Document:

EXHIBIT 10.1

 

EXECUTION VERSION

 

SECOND AMENDMENT

 

This Second Amendment (this “Agreement”) to the Credit Agreement (as defined below) is dated as of November 16, 2017, and effective in accordance with Section 4 below, by and among WALKER & DUNLOP, INC., a Maryland corporation (the “Borrower”), the Subsidiary Guarantors, the Lenders party hereto (the “Consenting Lenders”) pursuant to an authorization in form and substance reasonably satisfactory to the Administrative Agent (each, a “Lender Authorization”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as Administrative Agent.

 

Statement of Purpose

 

The Borrower, the Lenders and the Administrative Agent are parties to that certain Credit Agreement dated as of December 20, 2013 (as amended, supplemented or otherwise modified as of the date hereof, the “Credit Agreement”) pursuant to which the Lenders have extended a certain credit facility to the Borrower, including, without limitation, the Initial Term Loans referred to below.

 

On the date hereof (but prior to giving effect to this Agreement), there are outstanding Initial Term Loans under the Credit Agreement in an aggregate principal amount of $166,499,090.90.

 

The Borrower intends to incur a new class of term loans (the “Tranche B-1 Term Loans”) and to concurrently (a) exchange a portion of such Tranche B-1 Term Loans in replacement of Initial Term Loans pursuant to a cashless settlement as described herein and (b) to the extent any Initial Term Loans are not so exchanged, to (i) issue such additional Tranche B-1 Term Loans and use the proceeds of such Tranche B-1 Term Loans to refinance the Initial Term Loans outstanding as of the Effective Date (as defined below) after giving effect to such cashless settlement and/or (ii) with the consent of the Administrative Agent, to repay Initial Term Loans of Lenders not providing Tranche B-1 Term Commitments (as defined below).

 

The Borrower has requested that the Administrative Agent and the Lenders agree to amend the Credit Agreement as more specifically set forth herein, including, without limitation, to enable the Borrower to exchange Tranche B-1 Term Loans in replacement of Initial Term Loans and to refinance the Initial Term Loans that are not so exchanged with proceeds of the Tranche B-1 Term Loans on the Effective Date.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

1.                                      Capitalized Terms.  All capitalized undefined terms used in this Agreement (including, without limitation, in the introductory paragraph and the Statement of Purpose hereto) shall have the meanings assigned thereto in the Credit Agreement.

 

2.                                      Tranche B-1 Term Loans.

 

(a)                                 The Administrative Agent has made entries in the Register which set forth the allocated commitments (the “Tranche B-1 Term Commitments”) received by it with respect to the Tranche B-1 Term Loans from various financial institutions. The Administrative Agent has notified each Tranche B-1 Term Lender (as defined below) of its allocated Tranche B-1 Term Commitment.  Subject to the satisfaction or waiver of the conditions precedent set forth in Section 4 hereof and to the provisions of Sections 2(c) and 11 hereof, each Person identified in the Register as having a Tranche B-1 Term Commitment as of the Effective Date (each, a “Tranche B-1 Term Lender”) agrees, severally and not jointly, to make, on the Effective Date, a 

 

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Tranche B-1 Term Loan to the Borrower in an aggregate principal amount equal to its Tranche B-1 Term Commitment.  Each Tranche B-1 Term Loan shall, except to the extent provided herein, be made pursuant to a cashless settlement of Initial Term Loans of each Existing Lender (as defined below) as described herein and a payment in cash to the Administrative Agent, on behalf of the Borrower, to repay the outstanding Initial Term Loans that are not subject to such cashless settlement.  The Tranche B-1 Term Commitment of each Tranche B-1 Term Lender shall automatically terminate upon the making of the Tranche B-1 Term Loans on the Effective Date. The proceeds of the Tranche B-1 Term Loans shall be used by the Borrower on the Effective Date solely to repay (or replace via cashless settlement) the principal amount of the Initial Term Loans outstanding as of the Effective Date. The transactions contemplated by this Section 2(a) are collectively referred to as the “Amendment Refinancing Transactions”.

 

(b)                                 Immediately upon the consummation of the Amendment Refinancing Transactions, each reference to the term “Initial Term Loan” in the Credit Agreement and the other Loan Documents shall be deemed to refer to the Tranche B-1 Term Loan.  Except as expressly provided in this Agreement, the Tranche B-1 Term Loans shall be on terms identical to the Initial Term Loans (including as to maturity, amortization, Subsidiary Guarantors, Collateral (and ranking) and payment priority).

 

(c)                                  Notwithstanding anything herein to the contrary, in connection with any cashless settlement (i) each Lender holding Initial Term Loans immediately prior to the Effective Date (each such Lender, an “Existing Lender”) shall, in lieu of its requirement to fund a Tranche B-1 Term Loan in accordance with Section 2(a) hereof, be deemed to have made to the Borrower a Tranche B-1 Term Loan on the Effective Date in an amount equal to the lesser of (A) the aggregate principal amount of the Initial Term Loans held by such Existing Lender immediately prior to the Effective Date (such Existing Lender’s “Existing Loan Amount”) and (B) such Existing Lender’s Tranche B-1 Term Commitment; provided that if such Existing Lender’s Tranche B-1 Term Commitment exceeds such Existing Lender’s Existing Loan Amount, then such Existing Lender shall be required to fund a Tranche B-1 Term Loan on the Effective Date in accordance with Section 2(a) hereof in an aggregate principal amount equal to such excess, and (ii) the Borrower shall, in lieu of its obligation to prepay Initial Term Loans of any Existing Lender in accordance with Section 2(a) hereof, be deemed to have prepaid, on the Effective Date, an amount of the Initial Term Loans of each Existing Lender in an aggregate principal amount equal to the lesser of (A) such Existing Lender’s Initial Term Loans and (B) such Existing Lender’s Tranche B-1 Term Commitment;  provided that (1) if such Existing Lender’s Initial Term Loans exceed such Existing Lender’s Tranche B-1 Commitment, then the Borrower shall be required to prepay in full, on the Effective Date in accordance with Section 2(a) hereof, the outstanding principal amount of the Initial Term Loans of such Existing Lender not deemed to be prepaid pursuant to this clause (ii) and (2) notwithstanding the operation of this clause (ii), the Borrower shall be required to pay to such Existing Lender, on the Effective Date, all accrued but unpaid interest and fees on the outstanding principal amount of the Initial Term Loans of such Existing Lender immediately prior to the Effective Date.

 

(d)                                 Notwithstanding anything herein to the contrary, each Existing Lender that does not have a Tranche B-1 Term Commitment shall be repaid in full in cash with respect to its Initial Term Loans (which such repayment may, with the consent of the Administrative Agent, be made from sources other than the Tranche B-1 Term Loans) and, by execution of a Lender Authorization as described below, each Tranche B-1 Term Loan Lender hereby consents to the repayments described in this Section 2.

 

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(e)                                  Each Existing Lender party hereto hereby waives any requirement to pay any amounts due and owing to it pursuant to Section 3.9 of the Credit Agreement as a result of the Amendment Refinancing Transactions.

 

(f)                                   Promptly following the Effective Date, all Term Loan Notes evidencing the Initial Term Loans shall be cancelled and returned to the Borrower, and any Tranche B-1 Term Lender may request that its Tranche B-1 Term Loans be evidenced by a Term Loan Note pursuant to Section 3.5 of the Credit Agreement.

 

3.                                      Amendments to the Credit Agreement.  The Credit Agreement is hereby amended as follows:

 

(a)                                 Section 1.1 of the Credit Agreement is amended by:

 

(i)                                     adding the following new defined terms in appropriate alphabetical order:

 

“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or its Subsidiaries from time to time concerning or relating to bribery or corruption, including, without limitation, the United States Foreign Corrupt Practices Act of 1977 and the rules and regulations  thereunder and the U.K. Bribery Act 2010 and the rules and regulations thereunder.

 

“Anti-Money Laundering Laws” means any and all laws, statutes, regulations or obligatory government orders, decrees, ordinances or rules applicable to a Credit Party, its Subsidiaries or Affiliates related to terrorism financing or money laundering, including any applicable provision of the PATRIOT Act and The Currency and Foreign Transactions Reporting Act (also known as the “Bank Secrecy Act,” 31 U.S.C. §§ 5311-5330 and 12 U.S.C. §§ 1818(s), 1820(b) and 1951-1959).

 

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

 

“Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

 

“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

 

“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

 

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“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any credit institution or investment firm established in any EEA Member Country.

 

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor thereto), as in effect from time to time.(1)

 

“Flood Compliance Items” means, with respect to any real property subject to a Facility Mortgage:

 

(a)                                 a “life of loan” flood hazard certification from the National Research Center, or any successor agency thereto; and

 

(b)                                 if such parcel of real property is located in a special flood hazard area:

 

(i)                                     notices to (and confirmation of receipt by) the Borrower as to the existence of a special flood hazard and, if applicable, the unavailability of flood hazard insurance under the National Flood Insurance Program because the community does not participate in the National Flood Insurance Program; and

 

(ii)                                  to the extent flood hazard insurance is available in the community in which the real property is located, a copy of one of the following: (w) the flood hazard insurance policy, (x) the Borrower’s application for a flood hazard insurance policy, together with proof of payment of the premium associated therewith, (y) a declaration page confirming that flood hazard insurance has been issued to the Borrower or (z) such other evidence of flood hazard insurance satisfactory to the Administrative Agent.

 

“Sanctions” means any and all economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes and anti-terrorism laws, including but not limited to those imposed, administered or enforced from time to time by the U.S. government (including those administered by OFAC or the U.S. Department of State), the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority with jurisdiction over any Lender, the Borrower or any of its Subsidiaries or Affiliates.

 

“Second Amendment Effective Date” means November 16, 2017.

 

“Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

 

(1) The EU Bail-In Legislation Schedule may be found at

http://www.lma.eu.com/uploads/files/EU%20BAIL-IN%20LEGISLATION%20SCHEDULE%2022-Dec-2015%2010-46%20.pdf

 

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(ii)                                  amending and restating the definition of “Applicable Margin” as follows:

 

“Applicable Margin” means, 3.00% per annum for LIBOR Rate Loans and 2.00% per annum for Base Rate Loans.  The Applicable Margin shall be increased as, and to the extent, required by Section 3.13.

 

(iii)                               adding “, implemented” immediately before the words “or issued” at the end of the definition of Change in Law.

 

(iv)                              deleting the phrase “(excluding, in the case of both clause (b) and clause (c), any individual whose initial nomination for, or assumption of office as, a member of that board occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors)” immediately preceding the period at the end of the definition of “Continuing Directors”.

 

(v)                                 amending the definition of “Defaulting Lender” by (A) deleting the word “or” at the end clause (b)(i) thereto and adding “or (iii) become the subject of a Bail-In Action” immediately before the semi-colon preceding the proviso to clause (b)(ii) of such definition.

 

(vi)                              amending the definition of “Federal Funds Rate” by (A) deleting the phrase “arranged by federal funds brokers on such day (or, if such day is not a Business Day, for the immediately preceding Business Day)” therein and (B) adding the following sentence to the end of such definition:

 

“Notwithstanding the foregoing, if the Federal Funds  Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.”

 

(vii)                           amending and restating definition of “LIBOR” as follows:

 

“LIBOR” means,

 

(a)                                 for any interest rate calculation with respect to a LIBOR Rate Loan, the rate of interest per annum determined on the basis of the rate for deposits in Dollars for a period equal to the applicable Interest Period as published by the ICE Benchmark Administration Limited, a United Kingdom company, or a comparable or successor quoting service approved by the Administrative Agent at approximately 11:00 a.m. (London time) two (2) London Banking Days prior to the first day of the applicable Interest Period.  If, for any reason, such rate is not so published then “LIBOR” shall be determined by the Administrative Agent to be the arithmetic average of the rate per annum at which deposits in Dollars would be offered by first class banks in the London interbank market to the Administrative Agent at approximately 11:00 a.m. (London time) two (2) London Banking Days prior to the first day of the applicable Interest Period for a period equal to such Interest Period, and

 

(b)                                 for any interest rate calculation with respect to a Base Rate Loan, the rate of interest per annum determined on the basis of the rate for deposits in Dollars for an Interest Period equal to one month (commencing on the date of determination of such interest rate) as published by the ICE Benchmark 

 

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Administration Limited, a United Kingdom company, or a comparable or successor quoting service approved by the Administrative Agent, at approximately 11:00 a.m. (London time) on such date of determination, or, if such date is not a Business Day, then the immediately preceding Business Day.  If, for any reason, such rate is not so published then “LIBOR” for such Base Rate Loan shall be determined by the Administrative Agent to be the arithmetic average of the rate per annum at which deposits in Dollars would be offered by first class banks in the London interbank market to the Administrative Agent at approximately 11:00 a.m. (London time) on such date of determination for a period equal to one month commencing on such date of determination.

 

Each calculation by the Administrative Agent of LIBOR shall be conclusive and binding for all purposes, absent manifest error.

 

Notwithstanding the foregoing, in no event shall LIBOR be less than 1.00%.

 

(viii)                        amending and restating definition of “S&P” as follows:

 

“S&P” means Standard & Poor’s Financial Services LLC, a part of McGraw-Hill Financial and any successor thereto.

 

(ix)                              amending and restating the definition of Sanctioned Country as follows:

 

“Sanctioned Country” means at any time, a country or territory which is itself the subject or target of any Sanctions (including, as of the Second Amendment Effective Date, Cuba, Iran, North Korea, Sudan, Syria and Crimea).

 

(x)                                 amending and restating the definition of Sanctioned Person as follows:

 

“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC (including, without limitation, OFAC’s Specially Designated Nationals and Blocked Persons List and OFAC’s Consolidated Non-SDN List), the U.S. Department of State, the United Nations Security Council, the European Union, Her Majesty’s Treasury, or  other relevant sanctions authority, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any such Person or Persons described in clauses (a) and (b), including a Person that is deemed by OFAC to be a Sanctions target based on the ownership of such legal entity by Sanctioned Person(s).

 

(b)                                 Section 2.4(c) of the Credit Agreement is amended by replacing the reference to “First Amendment Effective Date” with “Second Amendment Effective Date”.

 

(c)                                  Section 3.11(g) of the Credit Agreement is amended by replacing each reference therein to “W-8BEN” with “W-8BEN or W-BEN-E, as applicable”.

 

(d)                                 Section 5.1 of the Credit Agreement is amended by adding the following sentence thereto:

 

“No Credit Party nor any Subsidiary thereof is an EEA Financial Institution.”

 

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(e)                                  Section 5.20 of the Credit Agreement is amended and restated as follows:

 

SECTION 5.20              Anti-Terrorism; Anti-Money Laundering; Anti-Corruption and Sanctions.  No Credit Party nor any of its Subsidiaries or, to their knowledge, any of their Related Parties (a) is an “enemy” or an “ally of the enemy” within the meaning of Section 2 of the Trading with the Enemy Act of the United States (50 U.S.C. App. §§ 1 et seq.), (b) is in violation of (i) the Trading with the Enemy Act, (ii) any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V) or any enabling legislation or executive order relating thereto or (iii) the PATRIOT Act (collectively, the “Anti-Terrorism Laws”), (c) is a Sanctioned Person, (D) has its assets located in a Sanctioned Country, (E) directly, or indirectly, derives revenues from investments in, or transactions with, Sanctioned Persons or (F) is under administrative, civil or criminal investigation for an alleged violation of, or received notice from or made a voluntary disclosure to any governmental entity regarding a possible violation of, Anti-Corruption Laws, Anti-Money Laundering Laws or Sanctions by a governmental authority that enforces Sanctions or any Anti-Corruption Laws or Anti-Money Laundering Laws.  No part of the proceeds of any Term Loans hereunder will be unlawfully used directly or indirectly to fund any operations in, finance any investments or activities in or make any payments to, a Sanctioned Person or a Sanctioned Country, or in any other manner that will result in any violation by any Person (including any Lender, the Arranger or the Administrative Agent) of any Anti-Terrorism Laws, any Anti-Corruption Laws, any Anti-Money Laundering Laws or any applicable Sanctions.

 

(f)                                   Section 6.14 of the Credit Agreement is amended by adding “Flood Compliance Items,” immediately after the words “environmental reports,” and immediately before the word “survey” therein.

 

(g)                                  Section 7.3 of the Credit Agreement is amended by deleting the word “and” at the end of clause (ii) of subsection (a) thereof.

 

(h)                                 Section 11.9 of the Credit Agreement is amended by adding the following new subsection (f) thereto:

 

(f)                                   Cashless Settlement.  Notwithstanding anything to the contrary contained in this Agreement, any Lender may exchange, continue or rollover all or a portion of its Term Loans in connection with any refinancing, extension, loan modification or similar transaction permitted by the terms of this Agreement, pursuant to a cashless settlement mechanism approved by the Borrower, the Administrative Agent and such Lender.

 

(i)                                     Article XI of the Credit Agreement is amended by adding the following new Sections thereto:

 

SECTION 11.21       No Advisory or Fiduciary Responsibility.

 

(a)                                 In connection with all aspects of each transaction contemplated hereby, each Credit Party acknowledges and agrees, and acknowledges its Affiliates’ understanding, that (i) the facilities provided for hereunder and any related arranging or other services in connection therewith (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document) are an arm’s-length commercial transaction between the Borrower and its Affiliates, on the one hand, and the Administrative Agent, the Arranger and the Lenders, on the other hand, and the Borrower 

 

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is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents (including any amendment, waiver or other modification hereof or thereof), (ii) in connection with the process leading to such transaction, each of the Administrative Agent, the Arranger and the Lenders is and has been acting solely as a principal and is not the financial advisor, agent or fiduciary, for the Borrower or any of its Affiliates, stockholders, creditors or employees or any other Person, (iii) none of the Administrative Agent, the Arranger or the Lenders has assumed or will assume an advisory, agency or fiduciary responsibility in favor of the Borrower with respect to any of the transactions contemplated hereby or the process leading thereto, including with respect to any amendment, waiver or other modification hereof or of any other Loan Document (irrespective of whether the Arranger or any Lender has advised or is currently advising the Borrower or any of its Affiliates on other matters) and none of the Administrative Agent, the Arranger or the Lenders has any obligation to the Borrower or any of its Affiliates with respect to the financing transactions contemplated hereby except  those obligations expressly set forth herein and in the other Loan Documents, (iv) the Arranger and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from, and may conflict with, those of the Borrower and its Affiliates, and none of the Administrative Agent, the Arranger or the Lenders has any obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship and (v) the Administrative Agent, the Arranger and the Lenders have not provided and will not provide any legal, accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby (including any amendment, waiver or other modification hereof or of any other Loan Document) and the Credit Parties have consulted their own legal, accounting, regulatory and tax advisors to the extent they have deemed appropriate.

 

(b)                                 Each Credit Party acknowledges and agrees that each Lender, the Arranger and any Affiliate thereof may lend money to, invest in, and generally engage in any kind of business with, any of the Borrower, any Affiliate thereof or any other person or entity that may do business with or own securities of any of the foregoing, all as if such Lender, Arranger or Affiliate thereof were not a Lender or Arranger or an Affiliate thereof (or an agent or any other person with any similar role under the Term Loan Facility) and without any duty to account therefor to any other Lender, the Arranger, the Borrower or any Affiliate of the foregoing.  Each Lender, the Arrangers and any Affiliate thereof may accept fees and other consideration from the Borrower or any Affiliate thereof for services in connection with this Agreement, the Term Loan Facility or otherwise without having to account for the same to any other Lender, the Arranger, the Borrower or any Affiliate of the foregoing.

 

SECTION 11.22       Acknowledgement and Consent to Bail-In of EEA Financial Institutions.  Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

 

(a)                                 the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

 

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(b)                                 the effects of any Bail-in Action on any such liability, including, if applicable:

 

(i)                                     a reduction in full or in part or cancellation of any such liability;

 

(ii)                                  a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

 

(iii)                               the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of any EEA Resolution Authority.

 

4.                                      Conditions to Effectiveness.  Upon the satisfaction or waiver of each of the following conditions, this Agreement shall be deemed to be effective (the date of such satisfaction, the “Effective Date”):

 

(a)                                 the Administrative Agent shall have received counterparts of this Agreement executed by the Administrative Agent and each of the Credit Parties;

 

(b)                                 the Administrative Agent shall have received an executed signature page or Lender Authorization directing the Administrative Agent to execute this Agreement on its behalf from each of the affected Lenders and all of the initial Tranche B-1 Term Lenders;

 

(c)                                  the Borrower shall have paid (i) to the Administrative Agent and the Arranger all fees and reasonable out of pocket costs and expenses incurred by them or their respective Affiliates in connection with this Agreement and (ii) the reasonable fees, disbursements and other charges of counsel for the Administrative Agent and its Affiliates;

 

(d)                                 the Borrower shall deliver or cause to be delivered a certificate in form and substance reasonably satisfactory to the Administrative Agent and executed by a Responsible Officer of the Borrower certifying that:

 

(i)                                     either (A) the articles of incorporation (or equivalent) and bylaws (or equivalent) of each Credit Party have not been amended, restated, supplemented or otherwise modified since the Closing Date (or the most recent date of delivery to the Administrative Agent) or (B) attached thereto are true, correct and complete copies of any amendments, supplements or modifications of any articles of incorporation (or equivalent) and bylaws (or equivalent) entered into since the Closing Date (or the most recent date of delivery to the Administrative Agent);

 

(ii)                                  attached thereto are such resolutions or other action duly adopted by the board of directors (or other governing body) of each Credit Party authorizing and approving the transactions contemplated hereunder and, the execution, delivery and performance of this Agreement; and

 

(iii)                               attached thereto are such certificates of good standing or the equivalent from each Credit Party’s jurisdiction of organization or formation, as applicable; and

 

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(e)                                  the Credit Parties shall have received all material governmental, shareholder and third party consents and approvals necessary in connection with the transactions contemplated by this Agreement (including, without limitation, all consents and approvals required from any Agency under any of the Agency Agreements and from any Investor under any of the Investor Agreements that are Material Contracts) and all applicable waiting periods shall have expired without any action being taken by any Person that could reasonably be expected to restrain, prevent or impose any material adverse conditions on any of the Credit Parties or such other transactions, and no law or regulation shall be applicable which in the reasonable judgment of the Administrative Agent could reasonably be expected to have such effect.

 

Without limiting the generality of the provisions of Section 10.3 of the Credit Agreement, for purposes of determining compliance with the conditions specified in this Section 4, each Lender that has executed a Lender Authorization shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Effective Date specifying its objection thereto.

 

5.                                      Effect of this Agreement.  Except as expressly provided herein, the Credit Agreement and the other Loan Documents shall remain unmodified and in full force and effect.  Except as expressly set forth herein, this Agreement shall not be deemed (a) to be a waiver of, or consent to, a modification or amendment of, any other term or condition of the Credit Agreement or any other Loan Document, (b) to prejudice any other right or rights which the Administrative Agent or the Lenders may now have or may have in the future under or in connection with the Credit Agreement or the other Loan Documents or any of the instruments or agreements referred to therein, as the same may be amended, restated, supplemented or otherwise modified from time to time, (c) to be a commitment or any other undertaking or expression of any willingness to engage in any further discussion with the Borrower, any Subsidiary Guarantor or any other Person with respect to any waiver, amendment, modification or any other change to the Credit Agreement or the Loan Documents or any rights or remedies arising in favor of the Lenders or the Administrative Agent, or any of them, under or with respect to any such documents or (d) to be a waiver of, or consent to or a modification or amendment of, any other term or condition of any other agreement by and among the Credit Parties, on the one hand, and the Administrative Agent or any other Lender, on the other hand.  References in the Credit Agreement to “this Agreement” (and indirect references such as “hereunder”, “hereby”, “herein”, and “hereof”) and in any Loan Document to the “Credit Agreement” shall be deemed to be references to the Credit Agreement as modified hereby.  Without limiting the generality of the foregoing, the execution and delivery of this Agreement shall not constitute a novation of any indebtedness or other obligations owing to the Lenders or the Administrative Agent under the Credit Agreement based on facts or events occurring or existing prior to the execution and delivery of this Agreement.  On the Effective Date, the credit facilities described in the Credit Agreement shall be continued by the facilities described herein and, subject to the terms hereof, all loans and other obligations of the Borrower outstanding as of such date under the Credit Agreement shall be deemed to be loans and obligations outstanding under the corresponding facility described herein, without any further action by any Person, except that the Administrative Agent shall make such transfers of funds as are necessary in order that the outstanding balance of Initial Term Loans, together with any Tranche B-1 Term Loans funded on the Effective Date, reflect the respective Tranche B-1 Term Commitments of the Tranche B-1 Term Lenders.

 

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6.             Representations and Warranties/No Default.  By its execution hereof,

 

(a)           the Borrower represents and warrants that the representations and warranties contained in each Loan Document (including this Agreement) are true and correct on and as of the date hereof, other than any such representations or warranties that, by their express terms, refer to an earlier date, in which case they shall have been true and correct on and as of such earlier date and that no Default or Event of Default has occurred and is continuing as of the effective date hereof; and

 

(b)           each Credit Party hereby certifies, represents and warrants to the Administrative Agent and the Lenders that:

 

(i)            it has the right, power and authority and has taken all necessary corporate and other action to authorize the execution, delivery and performance of this Agreement and each other document executed in connection herewith to which it is a party in accordance with their respective terms and the transactions contemplated hereby; and

 

(ii)           this Agreement and each other document executed in connection herewith has been duly executed and delivered by the duly authorized officers of each Credit Party, and each such document constitutes the legal, valid and binding obligation of each such Credit Party, enforceable in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar state or federal debtor relief laws from time to time in effect which affect the enforcement of creditors’ rights in general and the availability of equitable remedies.

 

7.             Acknowledgment and Consent.  By its execution hereof, each Credit Party (a) acknowledges and consents to all of the terms and conditions of this Agreement, (b) affirms all of its obligations under the Loan Documents and acknowledges that the covenants, representations, warranties and other obligations set forth in the Credit Agreement, the Notes and the other Loan Documents to which it is a party remain in full force and effect, (c) affirms that each of the Liens granted in or pursuant to the Loan Documents are valid and subsisting, (d) agrees that this Agreement shall in no manner impair or otherwise adversely affect any of the Liens granted in or pursuant to the Loan Documents and (e) agrees that this Agreement and all documents executed in connection herewith do not operate to reduce or discharge such Person’s obligations under the Loan Documents.

 

8.             Miscellaneous.  Except as expressly provided herein, the Credit Agreement and the other Loan Documents shall remain unmodified and in full force and effect.  This Agreement is the entire agreement, and supersedes any prior agreements and contemporaneous oral agreements, of the parties concerning its subject matter. This Agreement shall be binding on and inure to the benefit of the parties and their heirs, beneficiaries, successors and permitted assigns. For purposes of determining withholding Taxes imposed under FATCA from and after the effective date of this Agreement, the Borrower and the Administrative Agent shall treat (and the Lenders hereby authorize the Administrative Agent to treat) the Credit Agreement (as amended by this Agreement) as not qualifying as a “grandfathered obligation” within the meaning of Treasury Regulation Section 1.1471-2(b)(2)(i).

 

9.             Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

10.          Counterparts.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Delivery by telecopier or electronic mail of an executed counterpart of a signature page to this Agreement or Lender Authorization shall be effective as delivery of an original executed counterpart of this Agreement.

 

11

 

11.          Cashless Settlement.  Each of the Existing Lenders executing and delivering a Lender Authorization is a Lender of record holding as of the date of its Lender Authorization the principal amount set forth in the Register of Initial Term Loans outstanding (which excludes accrued interest and other non-principal amounts owing, if any) under the Credit Agreement (with respect to such Existing Lender, such principal amount, the “Existing Principal” and such Loans, the “Existing Loans”) and has agreed to a cashless settlement in its Lender Authorization.

 

Pursuant to this Agreement, the Tranche B-1 Term Lenders will make new Tranche B-1 Term Loans under the Credit Agreement to the Borrower for the purpose of replacing the Existing Loans.  The Borrower hereby offers to each Existing Lender to exchange the Allocated Amount (as defined below) of the Existing Loans held by such Existing Lender on the Effective Date for Tranche B-1 Term Loans in an aggregate principal amount equal to the Allocated Amount so exchanged, which shall be evidenced and governed by the Credit Agreement and the related Loan Documents as defined therein (such Allocated Amount so exchanged, the “Allocated Loans”), and each Existing Lender providing a Lender Authorization  hereby agrees to accept such offer of exchange. Any Existing Lender’s Tranche B-1 Term Commitment that is in excess of its Allocated Loans shall be funded in accordance with Section 2(c) above.

 

For purposes of this Agreement, the term “Allocated Amount” shall mean, with respect to any Existing Lender, an aggregate principal amount, not to exceed the amount of the Existing Principal owed to such Existing Lender outstanding on the Effective Date immediately prior to giving effect to this Agreement, determined by the Administrative Agent in consultation with the Borrower and notified to the Borrower and each Existing Lender.

 

Upon satisfaction or waiver of the conditions precedent set forth in Section 4 of this Agreement (including, without limitation, the Borrower paying to the Administrative Agent, for the account of each Existing Lender, all interest and other non-principal amounts then due and owing by the Borrower to such Existing Lender in respect of such Existing Lender’s Existing Loans on the Effective Date) and the funding of the Tranche B-1 Term Loans on the Effective Date, and notwithstanding anything to the contrary contained in the Credit Agreement, the Borrower’s obligations in respect of the Existing Loans of each Existing Lender in the amount equal to such Existing Lender’s Allocated Amount shall be deemed to have been satisfied; provided that if the Allocated Amount with respect to any Existing Lender is less than the Existing Loans of such Lender, then the difference shall be repaid to the extent set forth in and in accordance with the terms of this Agreement.  Upon the Administrative Agent marking the Register as contemplated below, each Existing Lender shall become a “Lender” pursuant to, and for all purposes under, the Credit Agreement with respect to the Allocated Loans.  The Administrative Agent’s determination and entry and completion of the Register shall be conclusive, in each case, absent clearly demonstrable error.  For the avoidance of doubt, it is acknowledged and agreed between the Borrower and each Existing Lender that (i) the Allocated Loans shall be initially made by the Tranche B-1 Term Lenders on the Effective Date, (ii) the Tranche B-1 Term Lenders shall not be required to pay any amount with respect to the Allocated Loans made by any of them, and the Administrative Agent shall not be required to pay any amount with respect to any of the Allocated Loans, but such Allocated Loans shall be transferred to such Existing Lender by marking the Register as contemplated below, and (iii) notwithstanding anything to the contrary contained in the Credit Agreement, each Existing Lender providing a Lender Authorization has agreed to accept, as satisfaction in full of its right to receive payment of the Existing Principal under the Credit Agreement in the amount equal to such Existing Lender’s Allocated Amount, the right to receive for no additional consideration Allocated Loans in accordance herewith.   Notwithstanding anything to the contrary, each Existing Lender agrees to waive its right to compensation for any amounts owing under Section 3.9 of the Credit Agreement.

 

By executing and delivering a Lender Authorization, each Existing Lender (a) represents and warrants to the Arranger, the Administrative Agent and the other Lenders that (i)(A) it has full power and

 

12

 

authority, and has taken all action necessary, to execute and deliver its Lender Authorization and to consummate the transactions contemplated hereby and thereby and to become a Lender under the Credit Agreement in respect of the Allocated Loans, and (B) neither its execution and delivery of the Lender Authorization nor the consummation of the transactions contemplated hereby or thereby conflict with  such Existing Lender’s organizational documents or material contracts or with any applicable law, (ii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Allocated Loans, shall have the obligations of a Lender thereunder and (iii) it has received a copy of this Agreement, together with copies of the most recent financial statements delivered pursuant to Section 6.1 of the Credit Agreement, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into its Lender Authorization and this Agreement and to accept the Allocated Loans, on the basis of which it has made such analysis and decision independently and without reliance on the Arranger, the Administrative Agent, or any other Lender; and (b) agrees that (i) it will, independently and without reliance on the Arranger, the Administrative Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender thereunder, and (iii) it hereby irrevocably appoints, designates and authorizes the Administrative Agent to take such action on its behalf under the provisions of the Credit Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of the Credit Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto, including, without limitation, pursuant to Article X of the  Credit Agreement.

 

In order to evidence the exchange contemplated above, the Administrative Agent has notified the Borrower that, upon the occurrence of the Effective Date (and the payment of all interest and other non-principal amounts then due and owing by the Borrower to such Existing Lender in respect of such Existing Lender’s Existing Loans on the Effective Date), it will mark the Register to reflect (a) the Existing Loans of each Existing Lender in the amount equal to such Existing Lender’s Allocated Amount as no longer outstanding and (b) that each Existing Lender is a Lender under the Credit Agreement upon the occurrence of the Effective Date in respect of its Allocated Loans.  None of the Administrative Agent, the Arranger, any other agent, or any of their respective affiliates (each of the foregoing, an “Agent-Related Person”), shall be liable to any Existing Lender, any other Lender, the Borrower or any of their respective affiliates, equity holders or debt holders for any losses, costs, damages or liabilities incurred, directly or indirectly, as a result of any Agent-Related Person, or their counsel or other representatives, taking any action in accordance with the Lender Authorization or this Agreement or executing a Lender Authorization or this Agreement.

 

12.          Agreement Regarding Tranche B-1 Term Lenders.  Each of the parties hereto (including, by its execution of a Lender Authorization each Tranche B-1 Term Lender) agrees that effective as of the Effective Date any Person executing such Lender Authorization (a) shall be a “Lender” for all purposes of the Credit Agreement and the other Loan Documents, (b) shall perform all of the obligations that are required to be performed by it as such under the Loan Documents and (c) shall be entitled to the benefits, rights and remedies as such set forth in the Loan Documents.

 

[Signature Pages Follow]

 

13

 

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

 

	
 
    	
BORROWER:
    
	
 
    	
 
    
	
 
    	
WALKER &   DUNLOP, INC.,
    
	
 
    	
as Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Stephen P. Theobald
    
	
 
    	
Name:
    	
Stephen P. Theobald
    
	
 
    	
Title:
    	
Executive Vice President, Chief   Financial Officer & Treasurer
    
	
 
    	
 
    	
 
    
	
 
    	
GUARANTORS:
    
	
 
    	
 
    
	
 
    	
WALKER & DUNLOP   MULTIFAMILY, INC., as a
    
	
 
    	
Subsidiary Guarantor
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Stephen P. Theobald
    
	
 
    	
Name:
    	
Stephen P. Theobald
    
	
 
    	
Title:
    	
Executive Vice President, Chief Financial   Officer & Treasurer
    
	
 
    	
 
    	
 
    
	
 
    	
WALKER & DUNLOP, LLC, as   a Subsidiary Guarantor
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Stephen P. Theobald
    
	
 
    	
Name:
    	
Stephen P. Theobald
    
	
 
    	
Title:
    	
Executive Vice President, Chief   Financial Officer & Treasurer
    
	
 
    	
 
    	
 
    
	
 
    	
WALKER & DUNLOP CAPITAL,   LLC, as a
    
	
 
    	
Subsidiary Guarantor
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Stephen P. Theobald
    
	
 
    	
Name:
    	
Stephen P. Theobald
    
	
 
    	
Title:
    	
Executive Vice President, Chief   Financial Officer & Treasurer
    
	
 
    	
 
    	
 
    
	
 
    	
W&D BE, INC., as a   Subsidiary Guarantor
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Stephen P. Theobald
    
	
 
    	
Name:
    	
Stephen P. Theobald
    
	
 
    	
Title:
    	
Executive Vice President, Chief   Financial Officer & Treasurer
    

 

Second Amendment to Credit Agreement

Walker & Dunlop, Inc.

Signature Page

 

 

	
 
    	
ADMINISTRATIVE   AGENT:
    
	
 
    	
 
    
	
 
    	
WELLS FARGO BANK, NATIONAL   ASSOCIATION, as Administrative Agent on behalf of itself and each Consenting   Lender
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Jason Prisco
    
	
 
    	
Name:
    	
Jason Prisco
    
	
 
    	
Title:
    	
AVP
    

 

Second Amendment to Credit Agreement

Walker & Dunlop, Inc.

Signature Pagedxlg-ex101_8.htm

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 

 

2

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 

 

3

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);

 

4

	
 
	
(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 

 

5

	
 
		
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.

 

6

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.

 

 

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]

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