened legal proceedings or governmental
investigations, the Parties understand and agree that they have a commonality of
interest with respect to such matters and it is their desire, intention and
mutual understanding that the sharing of such material is not intended to, and
shall not, waive or diminish in any way the confidentiality of such material or
its continued protection under the attorney-client privilege, work product
doctrine or other applicable privilege.  All Proprietary Information provided by
the Company that is entitled to protection under the attorney-client privilege,
work product doctrine or other applicable privilege shall remain entitled to
such protection under these privileges, this letter agreement, and under the
joint defense doctrine.  Nothing in this letter agreement obligates the Company
to reveal material subject to the attorney-client privilege, work product
doctrine or any other applicable privilege.  For the avoidance of doubt, if Mr.
Mesdag or any other person affiliated with Red Mountain serves on the Board, Mr.
Mesdag or such person shall not share any legally privileged information
received in Mesdag or such person’s capacity as a member of the Board with Red
Mountain.  

8.Red Mountain acknowledges that neither the Company nor any of its
Representatives makes any express or implied representation or warranty as to
the accuracy or completeness of any Proprietary Information, and Red Mountain
agrees that none of such persons shall have any liability to any of Red
Mountain, any of its Affiliates or any of their respective Representatives
relating to or arising from the use of any Proprietary Information.

9.At any time upon the request of the Company, Red Mountain shall promptly
deliver to the Company or destroy (provided that any such destruction shall be
certified by Red Mountain) all Proprietary Information and all copies,
reproductions, summaries, analyses or extracts thereof or based thereon (whether
in hard-copy form or on intangible media, such as electronic mail or computer
files) in the possession of Red Mountain, any of its Affiliates or any of their
respective Representatives; provided that Red Mountain, its Affiliates and their
respective Representatives shall be permitted to retain a copy of such
Proprietary Information to the extent such person believes in good faith that
the retention of such copy is required under applicable law (including the
recordkeeping requirements under the Investment Advisers Act of 1940, as
amended).  Red Mountain acknowledges that the Company reserves the right, in its
sole discretion and without giving any reason therefor, to request the return or
destruction of Proprietary Information pursuant to this paragraph 9.

 

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10.Red Mountain is aware of the restrictions imposed by the United States
securities laws on the purchase or sale of securities by any person who has
received material, non-public information from the issuer of such securities and
on the communication of such information to any other person when it is
reasonably foreseeable that such other person is likely to purchase or sell such
securities in reliance upon such information.

11.Without prejudice to the rights and remedies otherwise available to either
party hereto, the Company shall be entitled to equitable relief by way of
injunction or otherwise if Red Mountain, any of its Affiliates or any of their
respective Representatives breaches or threatens to breach any of the provisions
of this letter agreement.

12.No failure or delay by any Party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any right, power or privilege hereunder.

13.This letter agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.  Each Party hereby irrevocably and
unconditionally consents to the exclusive institution and resolution of any
action, suit or proceeding of any kind or nature with respect to or arising out
of this letter agreement brought by any Party in the Chancery Court of the State
of Delaware and the appellate courts thereof.  Each Party hereby irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this letter agreement in such court, and further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.  The Parties agree that a final
judgment in any such dispute shall be conclusive and may be enforced in other
jurisdictions by suits on the judgment or in any other manner provided by law.

14.This letter agreement contains the entire agreement between the Parties
concerning the subject matter hereof, and no modification of this letter
agreement or waiver of the terms and conditions hereof shall be binding unless
approved in writing by the Parties.

15.This letter agreement shall terminate automatically upon the later to occur
of (i) December 31, 2014 or (ii) the date upon which no persons affiliated with
Red Mountain are serving on the Board; provided that Red Mountain’s obligations
under paragraphs 3 and 5 shall terminate as provided for therein and in
paragraph 6.

16.This letter agreement may be executed in two or more counterparts (including
by fax and .pdf), which together shall constitute a single agreement.

 

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Please confirm your agreement with the foregoing by signing and returning this
letter agreement to the undersigned, whereupon this letter agreement shall
become a binding agreement.

Very truly yours,

 

DESTINATION XL GROUP, INC.

 

 

By:  /s/ David A. Levin___________

Name: David A. Levin

Title:   President & CEO

 

 

 

ACCEPTED AND AGREED as of the date first written above:

 

RED MOUNTAIN CAPITAL PARTNERS LLC

By: /s/ Willem Mesdag____________

Name:Willem Mesdag

Title:Managing Partner

 

 

 

 

[Signature Page to Letter Agreement]