Document:

Exhibit 10.14

 

	
  Smith, H.

  	
  2009

  

 

INCENTIVE DEFERRED BONUS COMPENSATION AGREEMENT

 

THIS
AGREEMENT (“Agreement”), made as of the 30th day of
April, 2009, by and between Walker & Dunlop, LLC (“Employer”)
and Howard W. Smith III (“Employee”).

 

WITNESSETH
THAT:

 

WHEREAS,
Employee is serving as Employer’s Executive Vice
President & Chief Operating Officer and, in that capacity has
senior management responsibility for Employer’s operations and an important
role in Employer’s success; and

 

WHEREAS, in order to maximize returns, Employer desires to provide
Employee with an incentive to contribute to the growth of the business and
profitability of the Employer and, to that end, the parties desire to enter
into this Agreement.

 

NOW,
THEREFORE, in consideration of the foregoing and of the mutual promises
hereinafter set forth and of other good and valuable consideration, the
sufficiency and receipt of which prior to the execution of these presents is
hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:

 

1

 

ARTICLE I

 

Definitions

 

Section 1.1             Definitions.

 

When
used in this Agreement, the following terms will have the meanings set forth
below:

 

(A)          “Annualized Financial Target” means,
with respect to a Deferred Bonus Earn-Out Period, the aggregate Adjusted Net
Income equal to or greater than the aggregate of the Base Financial Targets for
each Fiscal Year contained within the Deferred Bonus Earn-Out Period.

 

(B)           “Adjusted Net Income” for a given
period means Employer’s net income as determined in accordance with generally
accepted accounting principles (“Net Income”) over that period, decreased by
the non-recurring gain on sale of assets.

 

(C)           “Base Financial Target” means an
amount budgeted at the discretion of Employer with respect to each Fiscal Year
or Base Fiscal Year.  Once determined,
the Base Financial Target applicable to each relevant Fiscal Year shall be
listed on a Schedule or Exhibit to this Agreement.

 

(D)          “Base Fiscal Year” means the Fiscal
Year to which a Deferred Bonus relates (e.g., Fiscal Year 2009 shall be the
Base Fiscal Year for any Deferred Bonus potentially payable to Employee for
Fiscal Year 2009 Plan).

 

(E)           “Beneficiary” means one or more
individuals designated by Employee to receive benefits payable hereunder upon
Employee’s death (whether voluntary or involuntary). Employee shall designate
his Beneficiary in writing on a form provided by Employer. Employee may change
his designated Beneficiary by filing a new form with Employer (at least ten (10) business
days prior to the effective date of such change). If no 

 

2

 

Beneficiary designated by Employee survives
Employee, or if Employee fails to designate a Beneficiary, any payments due
hereunder upon Employee’s death shall be paid to Employee’s executor or other
legal representative.

 

(F)           “Change of Control” means the sale or
transfer of substantially all equity interests or assets of the Employer to a
third party, if the acquiring entity does not assume liability for the benefits
provided hereunder pursuant to said transaction and Employer does not otherwise
agree to continue or maintain this Agreement.

 

(G)           “Deferred Bonus” means the amount of
the deferred bonus potentially payable to Employee on account of a particular
Base Fiscal Year in accordance with the provisions hereof.

 

(H)          “Deferred Bonus Earn-Out Period”
means, with respect to each Deferred Bonus for each Base Fiscal Year, the
period beginning on the first day of the Base Fiscal Year and terminating on
the earliest to occur of the following:

 

(i)            the last day of the
three (3) year period commencing with the first day of the Base Fiscal
Year;

 

(ii)           the date of a
Change of Control; or

 

(iii)          the date of Plan
Termination.

 

(I)            “Deferred Compensation Pool” means,
with respect to a Base Fiscal Year, 25% of the excess of (i) Employer’s
Adjusted Net Income for that Base Fiscal Year, over (ii) the Base
Financial Target for that Base Fiscal Year.

 

(J)            “Disability” means any physical or
mental impairment which, in the opinion of Employer, based upon a competent
medical examination, renders Employee unable to continue the performance of
Employee’s regular duties with Employer and is expected to be permanent in
duration or to continue for a period of 12 months or more. Employer shall have
absolute discretion to determine if and when a Disability has occurred for
purposes of this 

 

3

 

Agreement, provided that nothing contained
herein shall prevent Employee from submitting to Employer, at Employee’s
expense, any evidence of disability that Employee deems relevant to said
determination.

 

(K)          “Employee” means Howard W. Smith III and, where appropriate,
shall also be deemed to mean his executor, guardian or other legal
representative.

 

(L)           “Employee Percentage” means the
percentage of the Deferred Compensation Pool determined by Employer and
specified in a Schedule or Exhibit attached hereto which shall be used to
determine the amount of Employee’s Deferred Bonus for each respective Base
Fiscal Year, as provided in Section 2.1.

 

(M)         “Employer” means Walker &
Dunlop, LLC and any successor to, or assignee of, Walker & Dunlop, LLC
to which Employee has consented, in Employee’s sole discretion, which will not
be unreasonably withheld.

 

(N)          “Fiscal Year” means a fiscal year of
Employer (presently a calendar

 

year).

 

(O)          “Person” means, as the context
requires, an individual, partnership, corporation, trust, unincorporated
association, joint stock company, or other legal entity or association.

 

(P)           “Plan Termination” means the
voluntary termination of this Agreement by Employer pursuant to the provisions
of Section 4.9(B).

 

(Q)          “Schedules” means, collectively, the
Schedules attached, or to be attached, hereto.

 

(R)           “Termination With Cause” means the
termination by Employer of Employee’s employment with Employer on account of (i) Employee’s
conviction for the 

 

4

 

commission of a felony in the course of his
employment with Employer, or (ii) Employee’s gross, willful and
intentional misconduct in connection with his employment with Employer.

 

(S)           “Termination Without Cause” means the
termination by Employer of Employee’s employment with Employer without Employee’s
consent for any reason which does not constitute Termination With Cause.

 

(T)           “Voluntary Resignation” means the
voluntary decision or election by Employee to terminate his employment with
Employer for any reason whatsoever other than a material breach by Employer of
this Agreement which is not cured within any applicable grace period specified
herein.

 

Section 1.2           Certain
Other Definitions.

 

When
used herein with its initial letter(s) capitalized, a term which is not
defined in Section 1.1 shall be given the definition assigned to it
elsewhere in this Agreement.

 

Section 1.3           Schedules
and Exhibits.

 

Attached
hereto and forming an integral part of this Agreement may be various Schedules
and Exhibits, all of which are incorporated into this Agreement as fully as if
the contents thereof were set out in full herein at each point of reference
thereto. The provisions of the immediately preceding sentence shall also apply
to any Schedules, Exhibits or other attachments which, pursuant to the provisions
hereof, are to be prepared and attached hereto in the future. Notwithstanding
any other provision hereof, if there is any conflict or inconsistency between
the provisions contained in this Agreement and the provisions contained in any
Schedule or Exhibit attached hereto (either now or in the future), the
provisions of the Schedule or Exhibit shall govern and prevail.

 

5

 

ARTICLE II

 

Determination Of Deferred Bonus

 

Section 2.1             Amount of Deferred Bonus.

 

Subject
to the vesting and forfeiture provisions outlined in Article III hereof,
Employee shall be entitled to a Deferred Bonus for each Base Fiscal Year in an
amount equal to (A) the Deferred Compensation Pool for that Base Fiscal
Year (if any), multiplied by (B) Employee’s Employee Percentage for that
Base Fiscal Year.

 

Section 2.2             Determination of Attainment of
Financial Targets.

 

As soon as practicable, and in any event within sixty (60) days after
the expiration of each Base Fiscal Year, Employer shall determine whether the
Base Financial Target was met during such Base Fiscal Year and shall certify
the amount of the Deferred Compensation Pool for that Base Fiscal Year, if
applicable.  Employer shall promptly advise
Employee as to whether the Base Financial Target has been met during the Base
Fiscal Year in question and, if so, the amount of the Deferred Bonus for that
Base Fiscal Year as computed by Employer. Employee shall be entitled to review
all financial and other records relevant to Employer’s determinations with
respect to the achievement of the Base Financial Target, the amount of Employee’s
Deferred Bonus, if any, and all related computations. Employer shall give
careful and good faith consideration to any bona fide questions raised by
Employee regarding Employer’s foregoing determinations and shall make any
adjustments therein as Employer deems necessary or appropriate in the light of
such questions. Employer’s good faith determination as to the attainment of the
Base Financial Target or other targets or computations relevant to the
determination of Employee’s Deferred Bonus shall, however, be binding and
conclusive on Employer and Employee unless the amount in question or 

 

6

 

controversy as to the size of the Deferred
Bonus exceeds $25,000 (in which event such question or controversy shall be
referred to, and determined by, arbitration in accordance with Section 4.4
hereof). Once the final amount of Employee’s Deferred Bonus for any Base Fiscal
Year has been computed, agreed or determined, such amount shall be memorialized
in an addendum which shall also be attached hereto and shall be deemed a part
hereof and such amount shall not then thereafter change.

 

7

 

ARTICLE III

 

Vesting,
Forfeiture, and Payment of Deferred Bonus

 

Section 3.1             Vesting of Deferred Bonus —
Annualized Financial Target Satisfied.

 

Each Employee’s vested status with regard to the Deferred Bonus for a
Base Fiscal Year shall be determined as of the last day of the applicable
Deferred Bonus Earn-Out Period.  If, as
of the last day of the Deferred Bonus Earn-Out Period, the Annualized Financial
Target has been satisfied, each Employee’s vested status with respect to the
Deferred Bonus for the applicable Base Fiscal Year shall be determined in
accordance with the following rules:

 

(A)          If Employee has
remained continuously employed by Employer until the last day of the Deferred
Bonus Earn-Out Period, Employee shall become 100% vested in Employee’s Deferred
Bonus for the applicable Base Fiscal Year provided that Employee remains
employed by Employer until the date that the Deferred Bonus is actually paid.

 

(B)           If, prior to the
last day of the Deferred Bonus Earn-Out Period, Employee was Terminated With
Cause or terminated employment due to a Voluntary Resignation, Employee shall
forfeit any and all right to a Deferred Bonus for the applicable Base Fiscal
Year.

 

(C)           If, prior to the
last day of the Deferred Bonus Earn-Out Period, Employee died, became Disabled,
or was Terminated Without Cause, Employee (or his Beneficiary) shall obtain a
vested right in a portion of his Deferred Bonus for the applicable Base Fiscal
Year in an amount equal to a fraction, the numerator of which is the number of
months Employee was employed by Employer beginning on the first day of the Base
Fiscal Year and ending on the date of death, Disability, or termination
(rounded to the nearest whole month), and the denominator of which is the
number of whole months contained in the Deferred 

 

8

 

Bonus Earn-Out Period (i.e., thirty-six (36)
months for a Deferred Bonus Earn-Out Period that does not end early due to Plan
Termination).

 

(D)          In the case that the
last day of a Deferred Bonus Earn-Out Period occurs due to a Change of Control,
the Annualized Financial Target shall be deemed to have been automatically
satisfied without regard to Employer’s actual Adjusted Net Income.  In such a case, Employee’s vested status
shall be determined as of the date of the Change of Control using the rules outlined
in subsections (A), (B), or (C) above, as applicable, treating the date of
the Change of Control as the last day of the Deferred Bonus Earn-Out Period.

 

(E)           In the case that the
last day of a Deferred Bonus Earn-Out Period occurs due to a Plan Termination,
the Annualized Financial Target shall be deemed to have been satisfied provided
that Adjusted Net Income, as of the date of Plan Termination, equals or exceeds
the Annualized Financial Target, as pro-rated through the date of Plan
Termination. In such a case, Employee’s vested status shall be determined as of
the date of the Plan Termination using the rules outlined in subsections
(A), (B), (C), or (D) above, as applicable, treating the date of Plan
Termination as the last day of the Deferred Bonus Earn-Out Period.

 

Section 3.2             Forfeiture of Deferred Bonus.

 

Notwithstanding
Section 3.1 above, Employee’s right to a Deferred Bonus for any
particularly Base Fiscal Year shall be immediately and fully forfeited if
either of the following events occurs:

 

(A)          Employee’s employment with Employer
terminates as a result of a Termination With Cause or a Voluntary Resignation
prior to the date following the last day of the Deferred Bonus Earn-Out Period
for that Base Fiscal Year on which the Deferred Bonus is paid; or

 

9

 

(B)           the relevant Annualized Financial
Target applicable to the Deferred Bonus for that Base Fiscal Year is not
satisfied.

 

If
one of the events delineated in (A) or (B) occurs with respect to a
Base Fiscal Year, Employee’s Deferred Bonus for such Base Fiscal Year shall not
vest and shall be forfeited in its entirety, and all of Employee’s rights,
title and interest in or with respect to such Deferred Bonus shall lapse and be
of no further force and effect. The forfeiture of Employee’s rights as to a
Deferred Bonus for any particular Base Fiscal Year shall not prejudice or
adversely affect in any way Employee’s rights, if any, to receive (or retain) a
Deferred Bonus for another Base Fiscal Year.

 

Section 3.3            Payment
of Vested Deferred Bonus.

 

(A)          Employer shall pay Employee (or, if
applicable, his Beneficiary) the vested portion of any Deferred Bonus which
vests pursuant to the provisions of Section 3.1 in accordance with the
following provisions:

 

(i)             if the last day of
the Deferred Bonus Earn-Out Period which results in the vesting of Employee’s
Deferred Bonus occurs as a result of a Plan Termination, that Deferred Bonus
shall be paid to Employee (or, if applicable, his Beneficiary) within sixty
(60) days after the date of Plan Termination; and

 

(ii)            if the last day of
the Deferred Bonus Earn-Out Period occurs for any reason other than Plan
Termination, that Deferred Bonus shall be paid to Employee on January 31
of the taxable year immediately following the taxable year in which Employee’s
rights to that Deferred Bonus vest, unless further time is needed to determine
the attainment of the Annualized Financial Target, as described more fully below.

 

(B)            The payment period
specified above shall be extended if, and to the extent, necessary in order for
a determination to be made as to whether the Annualized Financial 

 

10

 

Target has been met; provided that payment
shall be made no later than 2-1/2 months after the last day of the taxable year
in which Employee’s rights to the Deferred Bonus vest. An extension of the
period within which a vested Deferred Bonus shall be paid shall not extend or
defer the date as of which such Deferred Bonus shall be deemed to have vested.

 

(C)         Whenever the payment of a Deferred
Bonus is dependent upon the meeting by Employer of all, or a specified
percentage, of an Annualized Financial Target during a Deferred Bonus Earn-Out
Period, Employer shall, as promptly as may be practicable after the date on
which the Deferred Bonus Earn-Out Period for such Deferred Bonus terminates and
Employer has received such financial reports or data relating to Employer which
are needed in order to determine whether all, or the specified percentage of
the Annualized Financial Target has been met, make a written determination as
to whether all, or the specified percentage, of such Annualized Financial
Target has been met and shall provide Employee with a copy of such written
determination. Employee shall have the right to review all financial and other
records relevant to such determination. Employer shall give careful and good
faith consideration to any bona fide questions
raised by Employee regarding Employer’s determination and shall, if necessary
or appropriate, adjust Employer’s determination in light of such questions.
Employer’s good faith determination (either as initially made or as thereafter
adjusted) as to whether Employer has met all, or the specified percentage, of
the Annualized Financial Target shall, however, be binding and conclusive upon
Employer and Employee unless the amount of the Deferred Bonus in question or
controversy exceeds $25,000 (in which event all questions or controversies as
to whether or not the Deferred Bonus in question has vested shall be referred
to, and determined by, arbitration pursuant to Section 4.4 hereof).

 

11

 

ARTICLE IV

Other Provisions

 

Section 4.1            Funding.

 

The
Deferred Bonus provided for hereunder shall be an unfunded obligation of
Employer.  Employee and any Beneficiaries
shall have the status of general unsecured creditors of Employer with respect
to payment of any Deferred Bonus provided hereunder.  At no time shall Employee be deemed to have
any lien, right, title or interest in or to any specific investment or to any
assets of the Company.  At all times, the
Company shall be the owner of any assets used to satisfy the Company’s
obligations hereunder.

 

Section 4.2            Tax Advances.

 

If Employee’s rights to a Deferred Bonus for a Base Fiscal Year vest
under circumstances in which the amount of the Deferred Bonus is deemed to be
taxable income to the Employee for Federal, State or local income tax purposes
and Employee is, or may be, liable to pay taxes on such deemed income before
the Deferred Bonus is paid to Employee, Employer may, at its discretion, make
an advance to Employee in an amount sufficient to permit Employee to pay the full amount of all taxes on such
deemed income before such taxes shall become due. Any such advance shall not
bear interest, and may be repaid to Employer, in whole or in part, at any
time.  Any subsequent payment of the Deferred
Bonus to Employee shall be adjusted to reflect any amount previously advanced
pursuant to this Section 4.2.

 

12

 

Section 4.3            No Employment Agreement.

 

This
Agreement does not constitute an employment agreement between Employer and
Employee but instead is only intended to set out the respective rights and
obligations of the parties with respect to Deferred Bonuses for Fiscal Year
2009 and subsequent Fiscal Years. Without in any way limiting the generality of
the foregoing, it is expressly acknowledged and agreed that Employee does not
have an employment agreement with Employer and that, unless or until the
parties otherwise agree, Employee is an at-will employee of Employer; provided,
however, that Employee’s status as an at-will employee shall not prejudice or
adversely affect any of Employer’s vested rights hereunder upon any Termination
of Employment.

 

Section 4.4            Arbitration.

 

(A)          Any disagreements
which are referable to arbitration under the provisions of this Agreement,
shall be referred to, and finally determined by, arbitration pursuant to the
applicable Rules of Commercial Arbitration (“Rules”) of the American
Arbitration Association (“AAA”), subject to the provisions of this Section 4.4.
Employer and Employee shall each attempt to resolve any disagreement which is
referable to arbitration by agreement and each party agrees to negotiate in
good faith for a period of at least fifteen (15) business days after any such
disagreement has arisen. If, despite such good faith negotiations, the parties
are unable to resolve any such disagreement by agreement, then either party
may, at any time after the expiration of the foregoing period of fifteen (15)
business days, demand arbitration of such disagreement.

 

(B)          If the amount in
controversy in the arbitrable disagreement is One Hundred Thousand Dollars
($100,000) or less, the arbitration shall be conducted before a single
arbitrator selected by Employer and Employee within thirty (30) days after
service of the initial demand for arbitration. If the amount in controversy
exceeds One Hundred Thousand 

 

13

 

Dollars ($100,000), the arbitration shall be
conducted before three (3) arbitrators, one of whom shall be selected by
Employer within thirty (30) days after service of the initial demand for
arbitration, one of whom shall be selected by Employee within the foregoing
thirty (30) day period and one of whom shall be selected by the two arbitrators
selected by the parties within thirty (30) days after the second of such
arbitrators is selected. Each arbitrator selected pursuant to this Section 4.4(B) shall
be independent of both Employer and Employee and shall have at least fifteen
(15) years experience in the subject matter of the disagreement to be
arbitrated. If any arbitrator is not timely selected within the periods
provided for in this Section 4.4(B), such arbitrator shall be appointed by
the AAA pursuant to the Rules. Any arbitration pursuant to this Section 4.4
shall be conducted in Bethesda, Maryland, or in such other location as may then
be agreed by the parties. A judgment upon the award rendered in any such
arbitration shall be final and binding upon the parties and may be entered in
any court of competent jurisdiction. All fees and expenses of the arbitrator(s) and
all administrative costs of the arbitration shall be borne equally by the
parties unless the arbitrator(s) otherwise direct(s). This agreement to
arbitrate shall be specifically enforceable.

 

Section 4.5            Governing Law.

 

This
Agreement and the rights and liabilities of the parties hereunder shall be
governed by, and construed in accordance with, the laws of the State of
Maryland without regard to such State’s principles of conflicts of law.

 

Section 4.6            No Third Party Beneficiary;
Spendthrift Clause.

 

(A)          This Agreement is made solely and
specifically between and for the benefit of the parties hereto and (subject to Section 4.7)
their Beneficiaries, heirs, successors, assigns 

 

14

 

and legal representatives. No other Person
whatsoever shall have any rights, interests or claims hereunder or be entitled
to any benefits under or on account of this Agreement as a third parry
beneficiary or otherwise.

 

(B)            To the maximum extent permitted by
law, neither Employee nor any Beneficiary shall have any power to dispose of or
to charge by way of anticipation any vested, potential or other right, title or
interest hereunder, and any vested Deferred Bonus payable to Employee or any
Beneficiary shall be free and clear of his debts, contracts, dispositions, and
anticipations, and shall not be taken or reached by any legal or equitable
process.

 

Section 4.7            Benefit and Burden.

 

This
Agreement, and the respective rights and obligations of the parties hereunder,
may not be assigned, sold, hypothecated, or otherwise transferred, either
outright or as security, without the prior written consent of the other party
which may be delayed, withheld or conditioned in the sole and absolute discretion
of such other party; provided, however, that Employee may designate a
Beneficiary without Employer’s consent. Any transfer, or attempted transfer, in
violation of the provisions of this Section 4.7 shall be null and void ab initio. Subject to the foregoing
provisions of this Section 4.7, the provisions of this Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto, the
Employee’s Beneficiary and their respective heirs, successors, legal
representatives and permitted assigns.

 

Section 4.8            Computation of Time.

 

In
computing any notice or other period of time prescribed or allowed by any
provision of this Agreement, the day of the act, event, or default from which
the designated 

 

15

 

period of time begins to run shall not be
included. The last day of the period so computed shall be included, unless it
is a Saturday, Sunday or a legal holiday in Bethesda, Maryland, in which event
the period runs until the end of the next, day which is not a Saturday, Sunday
or such legal holiday. All notice or other periods expire as of 5:00 p.m.
(local time in Bethesda, Maryland) on the last day of the notice or other
period.

 

Section 4.9            Entire Agreement; Amendment and
Termination.

 

(A)          This Agreement contains the entire
understanding between Employer and Employee regarding the subject matter hereof
and supersedes any prior or contemporaneous understandings or agreements
between them respecting such subject matter. There are no representations,
warranties, agreements, arrangements or understandings, oral, written or
expressed by, or based upon, conduct, between the parties relating to the
subject matter hereof which are not fully expressed herein.

 

(B)          This Agreement, including the Schedules
hereto, may not be amended, modified, waived, or discharged except by an
instrument in writing which is duly executed by the party sought to be charged
with any such amendment, modification, waiver, termination or discharge;
provided, however, that this Agreement may be terminated at any time at the
discretion of Employer.

 

Section 4.10          Construction.

 

(A)          Common nouns and pronouns shall be
deemed to refer to the masculine, feminine, neuter, singular and plural, as the
context may require.

 

(B)          All headings herein
are inserted only for convenience and ease of reference and are not to be
considered in the construction or interpretation of this Agreement.

 

16

 

(C)          Numbered or lettered
Articles, sections, subsections, subparts and subparagraphs herein contained
refer to Articles, sections, subsections, subparts and subparagraphs of this
Agreement unless otherwise expressly stated. The words “herein,” “hereof,” “hereunder,”
“hereby,” “this Agreement” and other similar references shall be construed to
mean and include this Agreement and all amendments of, supplements to, and
Schedules and other attachments to this Agreement unless the context shall
clearly indicate or require otherwise.

 

(D)           Employer and
Employee have both participated extensively in the negotiation and drafting of
this Agreement. Accordingly, this Agreement shall not be interpreted or
construed for or against either party as the draftsman hereof.

 

Section 4.11          Notices.

 

Any
notices, demands, consents, requests or other communications (hereinafter
collectively referred to in this Section 4.11 as “notice”) provided for or
permitted to be given pursuant to this Agreement shall be in writing, and shall
be delivered by hand, by first-class mail, postage prepaid (with a return
receipt requested), or by Federal Express, or by some other commercial
overnight delivery service, to the parties at the following addresses:

 

	
  (i) If
  to Employer:

  	
  Walker &
  Dunlop, LLC

  
	
   

  	
  7501
  Wisconsin Avenue, Suite 1200

  
	
   

  	
  Bethesda,
  Maryland 20814

  
	
   

  	
  Attn:
  Mr. William M. Walker

  
	
   

  	
   

  
	
  (ii) If
  to Employee:

  	
  Howard W. Smith III

  
	
   

  	
  2915 44th Street, NW

  
	
   

  	
  Washington, DC 20016

  

 

17

 

Each
notice shall be deemed given on the day it is received or on the day its
delivery is refused by or for the addressee, whichever is earlier. Each party
may change its address or addressee for notice by giving notice thereof in the
manner provided above (such notice to be given at least five (5) business
days prior to its effective date).

 

Section 4.12          Examples.

 

The
operation of the provisions of this Agreement can be illustrated by the
following examples.  Assume the Base
Fiscal Year is 2009, with Base Financial Targets and achievement of Adjusted
Net Income as provided in the table below:

 

	
   

  	
   

  	
  Target

  	
   

  	
  Actual

  Adjusted Net

  Income

  	
   

  	
  Deferred

  Compensation

  Pool

  	
   

  
	
  Base
  Financial Target (2009)

  	
   

  	
  $

  	
  10

  	
  M (budgeted)

  	
  $

  	
  14

  	
  M

  	
  =(14-10)*.25 = $1M

  	
   

  
	
  Base
  Financial Target (2010)

  	
   

  	
  $

  	
  12

  	
  M

  	
  $

  	
  7

  	
  M

  	
   

  	
   

  
	
  Base
  Financial Target (2011)

  	
   

  	
  $

  	
  14

  	
  M

  	
  $

  	
  16

  	
  M

  	
   

  	
   

  
	
  Totals

  	
   

  	
  $

  	
  36

  	
  M

  	
  $

  	
  37

  	
  M

  	
   

  	
   

  

 

(A)          Because Employer’s Adjusted Net Income
for the 2009 Base Fiscal Year ($14 million) was $4 million greater than the
Base Financial Target for that year ($10 million), the Deferred Compensation
Pool for that year is $1 million ($4 million multiplied by 25%).

 

(B)          Assume that Employee X has an Employee
Percentage of 10%, and continues employment with Employer through the date the
Deferred Bonus is actually paid, on or about January 31, 2012.  Because, as of the last day of the 2011
Fiscal Year, aggregate Adjusted Net Income ($37 million) exceeds the aggregate
of the Base Financial Targets for the three Fiscal Years contained in the
Deferred Bonus Earn-Out Period ($36 million), the Annualized

 

18

 

Financial
Target is satisfied and Employee X becomes 100% vested in his Deferred Bonus
for the 2009 Fiscal Year as of December 31, 2011.  Employee X will receive a distribution of his
Deferred Bonus in the amount of $100,000 ($1 million Deferred Compensation Pool
multiplied by 10% Employee Percentage) on or about January 31, 2012.

 

(C)          Assume that Employee Y has an Employee
Percentage of 10% and incurs a Disability on July 1, 2010.  Because, as of the last day of the 2011
Fiscal Year, aggregate Adjusted Net Income ($37 million) exceeds the aggregate
of the Base Financial Targets for the three Fiscal Years contained in the
Deferred Bonus Earn-Out Period ($36 million), the Annualized Financial Target
is satisfied and Employee Y becomes 50% vested (18 months of employment from
the first day of the Base Fiscal Year through the date of Disability, divided
by 36 months) in his Deferred Bonus for the 2009 Fiscal Year as of December 31,
2011.  Employee Y will receive a
distribution of his Deferred Bonus in the amount of $50,000 ($1 million
Deferred Compensation Pool multiplied by 10% Employee Percentage multiplied by
50% vested percentage) on or about January 31, 2012.  The remaining $50,000 unvested Deferred Bonus
is forfeited.

 

19

 

IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first above written.

 

	
   

  	
  WALKER & DUNLOP, LLC

  
	
   

  	
   

  
	
   

  	
    (“Employer”)

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  April 30,
  2009

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  William Walker

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  William M. Walker

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  President &

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Howard W. Smith III (“Employee”)

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  April 30,
  2009

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Howard W. Smith III

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Howard W. Smith III

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Executive Vice President &

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Chief Operating Officer

  

 

20

 

SCHEDULE
1-2009

 

Formulae
for Computation of Deferred Bonus

 

1.            (A)           The following is a summary of key
defined terms for 2009:

 

(i)            Employee:
Howard W. Smith III

 

(ii)                                  Base Fiscal
Year: January 1, 2009 - December 31, 2009

 

(iii)                               Base Financial Target:
$25,272,927.00

 

(iv)           Deferred
Compensation Pool:  25% of the difference
between 2009 Adjusted Net Income minus the Base Financial Target

 

(v)            Employee
Percentage: 25% of Deferred Compensation
Pool

 

(B)           Employee shall be
entitled to a Deferred Bonus in the amount equal to (i) the Employee
Percentage times (ii) the Deferred Compensation Pool, subject to all
applicable vesting provisions set forth in the foregoing and attached Incentive
Deferred Bonus Compensation Agreement (“Agreement”) of which this Schedule
1-2009 is a part. In no event shall the Deferred Bonus be less than zero.

 

2.              Unless otherwise defined in this
Schedule 1-2009, all capitalized words and phrases in this Schedule 1-2009
shall have the same meanings as are ascribed to them in the Agreement.

 

21

 

APPROVED AND ACCEPTED:

 

 

	
  /s/
  William Walker

  	
   

  	
  April 30,
  2009

  
	
   

  	
   

  	
   

  
	
  William
  M. Walker

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
  President
   & Chief Executive Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  Howard W. Smith III

  	
   

  	
  April 30,
  2009

  
	
   

  	
   

  	
   

  
	
  Howard W. Smith III

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
  Executive Vice President & Chief Operating Officer

  	
   

  	
   

  

 

22Exhibit 10.15

 

	
  Warner, R.

  	
  2009

  

 

INCENTIVE DEFERRED BONUS COMPENSATION AGREEMENT

 

THIS
AGREEMENT (“Agreement”), made as of the 30th day of
April, 2009, by and between Walker & Dunlop, LLC (“Employer”)
and Richard Warner (“Employee”).

 

WITNESSETH
THAT:

 

WHEREAS,
Employee is serving as Employer’s Senior Vice
President & Chief Underwriter and, in that capacity has senior
management responsibility for Employer’s operations and an important role in
Employer’s success; and

 

WHEREAS, in order to maximize returns, Employer desires to provide
Employee with an incentive to contribute to the growth of the business and
profitability of the Employer and, to that end, the parties desire to enter
into this Agreement.

 

NOW,
THEREFORE, in consideration of the foregoing and of the mutual promises
hereinafter set forth and of other good and valuable consideration, the
sufficiency and receipt of which prior to the execution of these presents is
hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:

 

1

 

ARTICLE I

 

Definitions

 

Section 1.1             Definitions.

 

When
used in this Agreement, the following terms will have the meanings set forth
below:

 

(A)          “Annualized Financial Target” means,
with respect to a Deferred Bonus Earn-Out Period, the aggregate Adjusted Net
Income equal to or greater than the aggregate of the Base Financial Targets for
each Fiscal Year contained within the Deferred Bonus Earn-Out Period.

 

(B)           “Adjusted Net Income” for a given
period means Employer’s net income as determined in accordance with generally
accepted accounting principles (“Net Income”) over that period, decreased by
the non-recurring gain on sale of assets.

 

(C)           “Base Financial Target” means an
amount budgeted at the discretion of Employer with respect to each Fiscal Year
or Base Fiscal Year.  Once determined,
the Base Financial Target applicable to each relevant Fiscal Year shall be
listed on a Schedule or Exhibit to this Agreement.

 

(D)          “Base Fiscal Year” means the Fiscal
Year to which a Deferred Bonus relates (e.g., Fiscal Year 2009 shall be the
Base Fiscal Year for any Deferred Bonus potentially payable to Employee for
Fiscal Year 2009 Plan).

 

(E)           “Beneficiary” means one or more
individuals designated by Employee to receive benefits payable hereunder upon
Employee’s death (whether voluntary or involuntary). Employee shall designate
his Beneficiary in writing on a form provided by Employer. Employee may change
his designated Beneficiary by filing a new form with Employer (at least ten (10) business
days prior to the effective date of such change). If no 

 

2

 

Beneficiary
designated by Employee survives Employee, or if Employee fails to designate a
Beneficiary, any payments due hereunder upon Employee’s death shall be paid to
Employee’s executor or other legal representative.

 

(F)           “Change of Control” means the sale or
transfer of substantially all equity interests or assets of the Employer to a
third party, if the acquiring entity does not assume liability for the benefits
provided hereunder pursuant to said transaction and Employer does not otherwise
agree to continue or maintain this Agreement.

 

(G)           “Deferred Bonus” means the amount of
the deferred bonus potentially payable to Employee on account of a particular
Base Fiscal Year in accordance with the provisions hereof.

 

(H)          “Deferred Bonus Earn-Out Period”
means, with respect to each Deferred Bonus for each Base Fiscal Year, the
period beginning on the first day of the Base Fiscal Year and terminating on
the earliest to occur of the following:

 

(i)            the last day of the
three (3) year period commencing with the first day of the Base Fiscal
Year;

 

(ii)           the date of a
Change of Control; or

 

(iii)          the date of Plan
Termination.

 

(I)            “Deferred Compensation Pool” means,
with respect to a Base Fiscal Year, 25% of the excess of (i) Employer’s
Adjusted Net Income for that Base Fiscal Year, over (ii) the Base
Financial Target for that Base Fiscal Year.

 

(J)            “Disability” means any physical or
mental impairment which, in the opinion of Employer, based upon a competent
medical examination, renders Employee unable to continue the performance of
Employee’s regular duties with Employer and is expected to be permanent in
duration or to continue for a period of 12 months or more. Employer shall have
absolute discretion to determine if and when a Disability has occurred for
purposes of this 

 

3

 

Agreement,
provided that nothing contained herein shall prevent Employee from submitting
to Employer, at Employee’s expense, any evidence of disability that Employee
deems relevant to said determination.

 

(K)          “Employee” means Richard Warner and, where appropriate, shall
also be deemed to mean his executor, guardian or other legal representative.

 

(L)           “Employee Percentage” means the
percentage of the Deferred Compensation Pool determined by Employer and
specified in a Schedule or Exhibit attached hereto which shall be used to
determine the amount of Employee’s Deferred Bonus for each respective Base
Fiscal Year, as provided in Section 2.1.

 

(M)         “Employer” means Walker &
Dunlop, LLC and any successor to, or assignee of, Walker & Dunlop, LLC
to which Employee has consented, in Employee’s sole discretion, which will not
be unreasonably withheld.

 

(N)          “Fiscal Year” means a fiscal year of
Employer (presently a calendar year).

 

(O)          “Person” means, as the context
requires, an individual, partnership, corporation, trust, unincorporated
association, joint stock company, or other legal entity or association.

 

(P)           “Plan Termination” means the
voluntary termination of this Agreement by Employer pursuant to the provisions
of Section 4.9(B).

 

(Q)          “Schedules” means, collectively, the
Schedules attached, or to be attached, hereto.

 

(R)           “Termination With Cause” means the
termination by Employer of Employee’s employment with Employer on account of (i) Employee’s
conviction for the 

 

4

 

commission
of a felony in the course of his employment with Employer, or (ii) Employee’s
gross, willful and intentional misconduct in connection with his employment
with Employer.

 

(S)           “Termination Without Cause” means the
termination by Employer of Employee’s employment with Employer without Employee’s
consent for any reason which does not constitute Termination With Cause.

 

(T)           “Voluntary Resignation” means the
voluntary decision or election by Employee to terminate his employment with
Employer for any reason whatsoever other than a material breach by Employer of
this Agreement which is not cured within any applicable grace period specified
herein.

 

Section 1.2           Certain
Other Definitions.

 

When
used herein with its initial letter(s) capitalized, a term which is not
defined in Section 1.1 shall be given the definition assigned to it
elsewhere in this Agreement.

 

Section 1.3           Schedules
and Exhibits.

 

Attached
hereto and forming an integral part of this Agreement may be various Schedules
and Exhibits, all of which are incorporated into this Agreement as fully as if
the contents thereof were set out in full herein at each point of reference
thereto. The provisions of the immediately preceding sentence shall also apply
to any Schedules, Exhibits or other attachments which, pursuant to the
provisions hereof, are to be prepared and attached hereto in the future.
Notwithstanding any other provision hereof, if there is any conflict or
inconsistency between the provisions contained in this Agreement and the
provisions contained in any Schedule or Exhibit attached hereto (either
now or in the future), the provisions of the Schedule or Exhibit shall
govern and prevail.

 

5

 

ARTICLE II

 

Determination Of Deferred Bonus

 

Section 2.1             Amount of Deferred Bonus.

 

Subject
to the vesting and forfeiture provisions outlined in Article III hereof,
Employee shall be entitled to a Deferred Bonus for each Base Fiscal Year in an
amount equal to (A) the Deferred Compensation Pool for that Base Fiscal
Year (if any), multiplied by (B) Employee’s Employee Percentage for that
Base Fiscal Year.

 

Section 2.2             Determination of Attainment of
Financial Targets.

 

As soon as practicable, and in any event within sixty (60) days after
the expiration of each Base Fiscal Year, Employer shall determine whether the
Base Financial Target was met during such Base Fiscal Year and shall certify
the amount of the Deferred Compensation Pool for that Base Fiscal Year, if
applicable.  Employer shall promptly
advise Employee as to whether the Base Financial Target has been met during the
Base Fiscal Year in question and, if so, the amount of the Deferred Bonus for
that Base Fiscal Year as computed by Employer. Employee shall be entitled to
review all financial and other records relevant to Employer’s determinations
with respect to the achievement of the Base Financial Target, the amount of
Employee’s Deferred Bonus, if any, and all related computations. Employer shall
give careful and good faith consideration to any bona fide questions raised by
Employee regarding Employer’s foregoing determinations and shall make any
adjustments therein as Employer deems necessary or appropriate in the light of
such questions. Employer’s good faith determination as to the attainment of the
Base Financial Target or other targets or computations relevant to the
determination of Employee’s Deferred Bonus shall, however, be binding and
conclusive on Employer and Employee unless the amount in question or 

 

6

 

controversy
as to the size of the Deferred Bonus exceeds $25,000 (in which event such
question or controversy shall be referred to, and determined by, arbitration in
accordance with Section 4.4 hereof). Once the final amount of Employee’s
Deferred Bonus for any Base Fiscal Year has been computed, agreed or
determined, such amount shall be memorialized in an addendum which shall also
be attached hereto and shall be deemed a part hereof and such amount shall not
then thereafter change.

 

7

 

ARTICLE III

 

Vesting,
Forfeiture, and Payment of Deferred Bonus

 

Section 3.1             Vesting of Deferred Bonus —
Annualized Financial Target Satisfied.

 

Each Employee’s vested status with regard to the Deferred Bonus for a
Base Fiscal Year shall be determined as of the last day of the applicable
Deferred Bonus Earn-Out Period.  If, as
of the last day of the Deferred Bonus Earn-Out Period, the Annualized Financial
Target has been satisfied, each Employee’s vested status with respect to the
Deferred Bonus for the applicable Base Fiscal Year shall be determined in
accordance with the following rules:

 

(A)          If Employee has
remained continuously employed by Employer until the last day of the Deferred
Bonus Earn-Out Period, Employee shall become 100% vested in Employee’s Deferred
Bonus for the applicable Base Fiscal Year provided that Employee remains
employed by Employer until the date that the Deferred Bonus is actually paid.

 

(B)           If, prior to the
last day of the Deferred Bonus Earn-Out Period, Employee was Terminated With
Cause or terminated employment due to a Voluntary Resignation, Employee shall
forfeit any and all right to a Deferred Bonus for the applicable Base Fiscal
Year.

 

(C)           If, prior to the
last day of the Deferred Bonus Earn-Out Period, Employee died, became Disabled,
or was Terminated Without Cause, Employee (or his Beneficiary) shall obtain a
vested right in a portion of his Deferred Bonus for the applicable Base Fiscal
Year in an amount equal to a fraction, the numerator of which is the number of
months Employee was employed by Employer beginning on the first day of the Base
Fiscal Year and ending on the date of death, Disability, or termination
(rounded to the nearest whole month), and the denominator of which is the
number of whole months contained in the Deferred 

 

8

 

Bonus
Earn-Out Period (i.e., thirty-six (36) months for a Deferred Bonus Earn-Out
Period that does not end early due to Plan Termination).

 

(D)          In the case that the
last day of a Deferred Bonus Earn-Out Period occurs due to a Change of Control,
the Annualized Financial Target shall be deemed to have been automatically
satisfied without regard to Employer’s actual Adjusted Net Income.  In such a case, Employee’s vested status
shall be determined as of the date of the Change of Control using the rules outlined
in subsections (A), (B), or (C) above, as applicable, treating the date of
the Change of Control as the last day of the Deferred Bonus Earn-Out Period.

 

(E)           In the case that the
last day of a Deferred Bonus Earn-Out Period occurs due to a Plan Termination,
the Annualized Financial Target shall be deemed to have been satisfied provided
that Adjusted Net Income, as of the date of Plan Termination, equals or exceeds
the Annualized Financial Target, as pro-rated through the date of Plan
Termination. In such a case, Employee’s vested status shall be determined as of
the date of the Plan Termination using the rules outlined in subsections
(A), (B), (C), or (D) above, as applicable, treating the date of Plan Termination
as the last day of the Deferred Bonus Earn-Out Period.

 

Section 3.2             Forfeiture of Deferred Bonus.

 

Notwithstanding
Section 3.1 above, Employee’s right to a Deferred Bonus for any
particularly Base Fiscal Year shall be immediately and fully forfeited if
either of the following events occurs:

 

(A)          Employee’s employment with Employer
terminates as a result of a Termination With Cause or a Voluntary Resignation
prior to the date following the last day of the Deferred Bonus Earn-Out Period
for that Base Fiscal Year on which the Deferred Bonus is paid; or

 

9

 

(B)           the relevant Annualized Financial
Target applicable to the Deferred Bonus for that Base Fiscal Year is not
satisfied.

 

If
one of the events delineated in (A) or (B) occurs with respect to a
Base Fiscal Year, Employee’s Deferred Bonus for such Base Fiscal Year shall not
vest and shall be forfeited in its entirety, and all of Employee’s rights,
title and interest in or with respect to such Deferred Bonus shall lapse and be
of no further force and effect. The forfeiture of Employee’s rights as to a
Deferred Bonus for any particular Base Fiscal Year shall not prejudice or
adversely affect in any way Employee’s rights, if any, to receive (or retain) a
Deferred Bonus for another Base Fiscal Year.

 

Section 3.3            Payment
of Vested Deferred Bonus.

 

(A)          Employer shall pay Employee (or, if
applicable, his Beneficiary) the vested portion of any Deferred Bonus which
vests pursuant to the provisions of Section 3.1 in accordance with the
following provisions:

 

(i)             if the last day of
the Deferred Bonus Earn-Out Period which results in the vesting of Employee’s
Deferred Bonus occurs as a result of a Plan Termination, that Deferred Bonus
shall be paid to Employee (or, if applicable, his Beneficiary) within sixty
(60) days after the date of Plan Termination; and

 

(ii)            if the last day of
the Deferred Bonus Earn-Out Period occurs for any reason other than Plan
Termination, that Deferred Bonus shall be paid to Employee on January 31
of the taxable year immediately following the taxable year in which Employee’s
rights to that Deferred Bonus vest, unless further time is needed to determine
the attainment of the Annualized Financial Target, as described more fully
below.

 

(B)            The payment period
specified above shall be extended if, and to the extent, necessary in order for
a determination to be made as to whether the Annualized Financial 

 

10

 

Target has been met; provided that payment shall be made no later than
2-1/2 months after the last day of the taxable year in which Employee’s rights
to the Deferred Bonus vest. An extension of the period within which a vested
Deferred Bonus shall be paid shall not extend or defer the date as of which
such Deferred Bonus shall be deemed to have vested.

 

(C)         Whenever the payment of a Deferred
Bonus is dependent upon the meeting by Employer of all, or a specified
percentage, of an Annualized Financial Target during a Deferred Bonus Earn-Out
Period, Employer shall, as promptly as may be practicable after the date on
which the Deferred Bonus Earn-Out Period for such Deferred Bonus terminates and
Employer has received such financial reports or data relating to Employer which
are needed in order to determine whether all, or the specified percentage of
the Annualized Financial Target has been met, make a written determination as
to whether all, or the specified percentage, of such Annualized Financial
Target has been met and shall provide Employee with a copy of such written
determination. Employee shall have the right to review all financial and other
records relevant to such determination. Employer shall give careful and good
faith consideration to any bona fide questions
raised by Employee regarding Employer’s determination and shall, if necessary
or appropriate, adjust Employer’s determination in light of such questions.
Employer’s good faith determination (either as initially made or as thereafter
adjusted) as to whether Employer has met all, or the specified percentage, of
the Annualized Financial Target shall, however, be binding and conclusive upon
Employer and Employee unless the amount of the Deferred Bonus in question or
controversy exceeds $25,000 (in which event all questions or controversies as to
whether or not the Deferred Bonus in question has vested shall be referred to,
and determined by, arbitration pursuant to Section 4.4 hereof).

 

11

 

ARTICLE IV

 

Other Provisions

 

Section 4.1                                      Funding.

 

The
Deferred Bonus provided for hereunder shall be an unfunded obligation of
Employer.  Employee and any Beneficiaries
shall have the status of general unsecured creditors of Employer with respect
to payment of any Deferred Bonus provided hereunder.  At no time shall Employee be deemed to have
any lien, right, title or interest in or to any specific investment or to any
assets of the Company.  At all times, the
Company shall be the owner of any assets used to satisfy the Company’s
obligations hereunder.

 

Section 4.2                                      Tax Advances.

 

If Employee’s rights to a Deferred Bonus for a Base Fiscal Year vest
under circumstances in which the amount of the Deferred Bonus is deemed to be
taxable income to the Employee for Federal, State or local income tax purposes
and Employee is, or may be, liable to pay taxes on such deemed income before
the Deferred Bonus is paid to Employee, Employer may, at its discretion, make
an advance to Employee in an amount sufficient to permit Employee to pay the full amount of all taxes on such
deemed income before such taxes shall become due. Any such advance shall not
bear interest, and may be repaid to Employer, in whole or in part, at any
time.  Any subsequent payment of the Deferred
Bonus to Employee shall be adjusted to reflect any amount previously advanced
pursuant to this Section 4.2.

 

12

 

Section 4.3                                      No Employment
Agreement.

 

This
Agreement does not constitute an employment agreement between Employer and
Employee but instead is only intended to set out the respective rights and
obligations of the parties with respect to Deferred Bonuses for Fiscal Year
2009 and subsequent Fiscal Years. Without in any way limiting the generality of
the foregoing, it is expressly acknowledged and agreed that Employee does not
have an employment agreement with Employer and that, unless or until the
parties otherwise agree, Employee is an at-will employee of Employer; provided,
however, that Employee’s status as an at-will employee shall not prejudice or
adversely affect any of Employer’s vested rights hereunder upon any Termination
of Employment.

 

Section 4.4                                      Arbitration.

 

(A)                            Any
disagreements which are referable to arbitration under the provisions of this
Agreement, shall be referred to, and finally determined by, arbitration
pursuant to the applicable Rules of Commercial Arbitration (“Rules”) of
the American Arbitration Association (“AAA”), subject to the provisions of this
Section 4.4. Employer and Employee shall each attempt to resolve any
disagreement which is referable to arbitration by agreement and each party
agrees to negotiate in good faith for a period of at least fifteen (15)
business days after any such disagreement has arisen. If, despite such good
faith negotiations, the parties are unable to resolve any such disagreement by
agreement, then either party may, at any time after the expiration of the
foregoing period of fifteen (15) business days, demand arbitration of such
disagreement.

 

(B)                              If the amount
in controversy in the arbitrable disagreement is One Hundred Thousand Dollars
($100,000) or less, the arbitration shall be conducted before a single
arbitrator selected by Employer and Employee within thirty (30) days after
service of the initial demand for arbitration. If the amount in controversy
exceeds One Hundred Thousand 

 

13

 

Dollars
($100,000), the arbitration shall be conducted before three (3) arbitrators,
one of whom shall be selected by Employer within thirty (30) days after service
of the initial demand for arbitration, one of whom shall be selected by
Employee within the foregoing thirty (30) day period and one of whom shall be
selected by the two arbitrators selected by the parties within thirty (30) days
after the second of such arbitrators is selected. Each arbitrator selected
pursuant to this Section 4.4(B) shall be independent of both Employer
and Employee and shall have at least fifteen (15) years experience in the
subject matter of the disagreement to be arbitrated. If any arbitrator is not
timely selected within the periods provided for in this Section 4.4(B),
such arbitrator shall be appointed by the AAA pursuant to the Rules. Any
arbitration pursuant to this Section 4.4 shall be conducted in Bethesda,
Maryland, or in such other location as may then be agreed by the parties. A
judgment upon the award rendered in any such arbitration shall be final and
binding upon the parties and may be entered in any court of competent jurisdiction.
All fees and expenses of the arbitrator(s) and all administrative costs of
the arbitration shall be borne equally by the parties unless the arbitrator(s) otherwise
direct(s). This agreement to arbitrate shall be specifically enforceable.

 

Section 4.5                                      Governing Law.

 

This
Agreement and the rights and liabilities of the parties hereunder shall be
governed by, and construed in accordance with, the laws of the State of
Maryland without regard to such State’s principles of conflicts of law.

 

Section 4.6                                      No Third Party
Beneficiary; Spendthrift Clause.

 

(A)                              This Agreement
is made solely and specifically between and for the benefit of the parties
hereto and (subject to Section 4.7) their Beneficiaries, heirs,
successors, assigns 

 

14

 

and
legal representatives. No other Person whatsoever shall have any rights,
interests or claims hereunder or be entitled to any benefits under or on
account of this Agreement as a third parry beneficiary or otherwise.

 

(B)                                     To the maximum
extent permitted by law, neither Employee nor any Beneficiary shall have any
power to dispose of or to charge by way of anticipation any vested, potential
or other right, title or interest hereunder, and any vested Deferred Bonus
payable to Employee or any Beneficiary shall be free and clear of his debts,
contracts, dispositions, and anticipations, and shall not be taken or reached
by any legal or equitable process.

 

Section 4.7                                      Benefit and
Burden.

 

This
Agreement, and the respective rights and obligations of the parties hereunder,
may not be assigned, sold, hypothecated, or otherwise transferred, either
outright or as security, without the prior written consent of the other party
which may be delayed, withheld or conditioned in the sole and absolute discretion
of such other party; provided, however, that Employee may designate a
Beneficiary without Employer’s consent. Any transfer, or attempted transfer, in
violation of the provisions of this Section 4.7 shall be null and void ab initio. Subject to the foregoing
provisions of this Section 4.7, the provisions of this Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto, the
Employee’s Beneficiary and their respective heirs, successors, legal
representatives and permitted assigns.

 

Section 4.8                                      Computation of
Time.

 

In
computing any notice or other period of time prescribed or allowed by any
provision of this Agreement, the day of the act, event, or default from which
the designated 

 

15

 

period
of time begins to run shall not be included. The last day of the period so
computed shall be included, unless it is a Saturday, Sunday or a legal holiday
in Bethesda, Maryland, in which event the period runs until the end of the
next, day which is not a Saturday, Sunday or such legal holiday. All notice or
other periods expire as of 5:00 p.m. (local time in Bethesda, Maryland) on
the last day of the notice or other period.

 

Section 4.9                                      Entire
Agreement; Amendment and Termination.

 

(A)                              This Agreement
contains the entire understanding between Employer and Employee regarding the
subject matter hereof and supersedes any prior or contemporaneous
understandings or agreements between them respecting such subject matter. There
are no representations, warranties, agreements, arrangements or understandings,
oral, written or expressed by, or based upon, conduct, between the parties
relating to the subject matter hereof which are not fully expressed herein.

 

(B)                                This Agreement,
including the Schedules hereto, may not be amended, modified, waived, or
discharged except by an instrument in writing which is duly executed by the
party sought to be charged with any such amendment, modification, waiver,
termination or discharge; provided, however, that this Agreement may be
terminated at any time at the discretion of Employer.

 

Section 4.10                                Construction.

 

(A)                              Common nouns
and pronouns shall be deemed to refer to the masculine, feminine, neuter,
singular and plural, as the context may require.

 

(B)                                All headings
herein are inserted only for convenience and ease of reference and are not to
be considered in the construction or interpretation of this Agreement.

 

16

 

(C)                                Numbered or
lettered Articles, sections, subsections, subparts and subparagraphs herein
contained refer to Articles, sections, subsections, subparts and subparagraphs
of this Agreement unless otherwise expressly stated. The words “herein,” “hereof,”
“hereunder,” “hereby,” “this Agreement” and other similar references shall be
construed to mean and include this Agreement and all amendments of, supplements
to, and Schedules and other attachments to this Agreement unless the context
shall clearly indicate or require otherwise.

 

(D)                                 Employer and
Employee have both participated extensively in the negotiation and drafting of
this Agreement. Accordingly, this Agreement shall not be interpreted or
construed for or against either party as the draftsman hereof.

 

Section 4.11                                Notices.

 

Any
notices, demands, consents, requests or other communications (hereinafter
collectively referred to in this Section 4.11 as “notice”) provided for or
permitted to be given pursuant to this Agreement shall be in writing, and shall
be delivered by hand, by first-class mail, postage prepaid (with a return
receipt requested), or by Federal Express, or by some other commercial
overnight delivery service, to the parties at the following addresses:

 

	
  (i) If
  to Employer:

  	
  Walker &
  Dunlop, LLC

  
	
   

  	
  7501
  Wisconsin Avenue, Suite 1200

  
	
   

  	
  Bethesda,
  Maryland 20814

  
	
   

  	
  Attn:
  Mr. William M. Walker

  
	
   

  	
   

  
	
  (ii) If
  to Employee:

  	
  Richard Warner

  
	
   

  	
  18007 Calico Circle

  
	
   

  	
  Olney, MD 20832

  

 

17

 

Each
notice shall be deemed given on the day it is received or on the day its delivery
is refused by or for the addressee, whichever is earlier. Each party may change
its address or addressee for notice by giving notice thereof in the manner
provided above (such notice to be given at least five (5) business days
prior to its effective date).

 

Section 4.12                                Examples.

 

The
operation of the provisions of this Agreement can be illustrated by the
following examples.  Assume the Base
Fiscal Year is 2009, with Base Financial Targets and achievement of Adjusted
Net Income as provided in the table below:

 

	
   

  	
   

  	
   

  	
  Target

  	
   

  	
  Actual

  Adjusted Net

  Income

  	
   

  	
  Deferred

  Compensation

  Pool

  	
   

  
	
   

  	
  Base
  Financial Target (2009)

  	
   

  	
  $

  	
  10

  	
  M (budgeted)

  	
  $

  	
  14

  	
  M

  	
  =(14-10)*.25 = $1M

  	
   

  
	
   

  	
  Base
  Financial Target (2010)

  	
   

  	
  $

  	
  12

  	
  M

  	
  $

  	
  7

  	
  M

  	
   

  	
   

  
	
   

  	
  Base
  Financial Target (2011)

  	
   

  	
  $

  	
  14

  	
  M

  	
  $

  	
  16

  	
  M

  	
   

  	
   

  
	
   

  	
  Totals

  	
   

  	
  $

  	
  36

  	
  M

  	
  $

  	
  37

  	
  M

  	
   

  	
   

  

 

(A)                              Because
Employer’s Adjusted Net Income for the 2009 Base Fiscal Year ($14 million) was
$4 million greater than the Base Financial Target for that year ($10 million),
the Deferred Compensation Pool for that year is $1 million ($4 million
multiplied by 25%).

 

(B)                                Assume that
Employee X has an Employee Percentage of 10%, and continues employment with
Employer through the date the Deferred Bonus is actually paid, on or about January 31,
2012.  Because, as of the last day of the
2011 Fiscal Year, aggregate Adjusted Net Income ($37 million) exceeds the
aggregate of the Base Financial Targets for the three Fiscal Years contained in
the Deferred Bonus Earn-Out Period ($36 million), the Annualized

 

18

 

Financial
Target is satisfied and Employee X becomes 100% vested in his Deferred Bonus
for the 2009 Fiscal Year as of December 31, 2011.  Employee X will receive a distribution of his
Deferred Bonus in the amount of $100,000 ($1 million Deferred Compensation Pool
multiplied by 10% Employee Percentage) on or about January 31, 2012.

 

(C)                                Assume that
Employee Y has an Employee Percentage of 10% and incurs a Disability on July 1,
2010.  Because, as of the last day of the
2011 Fiscal Year, aggregate Adjusted Net Income ($37 million) exceeds the
aggregate of the Base Financial Targets for the three Fiscal Years contained in
the Deferred Bonus Earn-Out Period ($36 million), the Annualized Financial
Target is satisfied and Employee Y becomes 50% vested (18 months of employment
from the first day of the Base Fiscal Year through the date of Disability,
divided by 36 months) in his Deferred Bonus for the 2009 Fiscal Year as of December 31,
2011.  Employee Y will receive a
distribution of his Deferred Bonus in the amount of $50,000 ($1 million
Deferred Compensation Pool multiplied by 10% Employee Percentage multiplied by
50% vested percentage) on or about January 31, 2012.  The remaining $50,000 unvested Deferred Bonus
is forfeited.

 

19

 

IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first above written.

 

 

	
   

  	
  WALKER & DUNLOP, LLC

  
	
   

  	
   

  
	
   

  	
  (“Employer”)

  
	
   

  	
   

  
	
   

  	
  Date:
  

  	
  April 30,
  2009

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  William Walker

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  William
  M. Walker

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  President &

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Richard Warner (“Employee”)

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:
  

  	
  April 30,
  2009

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Richard Warner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Richard Warner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Senior Vice President &

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Chief Underwriter

  

 

20

 

SCHEDULE
1-2009

 

Formulae
for Computation of Deferred Bonus

 

1.                                     (A)                                The following
is a summary of key defined terms for 2009:

 

(i)                                     Employee: Richard Warner

 

(ii)                                  Base Fiscal
Year: January 1, 2009 - December 31, 2009

 

(iii)                               Base Financial Target:
$25,272,927.00

 

(iv)                                Deferred Compensation
Pool:  25% of the difference between 2009
Adjusted Net Income minus the Base Financial Target

 

(v)                                   Employee Percentage: 12% of Deferred Compensation Pool

 

(B)                                   Employee shall
be entitled to a Deferred Bonus in the amount equal to (i) the Employee
Percentage times (ii) the Deferred Compensation Pool, subject to all
applicable vesting provisions set forth in the foregoing and attached Incentive
Deferred Bonus Compensation Agreement (“Agreement”) of which this Schedule
1-2009 is a part. In no event shall the Deferred Bonus be less than zero.

 

2.                                            Unless
otherwise defined in this Schedule 1-2009, all capitalized words and phrases in
this Schedule 1-2009 shall have the same meanings as are ascribed to them in
the Agreement.

 

21

 

APPROVED AND ACCEPTED:

 

 

	
  /s/
  William Walker

  	
   

  	
  April 30,
  2009

  
	
   

  	
   

  	
   

  
	
  William
  M. Walker

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
  President &
  Chief Executive Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  Richard Warner

  	
   

  	
  April 30,
  2009

  
	
   

  	
   

  	
   

  
	
  Richard Warner

  	
   

  	
  Date

  

 

Senior Vice President & Chief Underwriter

 

22

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