Exhibit 10.1

 

EXECUTION COPY

 

Walker & Dunlop, Inc.

Walker & Dunlop, LLC

7501 Wisconsin Avenue, Suite 1200E
Bethesda, Maryland 20814

 

September 4, 2012

 

CW Financial Services, LLC

CWCapital LLC

7501 Wisconsin Avenue, Suite 500W

Bethesda, Maryland 20814

 

Re:                              Agreements and Acknowledgements

 

Ladies and Gentlemen:

 

Reference is made to the Purchase Agreement, dated as of June 7, 2012, by and among Walker & Dunlop, Inc., Walker & Dunlop, LLC, CW Financial Services LLC and CWCapital LLC (the “ Purchase Agreement ”).  Terms used but not defined in this letter (this “ Letter ”) shall have the respective meanings set forth in the Purchase Agreement.

 

The Parties hereby agree that:

 

1.                The penultimate sentence of Section 3.1 of the Purchase Agreement is hereby amended by replacing the phrase “11:59 p.m. (Eastern time) on the date of the Closing” with “11:59 p.m. (Eastern time) on August 31, 2012”.  All references in the Purchase Agreement to covenants required to be performed at or prior to the Closing Date shall be amended such that they are required to be performed at or prior to September 4, 2012.  All references in the Purchase Agreement to representations and warranties required to be accurate as of the Closing Date shall be amended such that they are required to be accurate as of September 4, 2012 (but without affecting any qualifications as to materiality or Material Adverse Effect).  All references in the Purchase Agreement to conditions required to be satisfied or waived as of the Closing Date shall be amended such that they are required to be satisfied or waived as of September 4, 2012.  Any certificates required to be delivered as of the Closing Date shall be required to be delivered as of September 4, 2012.  The Seller’s ownership interest in CWCapital LLC shall vest in Purchaser immediately upon Seller’s receipt of the Cash Consideration and the Stock Consideration.

 

2.                The second sentence of Section 6.17(a) of the Purchase Agreement is hereby amended in its entirety to read as follows:  “Effective as of the day immediately following the Closing Date, the employees of the Company shall cease to participate in the employee benefits plans and programs of the Seller and its

 

 

Affiliates in accordance with the terms and conditions of such plans and programs.”

 

3.                The first sentence of Section 6.17(c) of the Purchase Agreement is hereby amended in its entirety to read as follows:  “Effective as of the day immediately following the Closing Date, the Company Employees shall be covered by the Parent Employee Benefit Plans, subject to the terms and conditions of such Parent Employee Benefit Plans.”

 

4.                The references in Sections 3.2(b), 3.2(c), 3.3(c) and 3.3(d) of the Purchase Agreement to “ten (10) calendar days” are hereby amended to instead read “ten (10) Business Days”.

 

5.                Notwithstanding anything to the contrary in the Purchase Agreement (including, without limitation, Section 2.3 thereof), Schedule A to the Purchase Agreement or the Company Closing Schedule prepared and delivered by Seller (the “Proposed Company Closing Schedule”), the Parties agree to and acknowledge the following adjustments for purposes of calculating the Closing Adjustment:

 

(a)  A Fannie Mae Guaranty Receivable account was reflected on the Proposed Company Closing Schedule as account number 14014 within the line item “Accrued Income & Other Receivables” and will be treated as a current asset in the amount of $539,410 (the “Fannie Mae Guaranty Receivable”).  For avoidance of doubt, it is acknowledged that the $539,410 was included in the Proposed Company Closing Schedule in the “Accrued Income & Other Receivables” line item as part of the total amount shown of $4,463,404, and that the $539,410 was part of, and not in addition to, the $4,463,404.  The resulting final amount of the Fannie Mae Guaranty Receivable shall be $539,410.

 

(b)  The CWCapital portion of ARA excess cash was not reflected on the Proposed Company Closing Schedule, but will be treated as a current asset in the amount of $324,015.

 

(c)  The increase in bonus accrual for resignation payments for Messrs. Weil and Ginsberg reflected on the Proposed Company Closing Schedule as part of the “Accrued Bonus” will be treated as a current liability, but the amount of such current liability reflected on the Proposed Company Closing Schedule as Accrued Bonus shall be increased by $133,000.  The resulting final amount of such Accrued Bonus liability shall be $400,000.

 

(d)  The “Accrued Value Creation — GSE West” adjustment reflected on the Proposed Company Closing Schedule will be treated as a current

 

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liability, but the amount of such current liability reflected on the Proposed Company Closing Schedule shall be increased by $122,918.  The “Accrued Value Creation — GSE West” relates only to the Value Creation Plan Bonus defined in the employment agreements of Trent Brooks and Bryan Frazier, and not to any other compensation for Messrs. Brooks and Frazier contemplated in their respective employment agreements.  The resulting final amount for the “Accrued Value Creation — GSE West” and the Brooks and Frazier value creation shall be $1,622,918.

 

(e)  The Stonewood Apartments risk share adjustment was not reflected on the Proposed Company Closing Schedule, but will be treated as a current liability in the amount of $309,687.

 

(f)  The Volusia Crossing risk share adjustment was not reflected on the Proposed Company Closing Schedule, but will be treated as a current liability in the amount of $433,780.

 

(g)  The Pelican Pointe risk share adjustment was not reflected on the Proposed Company Closing Schedule, but will be treated as a current liability in the amount of $644,746.

 

The foregoing adjustments and the resulting aggregate amounts for the applicable line items of the Proposed Company Closing Schedule, each as reflected in Exhibit A hereto, shall be referred to as the “Agreed Adjustments” for purposes of this letter.  The Parties further agree and acknowledge that the collective effect of the Agreed Adjustments will be to decrease the Estimated Working Capital Surplus reflected on the Proposed Company Closing Schedule by $1,320,116.  The Agreed Adjustments shall be conclusive and binding on the Parties.  In no event shall any Party disagree with, dispute or challenge the Agreed Adjustments including, without limitation, pursuant to the procedures set forth in Section 2.3 of the Purchase Agreement.  None of (i) the Agreed Adjustments, (ii) Exhibit A hereto, (iii) the contents of Exhibit A hereto, or (iv) Exhibit A’s inclusion as an exhibit hereto is an admission or acknowledgement by any Party that the Proposed Company Closing Schedule does not comply with the Purchase Agreement or Schedule A thereto.  In no event shall any Party assert or posit any allegation, contention or argument that there has been any such admission or acknowledgement.

 

6.                A new Section 6.10(f) will be inserted into the Purchase Agreement which will read, in its entirety, as follows:  “Until the earlier of (x) such time as the Seller appoints its Board Designees and such Board Designees actually become members of the Parent’s Board of Directors, and (y) February 28, 2013 (provided that such February 28, 2013 date shall be extended until actual appointment if the

 

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applicable Board Designee is rejected by Parent pursuant to the Purchase Agreement), Seller shall have the right, but not the obligation, to appoint the number of observers to the Parent’s Board of Directors (the “ Board Observers ”) that is equal to the number of Board Designees that have not yet actually become members of the Parent’s Board of Directors.  Subject to fiduciary duties, confidentiality, privilege and all other applicable laws, each of the Board Observers shall have the right to (a) attend any and all meetings of the Parent’s Board of Directors and any committees or subcommittees of the Parent’s Board of Director and (b) receive the same notices of such meetings, materials, information and notices of actions taken as the members of the Parent’s Board of Directors or such committee or subcommittee are entitled to receive.”

 

7.                A new Section 9.1(h) will be inserted into the Purchase Agreement which will read, in its entirety, as follows:  “During the period commencing on the Closing Date and ending on the 12 month anniversary of the Closing Date, Seller hereby covenants and agrees to maintain net worth equal to or greater than $22,000,000 at all times during such period.  Solely to the extent that there are unresolved indemnity claims asserted by Purchaser Indemnified Parties against Seller pursuant to Article 9 of the Purchase Agreement as of the 12 month anniversary of the Closing Date, during the period commencing on such 12 month anniversary until such time as there are no such unresolved indemnity claims against Seller, Seller hereby covenants and agrees to maintain net worth equal to or greater than the aggregate amount of the Losses asserted by the Purchaser Indemnified Parties with respect to such unresolved indemnity claims (but not to exceed $22,000,000, in the aggregate), calculated, in each case, as of the applicable day of such period.”

 

8.                Any fees paid to the counterparties to the Company Warehouse Lines (including the legal fees of such counterparties) shall be deemed to be fees associated with obtaining consent of Governmental Authorities and treated in accordance with the last sentence of Section 10.19 of the Purchase Agreement.

 

9.                Seller shall pay $170,000 of Parent’s fees related to the transaction, which amount shall be paid as a reduction in the Cash Consideration paid by Parent at Closing.

 

10.          For purposes of the letter agreement dated August 27, 2012 regarding certain sales of mortgage servicing rights entered into by the parties hereto (the “Consent”), the Parties agree that the Servicing Rights Purchase and Sale Agreement between Wells Fargo, National Association and the Company dated August 31, 2012  shall be deemed a Sale Agreement (as defined in Consent).

 

Except as modified hereby, the Purchase Agreement shall remain in full force and effect in accordance with its terms.  The term “Agreement” or “Purchase Agreement” as used in the

 

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Purchase Agreement shall for all purposes therein refer to the Purchase Agreement as amended by this Letter.  This Letter may be executed in more than one counterpart, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.   This Letter shall be governed by and construed in accordance with the laws of the State of Delaware without regard to its conflicts of law rules and principles.

 

[ signature page follows ]

 

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If the foregoing is in accordance with your understanding, please countersign this Letter where indicated below and return one executed copy to the undersigned by facsimile or e-mail, whereupon this letter will constitute our binding agreement with respect to the matters herein.

 

			Sincerely yours,
			WALKER & DUNLOP, INC.
			By:	/s/ William M. Walker
			Name: William M. Walker
			Title: Chairman, President and Chief Executive Officer
			WALKER & DUNLOP, LLC
			By:	/s/ William M. Walker
			Name: William M. Walker
			Title: Chairman, President and Chief Executive Officer
Accepted and agreed to as of this
4 th  day of September, 2012
CW FINANCIAL SERVICES LLC
By:	/s/ Scott D. Spelfogel
Name: Scott D. Spelfogel
Title: Executive Vice President
CWCAPITAL LLC
By:	/s/ Scott D. Spelfogel
Name: Scott D. Spelfogel
Title: Executive Vice President

 

[Signature Page to Closing Side Letter]

 

Exhibit 10.2

 

EXECUTION COPY

 

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this “ Agreement ”) is made and entered into as of September 4, 2012 by and between Walker & Dunlop, Inc., a Maryland corporation (the “ Company ”), and CW Financial Services LLC, a Delaware limited liability company (the “ Initial Holder ”).

 

WHEREAS, the Company has entered into a the Purchase Agreement dated as of June 7, 2012 (the “ Purchase Agreement ”) by and among the Company, Walker & Dunlop, LLC, the Initial Holder and CWCapital LLC, a Massachusetts limited liability company (“ CWC ”), pursuant to which the Company has agreed to purchase and the Initial Holder has agreed to sell, all of the limited liability company interests in CWC.  Pursuant to the Purchase Agreement, among other things, in partial consideration for the limited liability company interests in CWC, the Company will issue to the Initial Holder a total of 11,647,255 shares (the “ Shares ”) of its common stock, par value $0.01 per share (“ Common Stock ”), pursuant to an exemption from registration under the U.S. Securities Act of 1933, as amended (the “ Securities Act ”); and

 

WHEREAS, the Company has agreed to grant to the Initial Holder (and its assignees and transferees) the registration rights described in this Agreement (the “ Registration Rights ”).

 

NOW, THEREFORE, the parties hereto, in consideration of the foregoing, the mutual covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, hereby agree as follows:

 

SECTION 1.                                                       DEFINITIONS

 

The following capitalized terms used herein have the following meanings:

 

“ 2010 Registration Rights Agreement ” means the Registration Rights Agreement dated as of December 20, 2010, by and among the Company and the holders listed on Schedule I thereto.

 

“ Affiliate ” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with such Person.  As used in this definition, the term “ control ” means the possession, directly or indirectly, of any other power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise

 

“ Aggregate Registrable Securities ” is defined in Section 2.2(b) .

 

“ Agreement ” is defined in the preamble hereto.

 

“ Business Day ” means any Monday, Tuesday, Wednesday, Thursday or Friday other than a day on which banks and other financial institutions are authorized or required to be closed for business in the State of New York.

 

 

“ Closing Date ” means the date on which the transactions contemplated by the Purchase Agreement are consummated.

 

“ Commission ” means the Securities and Exchange Commission.

 

“ Common Stock ” is defined in the recitals hereto.

 

“ Company ” is defined in the preamble hereto.

 

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

 

“ FINRA ” means the Financial Industry Regulatory Authority.

 

“ Free Writing Prospectus ” means a free writing prospectus, as defined in Rule 405 under the Securities Act.

 

“ Holder Information ” is defined in Section 3.1 .

 

“ Holders ” means to (a) the Initial Holder and (b) any assignee or transferee (of the Initial Holder or any subsequent Holder) of any of the Registrable Securities, provided such assignee or transferee agrees in writing to be bound by the provisions hereof.

 

“ Issuer Free Writing Prospectus ” means an issuer free writing prospectus, as defined in Rule 433 under the Securities Act.

 

“ Person ” means any individual, corporation, partnership, joint venture, limited liability company, estate, trust, unincorporated association or other entity, any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.

 

“ Piggy-Back Registration ” is defined in Section 2.2(a) .

 

“ Prospectus ” means the prospectus or prospectuses included in the Registration Statement, including any documents incorporated therein by reference.

 

“ Registrable Securities ” means the Shares and any additional shares of the Company’s Common Stock, and any other debt or equity securities issued by the Company, in any case issued with respect to any Shares or such other securities by way of share or other dividend, distribution or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise, and any shares of Common Stock or other Registrable Securities issuable upon conversion, exercise or exchange thereof.

 

“ Registration Rights ” is defined in the recitals hereto.

 

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“ Registration Statement ” means a registration statement on Form S-3 (or any successor form, provided that if at the time of determination, the Company does not meet the requirements to use Form S-3, then on Form S-1 or any successor form) of the Company covering only the Registrable Securities pursuant to Section 2.1(a) , or other registration statement contemplated by Section 2.2(a) , including any documents incorporated therein by reference.

 

“ Securities Act ” is defined in the preamble hereto.

 

“ Shares ” is defined in the preamble hereto.

 

“ Side Letter ” means the letter agreement dated as of June 7, 2012 among the Initial Holder, Column Guaranteed LLC, the Company and the other holders of Common Stock that are parties thereto.

 

“ Suspension Event ” is defined in Section 2.3(a) .

 

“ Termination Date ” is defined in Section 2.1(a) .

 

“ Underwritten Offering ” is defined in Section 2.1(d) .

 

“ Underwritten Offering Notice ” is defined in Section 2.1(d) .

 

SECTION 2.                                                       REGISTRATION RIGHTS

 

2.1                                Mandatory Registration .

 

(a)                                  Upon the terms and subject to the conditions set forth in this Agreement, the Company shall file with the Commission as soon as practicable after the Closing Date and in all events within thirty (30) calendar days after the Closing Date the Registration Statement.  Except as contemplated by the Side Letter, the Registration Statement shall register only the Registrable Securities and no other securities of the Company.  Each Holder and its counsel shall have a reasonable opportunity to review and comment upon the Registration Statement and upon each amendment to the Registration Statement and any related Prospectus prior to its filing with the Commission.  Each Holder shall furnish all information reasonably requested by the Company for inclusion therein relating to such Holder and its plan of distribution for the Registrable Securities.  The Company shall use its reasonable best efforts to have the Registration Statement or amendment declared effective by the Commission at the earliest possible date following the filing thereof.  The Company shall use its reasonable best efforts to keep the Registration Statement effective pursuant to Rule 415 promulgated under the Securities Act (or any successor rule providing for offering securities on a continuous basis) and available for sales of all of the Registrable Securities at all times until the earlier of (i) the date on which all of the Registrable Securities covered by such Registration Statement are eligible for sale without registration pursuant to Rule 144 (or any successor provision) under the Securities Act without volume limitations or other restrictions on transfer thereunder or (ii) the date on which the Holders consummate the sale

 

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of all of the Registrable Securities registered under the Registration Statement (the earlier of (i) or (ii), the “ Termination Date ”).  The Company hereby undertakes and agrees (with respect to only the information provided by the Company to be included in the Registration Statement) that the Registration Statement (including any amendments or supplements thereto and Prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading.

 

(b)                                  The Company shall, as required by applicable securities regulations, from time to time file with the Commission, pursuant to Rule 424 promulgated under the Securities Act, the Prospectus and Prospectus supplements, if any, to be used in connection with sales of the Registrable Securities under the Registration Statement.  Each Holder and its counsel shall have a reasonable opportunity to review and comment upon the Prospectus and Prospectus supplements prior to its filing with the Commission.

 

(c)                                   All offers and sales of Registrable Securities covered by the Registration Statement by the Holders thereof shall be completed within the period during which the Registration Statement remains effective and not the subject of any stop order, injunction or other order of the Commission.  Upon notice that the Registration Statement is no longer effective, each Holder will not offer or sell the Registrable Securities covered by the Registration Statement.  If directed in writing by the Company, each Holder will return all undistributed copies of the related Prospectus in the Holder’s possession upon the expiration of such period, other than permanent file copies then in the possession of the Holder’s counsel.

 

(d)                                  Underwritten Registered Resales .  Upon the written request of a Holder or Holders of a number of Registrable Securities equal to at least five percent (5%) of the issued and outstanding shares of Common Stock as of the Closing (an “ Underwritten Offering Notice ”), then such Holder(s) shall be entitled to effect the sale of such Registrable Securities through an underwritten public offering (an “ Underwritten Offering ”); provided , however , that the Company shall not be obligated to effect more than three Underwritten Offerings under this Section 2.1(d) ; provided , further , that in the event the number of Registrable Securities included in the Underwritten Offering shall have been cutback at the request of the managing underwriter(s) by 25% or more from the number of Registrable Securities requested in the Underwritten Offering Notice by the applicable Holder(s), then such Underwritten Offering shall not count towards the three Underwritten Offerings permitted under this Section 2.1(d) ; and provided , further , that the Company shall not be obligated to effect, or take any action to effect, an Underwritten Offering (i) within one hundred eighty (180) days following the last date on which an Underwritten Offering was effected pursuant to this Section 2.1(d)  or during any lock-up period required by the underwriters in any prior Underwritten Offering conducted by the Company on its own behalf or on behalf of selling stockholders, or (ii) during the period commencing with the date thirty (30) days prior to the Company’s good faith estimate of the date of filing of a registration statement with respect to an offering by the Company with respect to which the Company gave notice pursuant to  Section 2.2(a) (provided the Company is actively engaged in good faith commercially reasonable efforts to file such registration statement), and ending on a date ninety (90) days after the effective date of such registration statement.  Any request for an Underwritten Offering hereunder shall be made to the Company in accordance with the notice provisions of this Agreement.  Upon receipt of

 

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a valid Underwritten Offering Notice for an Underwritten Offering in accordance with the terms of this Section 2.1(d) , the Company shall give written notice of the proposed Underwritten Offering to all other Holders as soon as practicable, and each Holder who wishes to participate in such Underwritten Offering shall notify the Company in writing within ten (10) Business Days after the receipt by such Holder of the notice from the Company, and shall specify in such notice the number of Registrable Securities to be included in the Underwritten Offering.  The Holders holding a majority of the Registrable Securities to be included in an Underwritten Offering shall be entitled to select the managing underwriters for any such Underwritten Offering, subject to the approval of the Company, such approval not to be unreasonably withheld.  The Company shall cooperate with the Holder(s) and such managing underwriters in connection with any such offering, including entering into such customary agreements (including underwriting and lock-up agreements in customary form) and taking all such other customary actions as the Holders or the managing underwriters of such Underwritten Offering reasonably request in order to expedite or facilitate the disposition of the Registrable Securities subject to such Underwritten Offering, including the obligations described in Section 2.5 .

 

Section 2.2                                     Piggy-Back Registration Rights .

 

(a)                                  Piggy-Back Registration .  Subject to Section 2.3 , if the Company proposes to file a Registration Statement under the Securities Act with respect to an underwritten offering of Common Stock by the Company for its own account or for the account of one more other stockholders of the Company (other than (i) the Registration Statement filed pursuant to Section 2.1(a)  or (ii) a registration statement on Form S-4 or S-8 (or any substitute form that may be adopted by the Commission) or filed in connection with an exchange offer or offering of securities solely to the Company’s existing stockholders), then the Company shall give written notice of such proposed filing to the Holders as soon as practicable (but in no event less than ten (10) Business Days before the anticipated filing date), and such notice shall offer such Holders the opportunity to register such number of shares of Registrable Securities as each such Holder may request in writing within five (5) Business Days of receiving such notice (a “ Piggy-Back Registration ”).  The Company shall use its commercially reasonable efforts to cause the managing underwriter(s) of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back Registration to be included on the same terms and conditions as any similar securities of the Company included therein.  All Holders of Registrable Securities proposing to distribute their securities through a Piggy-Back Registration shall (i) enter into an underwriting agreement in reasonable and customary form with the underwriter(s) selected by the Company for such Piggy-Back Registration and (ii) complete and execute all questionnaires, powers-of-attorney, indemnities, opinions and other documents reasonably required under the terms of such underwriting agreement.

 

(b)                                  Reduction of Offering .  If the managing underwriter(s) for a Piggy-Back Registration advises the Company and the Holders of Registrable Securities that in their opinion the dollar amount or number of Common Shares or other securities, if any, that the Company desires to sell, taken together with Common Stock or other securities, if any, as to which registration has been demanded pursuant to written contractual arrangements with Persons other than the Holders of Registrable Securities hereunder, the Registrable Securities as to which registration has been requested under this Section 2.2 , and the Common Stock or other securities, if any, as to which

 

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registration has been requested pursuant to the written contractual piggy-back registration rights of other stockholders of the Company, exceeds the maximum dollar amount or maximum number of securities that can be sold in such offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of securities, as applicable, the “ Maximum Threshold ”), then the Company shall include in such offering (A) if the registration is undertaken for the Company’s account: (i) first, the Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Threshold; (ii) second, to the extent that the Maximum Threshold has not been reached under the foregoing clause (i), the Common Stock or other securities, if any, comprised of Registrable Securities as to which registration has been requested pursuant to the terms hereof and the Common Stock or other securities, if any, comprised of “Registrable Securities” (as defined in the 2010 Registration Rights Agreement) of the holders that are parties to the Side Letter (together with the Registrable Securities, the “ Aggregate Registrable Securities ”), pro rata in accordance with the number of Aggregate Registrable Securities which such Holders have requested be included in such underwritten offering, regardless of the number of Aggregate Registrable Securities or other securities held by each such Person that can be sold without exceeding the Maximum Threshold; and (iii) third, to the extent that the Maximum Threshold has not been reached under the foregoing clauses (i) and (ii), the Common Stock or other securities for the account of other Persons that the Company is obligated to register pursuant to written contractual piggy-back registration rights with such Persons and that can be sold without exceeding the Maximum Threshold; and (B) if the registration is undertaken for the account of a holder of Common Stock other than the Registrable Securities that is a party to the Side Letter: (i) first, the Common Stock or other securities that the holders requesting such underwritten offering and the holders of Registrable Securities desire to include in such offering, allocated pro rata among such holders on the basis of the number of shares of Common Stock (on a fully diluted basis) and the number of Registrable Securities, as applicable, owned by all such holders without exceeding the Maximum Threshold; and (ii) second, to the extent that the Maximum Threshold has not been reached under the foregoing clause (i), the Common Stock or other securities allocated among such other holders in such manner as they agree.

 

(c)                                   Withdrawal .  Any Holder of Registrable Securities may elect to withdraw such Holder’s request for inclusion of Registrable Securities in any Piggy-Back Registration by giving written notice to the Company of such request to withdraw prior to the effectiveness of the Registration Statement.  The Company (whether on its own determination or as the result of a withdrawal by Persons making a demand pursuant to written contractual obligations) may withdraw a Registration Statement at any time prior to the effectiveness of the Registration Statement without thereby incurring any liability to the Holders of Registrable Securities, provided that the Company promptly deliver written notice of such withdrawal to each Holder. Notwithstanding any such withdrawal, the Company shall pay all expenses incurred by the Holders of Registrable Securities in connection with such Piggy-Back Registration as provided in Section 4 .

 

Section 2.3                                     Suspension of Offering .

 

(a)                                  Notwithstanding Section 2.1 or Section 2.2 , the Company shall be entitled to postpone the filing of a Registration Statement, and from time to time to require any Holder not to sell under a Registration Statement or suspend the effectiveness thereof, if (i) the Board of Directors

 

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of the Company determines in good faith that such registration and/or offering would materially and adversely affect any offering of securities of the Company, or (ii) the negotiation or consummation of a transaction by the Company or its subsidiaries is pending or an event has occurred, which negotiation, consummation or event would require additional disclosure by the Company in the Registration Statement of material information which the Company has a bona fide business purpose for keeping confidential and the non-disclosure of which in the Registration Statement would be expected, in the Company’s reasonable determination, to cause the Registration Statement to fail to comply with applicable disclosure requirements (each such circumstance a “ Suspension Event ”); provided , however , that the Company may not delay, suspend or withdraw such Registration Statement for more than sixty (60) days at any one time, or more than twice in any twelve (12) month period, or more than three times in any two year period.  Upon receipt of any written notice from the Company of (i) the happening of any Suspension Event during the period the Registration Statement is effective or (ii) the Suspension Event resulting in the Registration Statement or related Prospectus containing any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made (in the case of the Prospectus) not misleading, each Holder agrees, subject to the proviso of the immediately preceding sentence, (x) it will immediately discontinue offers and sales of the Registrable Securities under any Registration Statement until such Holder receives copies of a supplemental or amended Prospectus (which the Company agrees to promptly prepare) that corrects the misstatement(s) or omission(s) referred to above and receives notice that any post-effective amendment has become effective or unless otherwise notified by the Company that it may resume such offers and sales, and (y) it will maintain the confidentiality of any information included in the written notice delivered by the Company unless otherwise required by law, subpoena or other inquiry from any governmental or regulatory authority.  If so directed by the Company, such Holder will deliver to the Company all copies of the Prospectus covering the Registrable Securities current at the time of receipt of such notice, other than permanent file copies then in the possession of the Holder’s counsel.

 

(b)                                  If all reports required to be filed by the Company pursuant to the Exchange Act have not been filed by the required date taking into account any permissible extension, upon written notice thereof by the Company to the Holders, the rights of the Holders to offer, sell or distribute any Registrable Securities pursuant to any Registration Statement or to require the Company to take action with respect to the registration or sale of any Registrable Securities pursuant to any Registration Statement shall be suspended until the date on which the Company has filed such reports, and the Company shall (i) file all such reports as promptly as practicable and (ii) notify the Holders in writing as promptly as practicable when such suspension is no longer required.

 

2.4                                Qualification .  The Company shall file such documents as necessary to register or qualify the Registrable Securities to be covered by a Registration Statement by the time such Registration Statement is declared effective by the Commission under all applicable state securities or “blue sky” laws of such jurisdictions as any Holder or underwriter of the securities being sold by any such Holder may reasonably request in writing, and shall use commercially reasonable efforts to keep each such registration or qualification effective during the period such Registration Statement is required to be kept effective pursuant to this Agreement or during the period offers or sales are being made by the Holders, whichever is shorter, and to do any and all other similar acts and things which may be reasonably necessary or advisable to enable the Holders or such

 

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underwriter to consummate the disposition of the Registrable Securities in each such jurisdiction; provided , however , that the Company shall not be required to (i) qualify generally to do business in any jurisdiction or to register as a broker or dealer in such jurisdiction where it would not otherwise be required to qualify but for this Agreement, (ii) take any action that would cause it to become subject to any taxation in any jurisdiction where it would not otherwise be subject to such taxation or (iii) take any action that would subject it to the general service of process in any jurisdiction where it is not then so subject.

 

2.5                                Additional Obligations of the Company . Until the Termination Date (or any later date with respect to an Underwritten Offering that the Company is obligated to effect under Section 2.1(d) , as applicable), subject to Section 2.3 , the Company shall:

 

(a)                                  (i) subject to Section 2.1 and 2.2 , prepare and file with the Commission the Registration Statement with respect to the Registrable Securities and cause the Registration Statement to be effective, and (ii) prepare and file with the Commission such amendments and supplements to the Registration Statement and the Prospectus used in connection therewith as may be necessary (A) to keep the Registration Statement effective and (B) to comply with the provisions of the Securities Act with respect to the disposition of the Registrable Securities covered by the Registration Statement, in each case for such time as is contemplated in Section 2.1 ;

 

(b)                                  furnish to each Holder and each underwriter, if any, of the securities being sold by such Holder such number of conformed copies of the Registration Statement, each amendment and supplement thereto (in each case including all exhibits), and the Prospectus included in the Registration Statement (including each preliminary Prospectus and any summary Prospectus and any other Prospectus filed under Rule 424 under the Securities Act), in conformity with the requirements of the Securities Act, and any Issuer Free Writing Prospectus, in each case in customary printed form,  and such other documents as such Holder and underwriter, if any, may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities owned by such Holder;

 

(c)                                   notify the Holders: (i) when the Registration Statement, any pre-effective amendment, the Prospectus or any Prospectus supplement related thereto or post-effective amendment to the Registration Statement has been filed, and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective, (ii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation or threat of any proceeding for that purpose, and (iii) of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction or the initiation of any proceeding for such purpose;

 

(d)                                  promptly use commercially reasonable efforts to prevent the issuance of any order suspending the effectiveness of the Registration Statement, and, if any such order suspending the effectiveness of the Registration Statement is issued, shall promptly use commercially reasonable efforts to obtain the withdrawal of such order at the earliest possible moment;

 

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(e)                                   following the effectiveness of the Registration Statement and thereafter until the Termination Date, promptly notify the Holders: (i) of the existence of any fact of which the Company is aware or the happening of any event which has resulted in (A) the Registration Statement, as then in effect, containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make any statements therein not misleading or (B) the Prospectus included in such Registration Statement containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make any statements therein, in the light of the circumstances under which they were made, not misleading, and (ii) of the Company’s reasonable determination that a post-effective amendment to the Registration Statement would be appropriate or that there exist circumstances not yet disclosed to the public which make further sales under the Registration Statement inadvisable pending such disclosure and post-effective amendment as contemplated by Section 2.3(a) ; and, if the notification relates to any event described in either of the clauses (i) or (ii) of this Section 2.5(e) , subject to Section 2.3 above, at the request of the Holders, the Company shall promptly prepare and, to the extent the exemption from the prospectus delivery requirements in Rule 172 under the Securities Act is not available, furnish to the Holders a reasonable number of copies of a supplement or post-effective amendment to the Registration Statement or related Prospectus or file any other required document so that (1) the Registration Statement shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (2) as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;

 

(f)                                    use reasonable best efforts to cause all such Registrable Securities to be listed on the national securities exchange on which the Common Shares are then listed, if the listing of Registrable Securities is then permitted under the rules of such national securities exchange;

 

(g)                                   use commercially reasonable efforts to cause such Registrable Securities covered by any Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the Holder(s) thereof to consummate the disposition of such Registrable Securities;

 

(h)                                  in connection with any Underwritten Offering effected pursuant to Section 2.1(d) , the Company shall obtain for each Holder and any underwriter:

 

(1) an opinion of counsel for the Company, covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such Holder and any underwriter, and

 

(2) a “comfort” letter (or, in the case of any such Person which does not satisfy the conditions for receipt of a “comfort” letter specified in AU Section 634 of the AICPA Professional Standards, an “agreed upon procedures” letter) signed by the independent registered public accountants who have certified the Company’s financial statements included in such registration statement (and, if necessary, any other independent registered public accountant of any

 

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subsidiary of the Company or any business acquired by the Company from which financial statements and financial data are, or are required to be, included in the registration statement);

 

(i)                                      in connection with any Underwritten Offering effected pursuant to Section 2.1(d) , the Company shall promptly make available for inspection by any Holder, any underwriter participating in any disposition pursuant to any Registration Statement, and any attorney, accountant or other agent or representative retained by any Holder or underwriter (collectively, the “ Inspectors ”), all financial and other records, pertinent corporate documents and properties of the Company (collectively, the “ Records ”), as shall be reasonably necessary to enable such Holder or underwriter to exercise their due diligence responsibility, and cause the Company’s officers, directors and employees to supply all information requested by any such Inspector in connection with such Registration Statement promptly; provided , however , that, unless the disclosure of such Records is necessary to avoid or correct a misstatement or omission in the registration statement or the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, the Company shall not be required to provide any information under this clause (i) if (y) the Company believes, after consultation with counsel for the Company, that to do so would cause the Company to forfeit an attorney-client privilege that was applicable to such information or (z) if either (1) the Company has requested and been granted from the Commission confidential treatment of such information contained in any filing with the Commission or documents provided supplementally or otherwise or (2) the Company reasonably determines in good faith that such Records are confidential and so notifies the Inspectors in writing unless prior to furnishing any such information with respect to (y) or (z) such Holder requesting such information agrees, and causes each of its Inspectors, to enter into a confidentiality agreement on terms reasonably acceptable to the Company; and provided, further, that each Holder agrees that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at its expense, to undertake appropriate action and to prevent disclosure of the Records deemed confidential;

 

(j)                                     if requested by any Holder participating in the offering of Registrable Securities, incorporate in a Prospectus supplement or post-effective amendment such information concerning such Holder or the intended method of distribution as such Holder reasonably requests to be included therein and is reasonably necessary to permit the sale of the Registrable Securities pursuant to the Registration Statement, including information with respect to the number of Registrable Securities being sold, the purchase price being paid therefor and any other material terms of the offering of the Registrable Securities to be sold in such offering; provided , however , that the Company shall not be obligated to include in any such Prospectus supplement or post-effective amendment any requested information that is not required by the rules of the Commission and is unreasonable in scope compared with the Company’s most recent Prospectus or Prospectus supplement used in connection with a primary or secondary offering of equity securities by the Company;

 

(k)                                  in connection with any Underwritten Offering effected pursuant to Section 2.1(d) , if requested by any underwriter, (i) agree, and cause the Company, to be bound by customary “lock-up” agreements restricting the ability to dispose of Company securities, and (ii) request that any directors or officers of the Company agree to be bound by customary “lock-up” agreements restricting the ability to dispose of Company securities;

 

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(l)                                      in connection with any Underwritten Offering effected pursuant to Section 2.1(d) , cooperate and assist in any filings required to be made with FINRA and in the performance of any due diligence investigation by any underwriter that is required to be undertaken in accordance with the rules and regulations of FINRA;

 

(m)                                in connection with any Underwritten Offering effected pursuant to Section 2.1(d) , otherwise use best efforts to cooperate as reasonably requested by any Holder and any underwriter in the offering, marketing or selling of the Registrable Securities (in “road show” presentations or as otherwise requested by any Holder or any underwriter);

 

(n)                                  use commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make available to Holders, as promptly as practicable, an earnings statement covering the period of at least 12 months, but not more than 18 months, beginning with the first day of the Company’s first full quarter after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

 

(o)                                  provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by the Registration Statement from and after a date not later than the effective date of such Registration Statement;

 

(p)                                  cooperate with any Holder and any underwriter to facilitate the timely preparation and delivery of certificates (which shall not bear any restrictive legends unless required under applicable law), if necessary or appropriate, representing securities sold under any Registration Statement, and enable such securities to be in such denominations and registered in such names as the managing underwriter or such Holder may request and keep available and make available to the Company’s transfer agent prior to the effectiveness of such Registration Statement a supply of such certificates as necessary or appropriate; and

 

(q)                                  otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the Commission and all reporting requirements under the rules and regulations of the Exchange Act.

 

2.6                                  Obligations of the Holder .  In connection with the Registration Statement, each Holder agrees to cooperate with the Company in connection with the preparation of the Registration Statement, and each Holder agrees that it will (i) respond in a timely manner to any written request by the Company to provide or verify information regarding such Holder or the Registrable Securities (including the proposed manner of sale) that may be required to be included in such Registration Statement and related Prospectus pursuant to the rules and regulations of the Commission, and (ii) provide in a timely manner information regarding the proposed distribution by such Holder of the Registrable Securities and such other information as may be requested by the Company from time to time in connection with the preparation of and for inclusion in the Registration Statement and related Prospectus.

 

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SECTION 3.                                                          INDEMNIFICATION; CONTRIBUTION

 

3.1                                  Indemnification by the Company.   The Company agrees to indemnify, defend and hold harmless each Holder and each Person, if any, who controls any Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and any of their partners, members, officers, directors, employees, agents or representatives, as follows:

 

(i)                                      against any and all loss, liability, claim, damage, judgment and expense whatsoever, as incurred, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto) pursuant to which the Registrable Securities were registered under the Securities Act, including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (or any amendment or supplement thereto), including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;

 

(ii)                                   against any and all loss, liability, claim, damage, judgment and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation by any Person, or investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, if such settlement is effected with the written consent of the Company; and

 

(iii)                                against any and all expense whatsoever, as incurred (including reasonable fees and disbursements of counsel), reasonably incurred in investigating, preparing or defending against any litigation by any Person, or investigation or proceeding by any governmental agency or body, commenced or threatened, in each case whether or not a party, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (i) or (ii) above;

 

provided , however , that the indemnity provided pursuant to this Section 3.1 does not apply to any Holder with respect to any loss, liability, claim, damage, judgment or expense to the extent arising out of (A) any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by such Holder expressly for use in the Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement thereto) (the “ Holder Information ”), or (B) such Holder’s failure to deliver to any purchaser of the Registrable Securities an amended or supplemental Prospectus furnished to such Holder by the Company, if such loss, liability, claim, damage, judgment or expense would not have arisen had such delivery occurred.

 

3.2                                  Indemnification by Holder .  Each Holder (and each assignee of such Holder), severally and not jointly, agrees to indemnify, defend and hold harmless the Company, and each of

 

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its directors and officers (including each director and officer of the Company who signed a Registration Statement), each Person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and each other Holder as follows:

 

(i)                                      against any and all loss, liability, claim, damage, judgment and expense whatsoever, as incurred, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto) pursuant to which the Registrable Securities of such Holder were registered under the Securities Act, including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (or any amendment or supplement thereto), including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;

 

(ii)                                   against any and all loss, liability, claim, damage, judgment and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation by any Person, or investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, if such settlement is effected with the written consent of such Holder; and

 

(iii)                                against any and all expense whatsoever, as incurred (including reasonable fees and disbursements of counsel), reasonably incurred in investigating, preparing or defending against any litigation by any Person, or investigation or proceeding by any governmental agency or body, commenced or threatened, in each case whether or not a party, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (i) or (ii) above;

 

provided , however , that the indemnity provided pursuant to this Section 3.2 shall only apply with respect to any loss, liability, claim, damage, judgment or expense to the extent arising out of (A) any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with the Holder Information or (B) such Holder’s failure to deliver to any purchaser of the Registrable Securities an amended or supplemental Prospectus furnished to such Holder by the Company, if such loss, liability, claim, damage or expense would not have arisen had such delivery occurred.  Notwithstanding the provisions of this Section 3.2 , each Holder and any assignee shall not be required to indemnify the Company, its officers, directors or control persons with respect to any amount in excess of the amount of the net proceeds actually received by such Holder or assignee, as the case may be, from sales of the Registrable Securities of such Holder under the Registration Statement that is the subject of the indemnification claim.

 

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3.3                                  Conduct of Indemnification Proceedings .  An indemnified party hereunder shall give reasonably prompt notice to the indemnifying party of any action or proceeding commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify the indemnifying party (i) shall not relieve the indemnifying party from any liability which it may have under the indemnity agreement provided in Sections 3.1 or 3.2 , unless and only to the extent it did not otherwise learn of such action and the lack of notice by the indemnified party results in the forfeiture by the indemnifying party of substantial rights and defenses, and (ii) shall not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided under Sections 3.1 or 3.2 , to the extent provided in clause (i) above.  If the indemnifying party so elects within a reasonable time after receipt of such notice, the indemnifying party may assume the defense of such action or proceeding at such indemnifying party’s own expense with counsel chosen by the indemnifying party and approved by the indemnified party, which approval shall not be unreasonably withheld; provided , however , that the indemnifying party will not settle, compromise or consent to the entry of any judgment with respect to any such action or proceeding without the written consent of the indemnified party unless such settlement, compromise or consent secures the unconditional release of the indemnified party of all liability or obligations at no cost or expense to the indemnified party; and provided further , that, if the indemnified party reasonably determines that a conflict of interest exists where it is advisable for the indemnified party to be represented by separate counsel or that, upon advice of counsel, there may be legal defenses available to it which are different from or in addition to those available to the indemnifying party, then the indemnifying party shall not be entitled to assume such defense and the indemnified party shall be entitled to separate counsel as selected by the indemnified party, at the indemnifying party’s expense.  If the indemnifying party is not entitled to assume the defense of such action or proceeding as a result of the second proviso to the preceding sentence, the indemnifying party’s counsel shall be entitled to conduct the indemnifying party’s defense and counsel for the indemnified party shall be entitled to conduct the defense of the indemnified party, it being understood that both such counsel will cooperate with each other to conduct the defense of such action or proceeding as efficiently as possible.  If the indemnifying party is not so entitled to assume the defense of such action or does not assume such defense, after having received the notice referred to in the first sentence of this paragraph, the indemnifying party will pay the reasonable fees and expenses of counsel as selected by the indemnified party.  In such event, however, the indemnifying party will not be liable for any settlement effected without the written consent of the indemnifying party (which consent will not be unreasonably withheld).  If an indemnifying party is entitled to assume, and assumes and conducts reasonably and in good faith, the defense of such action or proceeding in accordance with this paragraph, the indemnifying party shall not be liable for any fees and expenses of counsel for the indemnified party incurred thereafter in connection with such action or proceeding.

 

3.4                                  Contribution .

 

(a)                                   In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in Sections 3.1 and 3.2 above is for any reason held to be unenforceable by the indemnified party although applicable in accordance with its terms, the Company and the relevant Holder shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by such indemnity agreement incurred by the Company and each Holder, in such proportion as is appropriate to reflect the relative fault of the

 

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Company on the one hand and such Holder on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities, or expenses.  The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether the action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, the indemnifying party or the indemnified party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action.

 

(b)                                  The parties hereto agree that it would not be just or equitable if contribution pursuant to this Section 3.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 3.4 , a Holder shall not be required to contribute any amount in excess of the amount of the net proceeds actually received by such Holder from sales of the Registrable Securities of such Holder under the Registration Statement that is the subject of the indemnification claim.

 

(c)                                   Notwithstanding the foregoing, no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.  For purposes of this Section 3.4 , each Person, if any, who controls a Holder within the meaning of Section 15 of the Securities Act shall have the same rights to contribution as the Holder, and each director of the Company, each officer of the Company who signed a Registration Statement and each Person, if any, who controls the Company within the meaning of Section 15 of the Securities Act shall have the same rights to contribution as the Company.

 

SECTION 4.                                                          EXPENSES

 

The Company shall pay all expenses incident to the performance by the Company of its obligations under Section 2 , including (i) Commission, stock exchange and FINRA registration and filing fees, (ii) all fees and expenses incurred in complying with securities or “blue sky” laws (including reasonable fees, charges and disbursements of counsel to any underwriter incurred in connection with “blue sky” qualifications of the Registrable Securities as may be set forth in any underwriting agreement), (iii) all printing (including expenses of printing certificates, if any, for the Registrable Securities in a form eligible for deposit with the Depository Trust Company and of printing prospectuses if the printing of prospectuses and Issuer Free Writing Prospectuses is requested by a Holder or underwriter of Registrable Securities), copying, messenger and delivery expenses (iv) the fees, charges and expenses of counsel to the Company and of its independent public accountants and any other accounting fees, charges and expenses incurred by the Company (including any expenses arising from any “comfort” letters, “agreed upon procedures letters,” opinions or any special audits incident to or required by any registration or qualification), (v) the fees, charges and expenses of one firm of counsel for the Holders (which firm shall be selected by the Holders selling in such registration that hold a majority of the Registrable Securities included in such registration), (vi) except as provided in the immediately following sentence, the fees and expenses (including underwriting discounts and commissions and transfer taxes) of every nationally recognized investment bank engaged in connection with a registration under Section 2.2 and (vii) any expenses described in clauses (i) through (vi) incurred in connection with the marketing and

 

15

 

sale of Registrable Securities, regardless of whether a registration is effected, marketing is commenced or sale is made.  Each Holder selling under such Registration Statement shall be responsible for the payment of its portion of all underwriting discounts and commissions, fees and disbursements of the Holder’s counsel, accountants and other advisors (except as contemplated by the preceding sentence), and any transfer taxes relating to the sale or disposition of the Registrable Securities by such Holder pursuant to this Agreement.  The Company will pay its internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties, the expense of any annual audit and the expense of any liability insurance) and the expenses and fees for listing the securities to be registered on each securities exchange and included in each established over-the-counter market on which similar securities issued by the Company are then listed or traded.

 

SECTION 5.                                                          RULE 144 COMPLIANCE

 

The Company covenants that it will use its best efforts to timely file the reports required to be filed by the Company under the Securities Act and the Exchange Act so as to enable the Holders to sell the Registrable Securities pursuant to Rule 144 under the Securities Act.  In connection with any sale, transfer or other disposition by a Holder of any Registrable Securities pursuant to Rule 144 under the Securities Act or pursuant to the Registration Statement, the Company shall cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing the Registrable Securities to be sold and not bearing any Securities Act legend, and enable certificates for such Registrable Securities to be for such number of shares and registered in such names as such Holder may reasonably request at least two (2) Business Days prior to any sale of Registrable Securities hereunder.

 

SECTION 6.                                                          MISCELLANEOUS

 

6.1                                  Preservation of Rights .  Except as contemplated by the Side Letter, the Company shall not (a) grant any registration rights to third parties which are, or enter into any amendment to or permit any waiver of the 2010 Registration Rights Agreement which is, more favorable than or inconsistent with the rights granted hereunder, or (b) enter into any agreement, amendment or waiver, take any action, or permit any change to occur, with respect to its securities that violates or subordinates, or is inconsistent with, the rights expressly granted to the holders of the Registrable Securities in this Agreement.

 

6.2                                  Counterparts .  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and it will not be necessary in making proof of this Agreement or the terms of this Agreement to produce or account for more than one of such counterparts.  All counterparts shall constitute one and the same instrument.  Each party may execute this Agreement via a facsimile (or transmission of a .pdf file) of this Agreement.  In addition, facsimile or .pdf signatures of authorized signatories of the parties shall be valid and binding and delivery of a facsimile or .pdf signature by any party shall constitute due execution and delivery of this Agreement.

 

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6.3                                  Governing Law .  This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware, without regard to the choice of laws provisions thereof.

 

6.4                                  Amendment; Waiver.   Any amendment hereto shall be in writing and signed by all parties hereto.  No waiver of any provisions of this Agreement shall be valid unless in writing and signed by the party against whom enforcement is sought.  The waiver by any party of the performance of any act shall not operate as a waiver of the performance of any other act or an identical act required to be performed at a later time.  Except as otherwise provided herein, no action taken pursuant to this Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representations, warranties, covenants or agreements contained in this Agreement.

 

6.5                                  Entire Agreement .  This Agreement, schedules hereto and the Side Letter constitute the entire agreement and supersede conflicting provisions set forth in all other prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.

 

6.6                                  Assignment; Successors and Assigns .  This Agreement shall not be assigned by the Company.  This Agreement and the rights granted hereunder may not be assigned by any Holder without the written consent of the Company; provided , however , that a Holder may assign some or all its rights and obligations hereunder, without such consent, in connection with a transfer of some or all of such Holder’s Registrable Securities to any of its Affiliates or to any third party in a private placement transaction, provided such transferee agrees in writing to be bound by all of the provisions hereof and such Holder provides written notice to the Company within ten (10) Business Days of the effectiveness of such assignment; provided , however, that the rights granted hereunder may not be assigned by any Holder to more than ten (10) Persons that are not affiliated with the Initial Holder without the written consent of the Company.  This Agreement shall inure to the benefit of and be binding upon all of the parties hereto and their respective heirs, executors, personal and legal representatives, successors and permitted assigns, including any successor of the Company by merger, acquisition, reorganization, recapitalization or otherwise.

 

6.7                                  Titles .  The titles and captions of the sections, subsections and paragraphs of this Agreement are included for convenience of reference only and shall have no effect on the construction or meaning of this Agreement.

 

6.8                                  Third Party Beneficiary .  Except as may be expressly provided herein (including in Section 3 ), no provision of this Agreement is intended, nor shall it be interpreted, to provide or create any third party beneficiary rights or any other rights of any kind in any customer, affiliate, shareholder, partner, member, director, officer or employee of any party hereto or any other Person.  All provisions hereof shall be personal solely among the parties to this Agreement.

 

6.9                                  Severability .  If any provision of this Agreement, or the application thereof, is for any reason held to any extent to be invalid or unenforceable, the remainder of this Agreement and application of such provision to other Persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto.  The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve,

 

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to the extent possible, the economic, business and other purposes of the void or unenforceable provision and to execute any amendment, consent or agreement deemed necessary or desirable by the Company to effect such replacement; provided , however , that such replacement does not defeat the principal purpose of this Agreement.

 

6.10                            Interpretation . As used in this Agreement, any reference to the masculine, feminine or neuter gender shall include all genders, the plural shall include the singular, and singular shall include the plural.  References herein to a party or other Person include their respective successors and assigns.  The words “include,” “includes” and “including” when used herein shall be deemed to be followed by the phrase “without limiting the generality of the foregoing” unless such phrase otherwise appears.  Unless the context otherwise requires, references herein to articles, sections, schedules, exhibits and attachments shall be deemed references to articles and sections of, and schedules, exhibits and attachments to, this Agreement. Unless the context otherwise requires, the words “hereof,” “hereby” and “herein” and words of similar meaning when used in this Agreement refer to this Agreement in its entirety and not to any particular article, section or provision hereof.  Except when used together with the word “either” or otherwise for the purpose of identifying mutually exclusive alternatives, the term “or” has the inclusive meaning represented by the phrase “and/or.”  Any deadline or time period set forth in this Agreement that by its terms ends on a day that is not a Business Day shall be automatically extended to the next succeeding Business Day.  All references in this Agreement to “dollars” or “$” shall mean United States dollars.  With regard to each and every term and condition of this Agreement, the parties hereto understand and agree that the same have or has been mutually negotiated, prepared and drafted, and that if at any time the parties desire or are required to interpret or construe any such term or condition or any agreement or instrument subject thereto, no consideration shall be given to the issue of which party actually prepared, drafted or requested any term or condition of this Agreement.

 

6.11                            Notices .  Any notice to be given by any party to this Agreement shall be given in writing and may be effected by facsimile, personal delivery, overnight courier or e-mail (provided receipt of such email is evidenced by a reply email), addressed as follows (or by another means approved in writing by a party pursuant to a notice given in accordance with this Section 6.11 ):

 

If to the Company:

 

Walker & Dunlop, Inc.

7501 Wisconsin Avenue, Suite 1200E

Bethesda, Maryland 20814

Attention:  General Counsel

Fax:  (301) 634-2190

E-mail:  RLucas@walkerdunlop.com

 

If to the Initial Holder:

 

CWCapital LLC

c/o CW Financial Services, LLC

7501 Wisconsin Avenue, Suite 500W

Bethesda, Maryland 20814

 

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Attention:  Carla Stoner

Fax:  (301) 222-4714

E-mail:  cstoner@cwcapital.com

 

and

 

Attention: Scott Spelfogel, General Counsel

Fax:  (866) 572-7745

E-mail:  sspelfogel@cwcapital.com

 

with a copy to (which shall not constitute notice):

 

Sidley Austin LLP

787 Seventh Avenue

New York, New York 10019

Attention: George Petrow, Esq.

Fax (212) 839-5599

Email: gpetrow@sidley.com

 

and

 

Attention:  Matthew J. Rizzo, Esq.

Fax:  (212) 839-5599

Email: mrizzo@sidley.com

 

With respect to any subsequent Holder:  such notice address as provided at such time that such Holder agrees in writing to be bound by all of the provisions hereof.

 

The date of service for any notice sent in compliance with the requirements of this Section 6.11 shall be (i) the date such notice is personally delivered, (ii) the next succeeding Business Day after the date of delivery to the overnight courier if sent by overnight courier or (iii) the next succeeding Business Day after the date of transmission by electronic mail or facsimile.

 

6.12                            Equitable Remedies .  The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not timely performed in accordance with the specific terms hereof or were otherwise breached.  It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any federal or state court located in Delaware (as to which the parties agree to submit to jurisdiction for the purpose of such action), this being in addition to any other remedy to which the parties are entitled under this Agreement; provided , however , that nothing in this Agreement shall be construed to permit or not permit any Holder to enforce the consummation of the Purchase Agreement.

 

[Signatures on following page]

 

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EXECUTION COPY

 

IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be duly executed and delivered in its name and on its behalf as of the date first written above.

 

	THE COMPANY:
	WALKER & DUNLOP, INC.
	By:	/s/ William M. Walker
	Name: William M. Walker
	Title: Chairman, President and Chief Executive Officer
	HOLDER:
	CW FINANCIAL SERVICES LLC
	By:	/s/ Charles R. Spetka
	Name: Charles R. Spetka
	Title: Chief Executive Officer

 

Registration Rights Agreement

Signature Page

 

Exhibit 10.3

 

CLOSING AGREEMENT

 

This CLOSING AGREEMENT (this “ Agreement ”) dated as of September 4, 2012, is by and between Walker & Dunlop, Inc., a Maryland corporation (“ Parent ”), CW Financial Services LLC, a Delaware limited liability company (“ Seller ”) and CWCapital LLC, a Massachusetts limited liability company (“ CW ”, and together with Parent and Seller, the “ Parties ”).

 

RECITALS:

 

WHEREAS, Seller owns all of the equity interests of the Company (the “ Company Interests ”);

 

WHEREAS, Parent (or its designated directly or indirectly wholly owned Affiliate, which such Affiliate for purposes of this Agreement, shall be included within the term “Parent,” as the context requires) and Seller, are parties to a purchase agreement of even date herewith (the “ Purchase Agreement ”), pursuant to which, at the closing thereunder (the “ Closing ”), Parent shall purchase and acquire from Seller, and Seller shall sell and transfer to Parent, the Company Interests for the consideration and on the terms and conditions set forth in the Purchase Agreement (the “ Transaction ”);

 

WHEREAS, at the Closing, Seller will be entitled to receive a number of shares of Parent Common Stock constituting the Stock Consideration (the “ Acquired Shares ”);

 

WHEREAS, each of the Parties hereby acknowledges and agrees that it will derive substantial benefit from the consummation of the Transaction, and, accordingly, such Parties desire to establish in this Agreement certain terms and conditions concerning the relationship of Seller and Parent; and

 

WHEREAS, as a condition and inducement to Parent entering into and incurring its obligations under the Purchase Agreement, Parent requires that Seller enter into this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

 

ARTICLE 1
DEFINITIONS

 

Section 1.1                                     Definitions .  Capitalized terms used in this Agreement and not defined herein have the meanings ascribed to such terms in the Purchase Agreement.  In addition, the following terms shall have the corresponding meanings for purposes of this Agreement:

 

 

“ Acquired Shares ” has the meaning set forth in the Recitals.

 

“ Affiliate ” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with such Person.  As used in this definition, the term “ control ” means the possession, directly or indirectly, of any other power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.  For the avoidance of doubt, the term “Affiliate” with respect to the Seller shall include Fortress Investment Group, LLC and its Affiliates.

 

 “ Agreement ” has the meaning set forth in the Preamble.

 

“ Causes of Action ” has the meaning set forth in Section 4.2 .

 

“ Company ” means CWCapital LLC, a Massachusetts limited liability company.

 

“ Competing Services ” means lending money through loans secured by commercial real estate as an authorized or licensed Fannie Mae DUS, Freddie Mac Program Plus or MAP- or LEAN-approved FHA lender under the programs established by such Agencies.  For the avoidance of doubt, Competing Services excludes correspondent lending, brokering loans and providing any other services to a lender that provides Competing Services.

 

“ Confidential Information ” means, with respect to any Party, all information regarding such Party and its Affiliates, including any business plans, financial information, operational information, personnel records, customer lists, and customer contracts and projections; provided , however , that “Confidential Information” shall not include information (i) which is or becomes generally available to the public other than as a result of the breach of this Agreement by the receiving Party, (ii) is or becomes available to the receiving Party or its Affiliates on a non-confidential basis from a source other than the disclosing Party or its Affiliates, provided that the receiving Party did not know that the source of such information was bound by a confidentiality agreement or other confidentiality obligation with respect to such information or (iii) that is independently developed by the receiving Party or its Affiliates without use of reference to the Confidential Information of the other Party.

 

“ Contract ” means any contract, commitment, purchase order, mortgage, instrument, indenture, sales order, license, lease or other agreement or arrangement, whether written or oral, in any case, that is legally binding.

 

“ Effective Date ” has the meaning set forth in Section 2.1 .

 

“ Parent ” has the meaning set forth in the Preamble.

 

“ Purchase Agreement ” has the meaning set forth in the Recitals.

 

“ Qualified Director ” means a director who qualifies as an independent director of Parent under (i) the bylaws of Parent and any applicable corporate governance policies or guidelines of Parent then in effect and (ii) (A) applicable rules of the New York Stock Exchange, as such rules may be amended or supplemented from time to time or (B) if the

 

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Parent Common Stock is listed on a securities exchange or quotation system other than the New York Stock Exchange, any comparable rule or regulation of the primary securities exchange or quotation system on which the Parent Common Stock is listed or quoted, in each case as determined by the Board of Directors.  Notwithstanding the foregoing, no Affiliate of Seller or any member of a “group” (as defined in Section 13(d)(3) of the Exchange Act) with Seller shall be deemed a “Qualified Director”.

 

“ Released Parties ” has the meaning set forth in Section 4.2 .

 

“ Releasing Parties ” has the meaning set forth in Section 4.2 .

 

“ Rule 144 ” means Rule 144 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such Rule.

 

“ Seller ” has the meaning set forth in the Preamble.

 

“ Term ” means the period beginning on the Effective Date and ending on the second anniversary of the Effective Date.

 

“ Territory ” means anywhere in North America.

 

“ Transaction ” has the meaning set forth in the Recitals.

 

“ Transfer ” means, with respect to any security, directly or indirectly, (i) selling, assigning, transferring, hypothecating, pledging, encumbering, permitting the creation of a Lien upon or otherwise disposing of (including by merger, consolidation or otherwise by operation of law) such security or (ii) granting any proxy or entering into any voting agreement, voting trust, power of attorney, consent or other agreement or arrangement with respect to the voting of such security; provided , however , any Lien granted as collateral for any third party indebtedness shall not be deemed a Transfer.

 

ARTICLE 2
EFFECTIVENESS OF AGREEMENT

 

Section 2.1                                     Effective Date .  The parties have executed and delivered this Agreement on the date hereof (the “ Effective Date ”).  Notwithstanding anything to the contrary contained herein, the covenants and agreements set forth in Sections 4.1(a) and 4.1(b) and shall terminate and be of no further force or effect at the end of the Term.

 

ARTICLE 3
REPRESENTATIONS AND WARRANTIES

 

Section 3.1                                     Representations and Warranties of Seller .                  Seller hereby represents and warrants to Parent as follows:

 

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(a)                                  Organization and Good Standing . Seller is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization, with all requisite power and authority required to conduct its business as presently conducted.

 

(b)                                  Authority .  Seller has all requisite power and authority to execute and deliver this Agreement and to perform all of its obligations hereunder.  The execution and delivery by Seller of this Agreement and the performance by Seller of its obligations hereunder have been duly authorized by all requisite action of Seller (to the extent that Seller is not a natural person) and no other action on the part of Seller or its securityholders is necessary to authorize the execution, delivery or performance by Seller of this Agreement.

 

(c)                                   Valid and Binding Agreement .  This Agreement has been duly executed and delivered by Seller and, assuming that this Agreement has been duly authorized, executed and delivered by Parent, constitutes the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except to the extent that the enforceability thereof may be limited by (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar Laws from time to time in effect affecting generally the enforcement of creditors’ rights and (ii) general principles of equity.

 

(d)                                  Non-Contravention .  The execution and delivery of this Agreement by Seller and the performance by Seller of its obligations hereunder does not and will not (i) violate any provision of the Organizational Documents of Seller, (ii) conflict with or violate any Law or order of any Governmental Authority applicable to Seller or its assets or properties, (iii) require any Permit, authorization, consent, approval, exemption or other action by, notice to or filing with, any Person or Governmental Authority (other than filings by Seller with the SEC under Sections 13 and 16 of the Exchange Act), (iv) violate, conflict with, result in a material breach of, or constitute (with or without notice or lapse of time or both) a material default under, or an event which would give rise to any right of notice, modification, acceleration, payment, cancellation or termination under, or in any manner release any party thereto from any obligation under any Permit or Contract to which Seller is a party or by which any of its properties or assets are bound, or (v) result in the creation or imposition of any Lien on any part of the properties or assets of Seller except, in the case of (ii), (iii), (iv) or (v), as would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Seller’s ability to perform its obligations hereunder.

 

(e)                                   Private Placement .  Seller has been advised that the Acquired Shares: (i) have not been, and will not at the Closing have been, registered under the Securities Act or any state securities laws, (ii) constitute “restricted securities” as defined in Rule 144 and (iii) therefore, cannot be resold unless they are registered under the Securities Act and applicable state securities laws or unless exemptions from such registration requirements are available.  Seller is acquiring the Acquired Shares for its own account for investment and not with a view to, or for resale in connection with, any distribution thereof within the meaning of the Securities Act.  Seller has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and

 

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risks of such investment, is able to incur a complete loss of such investment and is able to bear the economic risk of such investment for an indefinite period of time.

 

(f)                                    Accredited Investor Status .  Seller is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

 

Section 3.2                                     Representations and Warranties of Parent .  Parent hereby represents and warrants to Sellers as follows:

 

(a)                                  Organization and Good Standing .  Parent is duly incorporated, validly existing and in good standing under the Laws of the State of Maryland, with all requisite power and authority required to conduct its business as presently conducted.

 

(b)                                  Authority .  Parent has all requisite corporate power and authority to execute and deliver this Agreement and to perform all of its obligations hereunder.  The execution and delivery by Parent of this Agreement and the performance by Parent of its obligations hereunder have been duly authorized by all requisite corporate action of Parent and no other action on the part of Parent or its stockholders is necessary to authorize the execution, delivery or performance by Parent of this Agreement.

 

(c)                                   Valid and Binding Agreement .  This Agreement has been duly executed and delivered by Parent and, assuming that this Agreement has been duly authorized, executed and delivered by Seller, constitutes the legal, valid and binding obligation of Parent, enforceable against Parent in accordance with its terms, except to the extent that the enforceability thereof may be limited by (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar Laws from time to time in effect affecting generally the enforcement of creditors’ rights and (ii) general principles of equity.

 

(d)                                  Non-Contravention .  The execution and delivery of this Agreement by Parent and the performance by Parent of its obligations hereunder does not and will not (i) violate any provision of the Organizational Documents of Parent, (ii) conflict with or violate any Law or order of any Governmental Authority applicable to Parent or its assets or properties, (iii) require any Permit, authorization, consent, approval, exemption or other action by, notice to or filing with any Person or Governmental Authority (other than the filing of a Current Report on Form 8-K with the SEC and as contemplated by the Purchase Agreement), (iv) violate, conflict with, result in a material breach of, or constitute (with or without notice or lapse of time or both) a material default under, or an event which would give rise to any right of notice, modification, acceleration, payment, cancellation or termination under, or in any manner release any party thereto from any obligation under, any Permit or Contract to which Parent is a party or by which any of its properties or assets are bound or (v) result in the creation or imposition of any Lien on any part of the properties or assets of Parent except, in the case of (ii), (iii), (iv) or (v), as would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Parent’s ability to perform its obligations hereunder.

 

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ARTICLE 4

 

COVENANTS

 

Section 4.1                                     Restrictive Covenants .  The Parties hereto acknowledge and agree that each Party is relying on the covenants and agreements set forth in this section, that without such covenants the Parties would not enter into the Purchase Agreement or consummate the Transaction or the other transactions contemplated thereby, and that the covenants contained herein and in the Purchase Agreement are sufficient consideration to make the covenants and agreements set forth herein enforceable.  For purpose of this Article 4, any reference to Subsidiaries of Parent shall include the Company and its Subsidiaries and any references to Subsidiaries of Seller shall expressly exclude the Company and its Subsidiaries.

 

(a)                                  Non-Competition .  To more effectively protect the value of the business of Parent and its Subsidiaries, and to induce Parent to consummate the Transaction, Seller covenants and agrees that, during the Term, it will not, and will cause its Subsidiaries not to, directly or indirectly, act as a director, officer, equityholder, partner or owner of any business or business unit that is engaged in providing Competing Services within the Territory (including being engaged as a principal part of such business or business unit in providing Competing Services within the Territory); provided, however, the foregoing shall not (i) prevent Seller or any of its Subsidiaries from holding a passive investment in a publicly traded company that does not exceed a 5% ownership interest in such publicly traded company or (ii) prohibit Seller or any of its Subsidiaries from acquiring any Person or business if such Person or business derives less than 50% of its aggregate revenue directly from the performance of Competing Services or acting as a director, officer, equityholder, partner or owner of such Person or business.

 

(b)                                  Non-Solicitation of Employees .  Each of Parent and Seller hereby covenants and agrees that, from and until the second anniversary of the Closing Date, neither it nor any of its Subsidiaries will offer to hire or hire any person who is a Restricted Employee of the other Party or any of its Subsidiaries; provided , however , that nothing in this letter agreement shall prohibit either Party or its Subsidiaries from hiring persons whose employment with the other Party or its Subsidiaries terminated more than 6 months prior to such hiring.  “Restricted Employees” means (a) in the case of Parent, the individuals set forth on Exhibit A and (b) in the case of Seller, the individuals set forth on Exhibit B. The restrictions in this Section 4.1(b) apply to Galaxy Acquisition LLC (the sole indirect owner of Seller) and each of its direct and indirect Subsidiaries.

 

(c)                                   Confidentiality .  Each Party hereby covenants and agrees that, during the Term, such Party will, and will cause its Subsidiaries and representatives to, maintain the confidentiality of, and refrain from disclosing to any Person, all Confidential Information of the other Party and its Subsidiaries, except to the extent disclosure is required by Law or in response to any summons or subpoena.  In the event that such Party reasonably believes after consultation with counsel that it or its Subsidiaries is required by Law or in response to any summons or subpoena to disclose any such Confidential Information, such Party will, to the extent legally permissible, (i) provide the other Party with prompt notice before such disclosure so that such other Party may attempt to obtain, at such other

 

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Party’s sole cost and expense, a protective order or other assurance that confidential treatment will be accorded to such Confidential Information and (ii) cooperate with the other Party, at such other Party’s sole cost and expense,  in attempting to obtain such order or assurance.

 

(d)                                  Non-Disparagement .  Each Party hereby covenants and agrees that, during the Term, such Party will cause the members of its senior management not to, directly or indirectly, make any statement or any other expressions (in writing, orally or otherwise) on television, radio, the internet or other media or to any third party, that are in any way disparaging of the other Party or any of its Subsidiaries, or any of their respective Affiliates, or the products and services of the foregoing.

 

(e)                                   Blue-Pencil .  If any court of competent jurisdiction shall at any time deem the term of any particular restrictive covenant contained in this Section 4.1 too lengthy or the geographic area covered too extensive, the other provisions of this Section 4.1 shall nevertheless stand, the Term shall be deemed to be the longest period permissible by Law under the circumstances and the geographic area covered shall be deemed to comprise the largest territory permissible by Law under the circumstances.  The court in each case shall reduce the Term and/or geographic area covered to permissible duration or size.

 

Section 4.2                                     Release .

 

(a)                                  Seller (on behalf of itself and its Subsidiaries) (the “ Seller Releasing Parties ”), hereby forever and unconditionally waives and releases the Company, its Subsidiaries and their respective current and former officers, directors and agents (collectively, the “ Released Company Parties ”), to the fullest extent permitted by Law, from all actions, causes of action, suits, debts, costs, penalties, dues, sums of money, accounts, reckonings, bonds, bills, liabilities,  controversies, variances, trespasses, damages, judgments, demands, grievances or any other claims of any kind or nature, known or unknown, existing or claimed to exist, fixed or contingent, both at law and in equity (“ Causes of Action ”) that such Seller Releasing Party now has, has ever had or may hereafter have against the Released Company Parties arising contemporaneously with or prior to the Effective Date but solely to the extent that such Causes of Action arose out of Seller’s ownership and conduct of the business of the Company and its Subsidiaries prior to the Effective Date; provided , however , that nothing contained herein will release any Released Company Party from (i) any Causes of Action arising under this Agreement, the Purchase Agreement or the Transaction Documents or any rights to indemnification thereunder or (ii) any Causes of Action arising under arms length Contracts existing between the Company and its Subsidiaries, on the one hand, and Seller and its Subsidiaries, on the other hand, which remains in effect after the Closing pursuant to the terms of the Purchase Agreement.

 

(b)                                  The Company (on behalf of the Company and its Subsidiaries) (the “ Company Releasing Parties ”), hereby forever and unconditionally waives and releases Seller, its Subsidiaries and their respective current and former officers, directors and agents (collectively, the “ Released Seller Parties ”), to the fullest extent permitted by Law, from all actions, causes of action, suits, debts, costs, penalties, dues, sums of money,

 

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accounts, reckonings, bonds, bills, liabilities,  controversies, variances, trespasses, damages, judgments, demands, grievances or any other claims of any kind or nature, known or unknown, existing or claimed to exist, fixed or contingent, both at law and in equity (“ Causes of Action ”) that such Company Releasing Party now has, has ever had or may hereafter have against the Released Seller Parties arising contemporaneously with or prior to the Effective Date but solely to the extent that such Causes of Action arose out of Seller’s ownership and conduct of the business of the Company and its Subsidiaries prior to the Effective Date; provided , however , that nothing contained herein will release any Released Seller Party from (i) any Causes of Action arising under this Agreement, the Purchase Agreement or the Transaction Documents or any rights to indemnification thereunder or (ii) any Causes of Action arising under arms length Contracts existing between the Company and its Subsidiaries, on the one hand, and Seller and its Subsidiaries, on the other hand, which remains in effect after the Closing pursuant to the terms of the Purchase Agreement.

 

Section 4.3                                     Restrictions on Transfer of Acquired Shares .  Except as required by applicable securities Laws, the Transfer of any of the Acquired Shares by Seller shall not be subject to any restrictions; provided , however , that notwithstanding the foregoing, Seller shall not Transfer any of the Acquired Shares prior to the 180 th  day following the Effective Date except for Transfers to one or more of Seller’s Affiliates provided that Seller shall be liable for any subsequent Transfers by such Affiliates in breach of this Section 4.3.

 

ARTICLE 5
RIGHT OF FIRST OFFER

 

Section 5.1                                     Right of First Offer .

 

(a)                                  If at any time Seller desires to Transfer to an unaffiliated third party or parties Acquired Shares (i) which would constitute more than ten percent (10%) of Parent’s then issued and outstanding Common Stock on a fully-diluted basis, and (ii) such proposed Transfer would be consummated pursuant to a private sale (other than through any broker dealer transactions) and not through a public offering of securities pursuant to a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act, then prior to effecting such Transfer, Seller shall deliver a written notice (a “ ROFO Notice ”) to Parent specifying the number of Acquired Shares desired to be Transferred (the “ ROFO Shares ”) and a list of no more than five (5) third parties to whom Seller shall have the right, but not the obligation, to transfer all or a portion of the ROFO Shares in the event that Parent does not acquire such ROFO Shares pursuant to this Section 5.1 (the “ Proposed Transferees ”).

 

(b)                                  Within 7 days of receipt of the ROFO Notice (the “ Offer Period ”), Parent shall have the right, but not the obligation, to provide Seller an irrevocable written offer to purchase all, but not less than all, of the ROFO Shares, in cash (the “ Offer Notice ”) at such price per ROFO Share (the “ ROFO Price ”) as set forth in the Offer Notice and on a closing date as set forth in the Offer Notice but no later than 30 days following the date of delivery of the Offer Notice (the “ ROFO Closing Date ”).  If Parent delivers an Offer

 

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Notice within the Offer Period, Seller shall have two Business Days, in its sole discretion, to accept or reject the Offer Notice, and a failure of Seller to respond within two Business Days following delivery of an Offer Notice shall be deemed to be a rejection.  If Seller accepts the offer set forth in the Offer Notice, then on the ROFO Closing Date, Parent shall remit to the Seller the cash consideration to be paid for the ROFO Shares being purchased from the Seller, at the ROFO Price and in immediately available funds, against delivery of certificates for the ROFO Shares, duly endorsed for Transfer.  The closing of the sale of the ROFO Shares shall occur at the offices of Parent or such other location as mutually agreed between Parent and Seller.

 

(c)                                   If Seller rejects (or is deemed to reject) the Offer Notice, then Seller shall have the right, but not the obligation, to Transfer any or all of the ROFO Shares to any of the Proposed Transferees at a price per ROFO Share that is at least 95% of the ROFO Price; provided, however, with respect to any ROFO Shares not Transferred by Seller to any of the Proposed Transferees within the 90 day period commencing at the end of the Offer Period, Seller shall not Transfer such ROFO Shares in the future without first complying with this Section 5.1, if applicable, to such future Transfers.

 

(d)                                  If Parent does not deliver an Offer Notice within the Offer Period, then (i) Parent shall forfeit its right to purchase the ROFO Shares and (ii) Seller shall have the right, but not the obligation, to Transfer any or all of the ROFO Shares to any Proposed Transferees at any price per ROFO Share; provided, however, with respect to any ROFO Shares not Transferred by Seller pursuant to this Section 5.1(d)(ii) within the 90 day period commencing at the end of the Offer Period, Seller shall not Transfer such ROFO Shares in the future without first complying with this Section 5.1, if applicable, to such future Transfers.

 

ARTICLE 6
MARKET ACTIVITIES BY THE SHAREHOLDERS

 

Section 6.1                                       Standstill Arrangement .  Seller irrevocably and unconditionally agrees that, from and after the Effective Date and for so long as (a) Seller has the right under the Purchase Agreement to designate a Board Designee to serve as a director on the Parent Board and (b) the Chairman, President and Chief Executive Officer as of the date of this Agreement (the “ Current CPCEO ”) continues to serve as at least one of the Chairman and/or the Chief Executive Officer of Parent, Seller shall not, in any manner, directly or indirectly, without the prior written consent of a majority of the Qualified Directors:

 

(a)                                   publicly initiate any offer to effect, seek or propose (with or without conditions), any merger, acquisition, consolidation, other business combination, restructuring, recapitalization, tender offer or exchange offer with or involving Parent or any of its Subsidiaries or all or substantially all of their respective securities or assets (each a “ Prohibited Transaction ”); provided , however , that nothing contained herein shall limit the ability of Seller (i) to file or amend its Schedule 13D regarding the Parent Common Stock as required by Law or to make other securities or tax filings as required by Law, (ii) to support any Prohibited Transaction initiated by any third party, (iii) to vote its Parent Common Stock with respect to any matter that does not relate to a

 

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Prohibited Transaction, or (iv)  to vote, tender or exchange its Parent Common Stock in any Prohibited Transaction initiated, sought or proposed by any third party; or

 

(b)                                  engage, or in any way participate, directly or indirectly, in any “solicitation” (as such term is defined in Rule 14a-1(l) promulgated by the SEC under the Exchange Act) of proxies or consents (whether or not relating to the election or removal of directors), seek to advise, encourage or influence any Person with respect to the voting of any Parent securities (except in support of proposals approved by the Board of Directors), in each case, against the election of Parent’s directors;

 

provided , however , that if the Current CPCEO is terminated by the Board with the Seller’s Board Designees voting in favor of such termination, then the obligations of Seller under this Section 6.1 shall terminate on the date that is the twelve month anniversary of the date of such termination.

 

ARTICLE 7
GENERAL

 

Section 7.1                                       Notices .  Any notice to be given by any party to this Agreement shall be given in writing and may be effected by facsimile, personal delivery, overnight courier or e-mail (provided receipt of such email is evidenced by a reply email) addressed to Parent or Seller at the respective address, e-mail or facsimile number set forth in the Purchase Agreement.  The date of service for any notice sent in compliance with the requirements of this Section 7.1 shall be (i) the date such notice is personally delivered, (ii) one day after date of delivery to the overnight courier if sent by overnight courier or (iii) the next succeeding Business Day after transmission by e-mail or facsimile (if electronic confirmation of such transmission is received).  Any notice delivered by facsimile or email shall be followed by personal delivery or overnight courier pursuant to (i) or (ii) above.

 

Section 7.2                                       No Third Party Beneficiaries . Except as set forth in Section 4.2 of this Agreement, nothing in this Agreement, express or implied, is intended to or shall confer upon the Person (other than the parties to this Agreement) any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

Section 7.3                                       Governing Law .  This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to any applicable principles of conflict of laws that would cause the Laws of another state otherwise to govern this Agreement.

 

Section 7.4                                       Severability . If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall nonetheless remain in full force and effect.

 

Section 7.5                                       Successors and Assigns .  This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and permitted assigns.  Seller may not assign this Agreement or any of its rights or obligations hereunder except as expressly provided for herein.  Parent may not assign its rights or obligations under this Agreement except

 

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with the prior written consent of Seller, which consent may be given or withheld in Seller’s sole discretion.

 

Section 7.6                                       Interpretation .  Interpretation of this Agreement shall be governed by the following rules of construction: (i) words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other gender as the context requires, (ii) references to the terms article, section and schedule are references to the articles, sections and schedules to this Agreement unless otherwise specified, (iii) the word “including” and words of similar import shall mean “including without limitation,” (iv) the word “or” shall not be exclusive, (v) the headings are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement, (vi) a reference to any Person includes such Person’s successors and permitted assigns, (vii) any reference to “days” means calendar days unless Business Days are expressly specified and (viii) this Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted.

 

Section 7.7                                       Amendments; Waivers .  This Agreement may not be amended without the express written agreement signed by all of the Parties to this Agreement.  No provision of this Agreement may be waived without the express written agreement signed by the Party making such waiver.  The failure or delay of any Party to assert any of its rights under this Agreement or otherwise will not constitute a waiver of such rights.

 

Section 7.8                                       Entire Agreement .  This Agreement (together with the Purchase Agreement and the Transaction Documents) constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties to this Agreement with respect to the subject matter of this Agreement.

 

Section 7.9                                       Remedies Cumulative .  Any and all remedies expressly conferred upon a party to this Agreement will be cumulative with, and not exclusive of, any other remedy contained in this Agreement, at law or in equity. The exercise by a Party to this Agreement of any one remedy will not preclude the exercise by it of any other remedy.

 

Section 7.10                                 Counterparts; Effectiveness .  This Agreement and any amendment hereto may be executed and delivered in two or more identical counterparts, and by the different Parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.  In the event that any signature to this Agreement or any amendment hereto is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.  No Party hereto shall raise the use of a facsimile machine or e-mail delivery of a “.pdf” format data file to deliver a signature to this Agreement or any amendment hereto or the fact that such signature was transmitted or communicated through the use of a facsimile machine or e-mail delivery of a “.pdf” format data file as a defense to the formation or enforceability of a contract, and each party hereto forever waives any such defense.

 

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Section 7.11                                 Specific Performance .  The parties to this Agreement agree that irreparable damage would occur and that the parties to this Agreement would not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the parties to this Agreement shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, in each case without the necessity of posting bond or other security or showing actual damages, and this being in addition to any other remedy to which they are entitled at law or in equity.

 

Section 7.12                                 Submission to Jurisdiction .  Each of the parties hereto irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of (a) any Delaware State court and (b) the United States District Court for the District of Delaware, for the purposes of any litigation arising out of this Agreement or any transaction contemplated hereby.  Each of the Parties hereto irrevocably and unconditionally waives (and agrees not to plead or claim) any objection to the laying of venue of any litigation arising out of this Agreement or the transactions contemplated hereby in (a) any Delaware State court or (b) the United States District Court for the District of Delaware, or that any such litigation brought in any such court has been brought in an inconvenient forum.

 

Section 7.13                                 WAIVER OF JURY TRIAL .  EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION, CONTROVERSY OR OTHER LEGAL ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (II) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (IV) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.13 .

 

[Remainder of Page Intentionally Left Blank.
Signature Pages Follow.]

 

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IN WITNESS WHEREOF, each party hereto has caused this Closing Agreement to be duly executed as of the date first written above.

 

	PARENT :
	WALKER & DUNLOP, INC.
	By:	/s/ William M. Walker
	Name:	William M. Walker
	Title:	Chairman, President and Chief Executive Officer
	SELLER:
	CW FINANCIAL SERVICES LLC
	By:	/s/ Charles R. Spetka
	Name:	Charles R. Spetka
	Title:	Chief Executive Officer
	COMPANY:
	CWCAPITAL LLC
	By:	/s/ Scott D. Spelfogel
	Name:	Scott D. Spelfogel
	Title:	Executive Vice President

 

 

EXHIBIT A

 

[WD individuals who are Vice Presidents and above as of the date of execution.]

 

14

 

EXHIBIT B

 

CW Financial Services LLC Restricted Employees

 

Attached

 

15

Exhibit 10.4

 

Execution Version

 

TRANSFER AND JOINDER AGREEMENT

 

THIS TRANSFER AND JOINDER AGREEMENT (this “ Agreement ”), dated as of September 4, 2012, is executed by Galaxy Acquisition LLC, a Delaware limited liability company (“ Galaxy ”), Walker & Dunlop, Inc., a Maryland corporation (“ Parent ”), CW Financial Services LLC, a Delaware limited liability company (“ Seller ”).

 

RECITALS

 

A.                                    Reference is made to the Purchase Agreement dated as of June 7, 2012 (the “ Purchase Agreement ”) among Seller, Parent, Walker & Dunlop, LLC, a Delaware limited liability company, and CWCapital LLC, a Massachusetts limited liability company (the “ Company ”).  Capitalized terms used but not defined in this Agreement shall have the meanings set forth in the Purchase Agreement.

 

B.                                      Seller is an indirect, wholly-owned subsidiary of Galaxy.  Seller wishes to cause all the Stock Consideration received by Seller at the Closing to be transferred to Galaxy immediately following the Closing (the “ Transfer ”), and in connection with the Transfer, each of Seller and Galaxy is hereby seeking the consent of Parent to effect the Transfer on the Closing Date, subject to the terms and condition of this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

 

1.                                        Transfer .

 

(a)                                   Effective immediately following the issuance of the Stock Consideration by Parent to Seller (the “ Effective Time ”), Seller hereby assigns, transfers and delivers to Galaxy all of Seller’s right, title and interest to the Stock Consideration, and Galaxy hereby accepts the foregoing assignment, transfer and delivery of the Stock Consideration.  Parent hereby consents to the Transfer, and Parent will reflect, and cause its transfer agent to reflect, the Transfer on the books and records of Parent.  For the avoidance of doubt, nothing herein or by virtue of the Transfer shall be deemed to relieve Seller of its liabilities and obligations (including any indemnification liabilities and obligations) under the Purchase Agreement.

 

(b)                                  As a condition to any sale or other transfer of any shares of Stock Consideration by Galaxy to any affiliate (as such term is defined in Rule 405 under the Securities Act) of Galaxy (each a “ Subsequent Transferee ”), and any further and successive sales or transfers thereof by a Subsequent Transferee to any other Subsequent Transferee, the transferor and the applicable Subsequent Transferee of such shares shall enter into a transfer and joinder with the Parent substantially in the form of this Agreement.

 

2.                                        Joinder to the Closing Agreement .  As of the Effective Time, solely with respect to its rights and obligations expressly resulting from ownership of the Stock Consideration,

 

 

Galaxy hereby agrees to become bound by the obligations of Sections 4.3, 5.1 and 6.1 of the Closing Agreement.  For the avoidance of doubt, the foregoing joinder shall not apply to Sections 4.1 and 4.2 of the Closing Agreement.

 

3.                                        Assignment and Joinder to the Registration Rights Agreement .  As of the Effective Time, (i) Seller hereby assigns all of Seller’s rights and obligations under the Registration Rights Agreement to Galaxy, and Galaxy hereby accepts the foregoing assignment, and (ii) Galaxy hereby agrees to be bound by all of the provisions of the Registration Rights Agreement applicable to a Holder (as defined in the Registration Rights Agreement).

 

4.                                        Assignment and Joinder to the Side Letter .  Reference is made to the letter agreement dated as of June 7, 2012 among Seller, Column Guaranteed LLC, Parent and the other holders of Parent Common Stock that are parties thereto (the “ Side Letter ”). As of the Effective Time, (i) Seller hereby assigns all of Seller’s rights and obligations under the Side Letter to Galaxy, and Galaxy hereby accepts the foregoing assignment, and (ii) Galaxy hereby agrees to be bound by all of the provisions of the Side Letter applicable to Seller.

 

5.                                        Accredited Investor Status, etc .  Galaxy represents and warrants that (a) it is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act, and (b) the Stock Consideration is being acquired by Galaxy pursuant to the Transfer for its own account for the purpose of investment and not with a view to the resale or distribution of all or any part of the Stock Consideration in violation of the Securities Act.

 

6.                                        General .

 

(a)                                   For purposes of the Closing Agreement, the Registration Rights Agreement and the Side Letter, the address of Galaxy shall be c/o Fortress Investment Group, 1345 Avenue of the Americas, 46th Floor, New York, NY 10105; provided , however , that Galaxy shall have the right to change its address for notices in the manner set forth in the Closing Agreement, the Registration Rights Agreement and the Side Letter, respectively.

 

(b)                                  This Agreement constitutes the entire understanding with respect to the subject matter hereof and supersede all prior and current understandings and agreements, whether written or oral.

 

(c)                                   To facilitate execution, this Agreement may be executed in as many counterparts as may be required, and it shall not be necessary that the signature of, or on behalf of, each party, or that the signatures of all persons required to bind any party, appear on such counterpart, but it shall be sufficient that the signature of, or on behalf of, each party, or that the signature of the persons required to bind any party, appear on one or more of the counterparts.  All counterparts shall collectively constitute a single agreement.  It shall not be necessary in making proof of this Agreement to produce or account for more than a number of counterparts containing the respective signatures of, or on behalf of, all of the parties hereto.

 

(d)                                  Each party shall bear its own expenses in connection with the preparation, execution and delivery of this Agreement.

 

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(e)                                   This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to any applicable principles of conflict of laws that would cause the Laws of another state otherwise to govern this Agreement.

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

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

 

	GALAXY ACQUISITION LLC
	By:	/s/ Peter Smith
	Name:	Peter Smith
	Title:	Co-President
	CW FINANCIAL SERVICES LLC
	By:	/s/ Charles R. Spetka
	Name:	Charles R. Spetka
	Title:	Chief Executive Officer
	WALKER & DUNLOP, INC.
	By:	/s/ William M. Walker
	Name:	William M. Walker
	Title:	Chairman, President and Chief Executive Officer

 

TRANSFER AND JOINDER AGREEMENT SIGNATURE PAGE

 

Exhibit 10.5

 

Execution Version

 

 

CREDIT AGREEMENT

 

Dated as of September 4, 2012

 

among

 

WALKER & DUNLOP, INC. ,

 

as Borrower

 

WALKER & DUNLOP MULTIFAMILY, INC. , WALKER & DUNLOP, LLC , and WALKER & DUNLOP CAPITAL, LLC ,

 

as Guarantors

 

 

BANK OF AMERICA, N.A .,

 

as Administrative Agent and Collateral Agent

 

and

 

THE LENDERS PARTY HERETO

 

 

 

TABLE OF CONTENTS

 

ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS			2
	1.01	Defined Terms	2
	1.02	Other Interpretive Provisions	39
	1.03	Accounting Terms	40
	1.04	Rounding	40
	1.05	Times of Day	40
ARTICLE II. THE COMMITMENTS AND LOANS			40
	2.01	Loans	40
	2.02	Conversions and Continuations of Loans	41
	2.03	Prepayments and Repayments	41
	2.04	INTENTIONALLY OMITTED	42
	2.05	Interest	42
	2.06	Computation of Interest	43
	2.07	Evidence of Debt	43
	2.08	Payments Generally; Administrative Agent’s Clawback	44
	2.09	Sharing of Payments by Lenders	45
ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY			45
	3.01	Taxes	45
	3.02	Illegality	48
	3.03	Inability to Determine Rates	48
	3.04	Increased Costs; Reserves on LIBOR Rate Loans	48
	3.05	Compensation for Losses	50
	3.06	Mitigation Obligations; Replacement of Lenders	51
	3.07	Survival	51
ARTICLE IV. CONDITIONS PRECEDENT TO LOANS			51
	4.01	Conditions of Loan	51
ARTICLE V. REPRESENTATIONS AND WARRANTIES			57
	5.01	Existence, Qualification and Power	57
	5.02	Authorization; No Contravention	57
	5.03	Governmental Authorization; Other Consents	58
	5.04	Binding Effect	58
	5.05	Base Line Projections	58
	5.06	Litigation	58
	5.07	No Default	58
	5.08	Ownership of Property; Liens	59

 

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	5.09	Environmental Compliance	59
	5.10	Insurance	60
	5.11	Taxes	60
	5.12	ERISA Compliance	60
	5.13	Subsidiaries; Equity Interests	61
	5.14	Margin Regulations; Investment Company Act	62
	5.15	Disclosure	62
	5.16	Compliance with Laws	62
	5.17	Intellectual Property; Licenses, Etc.	63
	5.18	Labor Matters	63
	5.19	Security Documents	64
	5.20	Solvency	64
	5.21	Deposit Accounts	64
	5.22	Brokers	64
	5.23	Customer and Trade Relations	64
	5.24	Material Contracts	65
	5.25	Casualty	65
	5.26	CW Transaction	65
ARTICLE VI. AFFIRMATIVE COVENANTS			67
	6.01	Financial Statements	67
	6.02	Certificates; Other Information	68
	6.03	Notices	70
	6.04	Payment of Obligations	71
	6.05	Preservation of Existence, Etc.	71
	6.06	Maintenance of Properties	72
	6.07	Maintenance of Insurance	72
	6.08	Compliance with Laws	72
	6.09	Books and Records; Accountants	72
	6.10	Inspection Rights; Appraisals	73
	6.11	Information Regarding the Collateral	73
	6.12	Environmental Laws	74
	6.13	Further Assurances	74
	6.14	Material Contracts	74
	6.15	Operating Accounts	75
	6.16	Subsequent Investor Agreements or CW Transaction Documents	75
	6.17	Agency Warehousing Facilities	75
ARTICLE VII. NEGATIVE COVENANTS			76
	7.01	Liens; Negative Pledges	76
	7.02	Investments	76

 

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	7.03	Indebtedness	77
	7.04	Fundamental Changes	77
	7.05	Dispositions	78
	7.06	Restricted Payments; Restricted Distributions	79
	7.07	Prepayments of Indebtedness	79
	7.08	Change in Nature of Business	79
	7.09	Transactions with Affiliates	80
	7.10	Burdensome Agreements	80
	7.11	Use of Proceeds	80
	7.12	Amendment of Material Documents	80
	7.13	Corporate Name; Fiscal Year	81
	7.14	Financial Covenants	82
ARTICLE VIII. SPECIAL PROVISIONS REGARDING WDLLC AND CWC			83
	8.01	Special Representations, Warranties and Covenants Concerning WDLLC Transfer	83
	8.02	Special Representations, Warranties and Covenants Concerning Eligibility of WDLLC and CWC as Seller/Issuer and Servicer of Mortgage Loans	85
	8.03	Special Representations, Warranties and Covenants Concerning WDLLC and WD Capital	85
	8.04	Special Representation, Warranty and Covenant with respect to WDLLC and WD Capital Concerning Fannie Mae Program Reserve Requirements	86
	8.05	Special Provisions Regarding Agency Collateral	87
ARTICLE IX. EVENTS OF DEFAULT AND REMEDIES			88
	9.01	Events of Default	88
	9.02	Remedies Upon Event of Default	92
	9.03	Application of Funds	92
	9.04	Fannie Mae Limitations	93
	9.05	Freddie Mac Limitations	93
	9.06	Ginnie Mae Limitations	94
ARTICLE X. ADMINISTRATIVE AGENT			94
	10.01	Appointment and Authority	94
	10.02	Rights as a Lender	95
	10.03	Exculpatory Provisions	95
	10.04	Reliance by Agents	96
	10.05	Delegation of Duties	96
	10.06	Resignation of Agents	96

 

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	10.07	Non-Reliance on Administrative Agent and Other Lenders	97
	10.08	Administrative Agent May File Proofs of Claim	97
	10.09	Collateral and Guaranty Matters	98
	10.10	Notice of Transfer	99
	10.11	Reports and Financial Statements	99
	10.12	Agency for Perfection	99
	10.13	Indemnification of Agents	100
	10.14	Relation among Credit Parties	100
ARTICLE XI. GUARANTEE; PLEDGES OF CW TRANSACTION DOCUMENTS			100
	11.01	The Guarantee	100
	11.02	Guarantee by Subsequent Subsidiary Guarantors	100
	11.03	Grant of Security Interest in CW Transaction Documents	101
ARTICLE XII. MISCELLANEOUS			102
	12.01	Amendments, Etc.	102
	12.02	Notices; Effectiveness; Electronic Communications	104
	12.03	No Waiver; Cumulative Remedies	106
	12.04	Expenses; Indemnity; Damage Waiver	106
	12.05	Payments Set Aside	108
	12.06	Successors and Assigns	108
	12.07	Treatment of Certain Information; Confidentiality	111
	12.08	Right of Setoff	112
	12.09	Interest Rate Limitation	113
	12.10	Counterparts; Integration; Effectiveness	113
	12.11	Survival	113
	12.12	Severability	113
	12.13	Replacement of Lenders	114
	12.14	Governing Law; Sealed Instrument; Jurisdiction; Etc.	114
	12.15	Waiver of Jury Trial	116
	12.16	No Advisory or Fiduciary Responsibility	116
	12.17	USA PATRIOT Act Notice	117
	12.18	Time of the Essence	117
	12.19	Press Releases	117
	12.20	Additional Waivers	117
	12.21	No Strict Construction	119
	12.22	Attachments	119

 

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SCHEDULES
1.01		Fannie Mae, Freddie Mac, Ginnie Mae, FHA/HUD Agreements, and other Investor Agreements
2.01		Commitments and Applicable Percentages
4.01		Investors
5.01		Loan Parties Organizational Information
5.10		Insurance
5.13		Subsidiaries; Other Equity Investments
5.18		Labor Matters
5.21		Deposit Accounts
5.24		Material Contracts
7.01		Existing Liens
EXHIBITS
A		Form of Note
B		Form of Compliance Certificate
C		Form of Assignment and Assumption

 

1

 

CREDIT AGREEMENT

 

This CREDIT AGREEMENT is entered into as of September 4, 2012 among:

 

WALKER & DUNLOP, INC. , a Maryland corporation (the “ Borrower ”);

 

WALKER & DUNLOP MULTIFAMILY, INC., a Delaware corporation (“ W&D Multifamily ”), WALKER & DUNLOP, LLC , a Delaware limited liability company (“ WDLLC ”), and WALKER & DUNLOP CAPITAL,  LLC, a Massachusetts limited liability company (“ WD Capital ”), formerly known as CWCAPITAL LLC (“ CWC ”), as Guarantors;

 

Each lender from time to time party hereto (collectively, the “ Lenders ” and individually, a “ Lender ”); and

 

BANK OF AMERICA, N.A ., a national banking association, as Administrative Agent and Collateral Agent.

 

PRELIMINARY STATEMENTS:

 

WHEREAS , WDLLC, as “ Purchaser ,” and the Borrower have entered into that certain Purchase Agreement, dated as of June 7, 2012 (as amended, supplemented or otherwise modified from time to time, the “ CW Purchase Agreement ”), with CW Financial Services LLC, a Delaware limited liability company, as “ Seller ” (the “ CW Seller ”) and CWC, to acquire all Equity Interests of the CW Seller in CWC, representing the “ Company Interests ” (as defined in the CW Purchase Agreement and referred to herein as the “ CWC Equity Interests ”) as provided in the CW Purchase Agreement (the “ CW Transaction ”);

 

WHEREAS , the Borrower desires to obtain financing hereunder: (i) in the amount of $60,000,000.00 toward the payment of the “ Cash Consideration ” (as defined in the CW Purchase Agreement and so referred to herein) payable to the CW Seller pursuant to the CW Purchase Agreement upon the closing of the CW Transaction; (ii) in the amount of $20,700,000.00 to refinance the Existing Credit Facility, and (iii) in the amount of $2,300,000.00 to repay certain existing Indebtedness of the Borrower to former equity holders in predecessor entities of the Borrower and to pay other related expenses disclosed to, and approved by, the Administrative Agent;

 

WHEREAS , the Lenders have agreed to extend a senior secured term loan facility to the Borrower, upon the terms and conditions specified in this Agreement, in an aggregate principal amount of $83,000,000.00 for the purposes described herein;

 

WHEREAS , the Borrower has agreed to secure all of its Obligations by granting to the Collateral Agent, for the benefit of the Credit Parties, a first-priority lien (subject to Liens permitted by the Loan Documents) on substantially all of its assets intended to constitute

 

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