Exhibit 10.1

 

EXECUTION COPY

 

AMENDMENT NO. 2

 

AMENDMENT NO. 2 dated as of March 14, 2005 to the Credit Agreement referred to
below, between MDC Partners Inc., a Canadian corporation (“MDC Partners”),
Maxxcom Inc., an Ontario corporation (“Maxxcom Canada”), Maxxcom Inc., a
Delaware corporation (“Maxxcom U.S.” and together with MDC Partners and Maxxcom
Canada, the “Borrowers”), each of the Lenders identified under the caption
“LENDERS” on the signature pages hereto and JPMorgan Chase Bank, N.A. (formerly
known as JPMorgan Chase Bank), as U.S. administrative agent for the Lenders (in
such capacity, the “U.S. Administrative Agent”).

 

The Borrowers, the Lenders party thereto (individually, a “Lender” and,
collectively, the “Lenders”), the U.S. Administrative Agent, JPMCB, as
Collateral Agent (in such capacity, the “Collateral Agent”), and JPMCB, Toronto
Branch, as Canadian Administrative Agent (in such capacity, the “Canadian
Administrative Agent” and together with the U.S. Administrative Agent, the
“Administrative Agents”) are parties to a Credit Agreement dated as of September
22, 2004 (as amended, the “Credit Agreement”). The Borrowers and the Required
Lenders wish to amend the Credit Agreement in certain respects, and accordingly,
the parties hereto hereby agree as follows:

 

Section 1. Definitions. Capitalized terms used in this Amendment No. 2 and not
otherwise defined are used herein as defined in the Credit Agreement.

 

Section 2. Amendments. Subject to the satisfaction of the conditions precedent
specified in Section 6 hereof, but effective as of December 31, 2004, the Credit
Agreement shall be amended as follows:

 

2.01. References in the Credit Agreement (including references to the Credit
Agreement as amended hereby) to “this Agreement” (and indirect references such
as “hereunder”, “hereby”, “herein” and “hereof”) shall be deemed to be
references to the Credit Agreement as amended hereby.

 

2.02. Section 1.01 of the Credit Agreement is hereby amended by amending the
following definitions therein to read in their entirety as follows:

 

“Applicable Margin” means, for any day, with respect to any Base Rate Advance,
Canadian Prime Rate Advance or Eurodollar Rate Advance or with respect to the
commitment fees payable hereunder, the applicable rate per annum set forth below
under the caption “Base Rate and Canadian Prime Rate”, “Eurodollar Rate” or
“Commitment Fee Rate”, respectively, subject to changes in the Total Debt Ratio
as indicated below:

 

 

 

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Total Debt Ratio

Revolving Credit and Swingline Advances

Commitment Fee Rate

 

Base Rate and Canadian Prime Rate

Eurodollar

 

Category 1:

Greater than or equal to 3.50 to 1

1.75%

3.25%

0.80%

Category 2

Less than 3.50 to 1 but greater than or equal to 3.00 to 1

1.50%

3.00%

0.74%

Category 3:

Less than 3.00 to 1 but greater than or equal to 2.50 to 1

1.25%

2.75%

0.68%

Category 4:

Less than 2.50 to 1 but greater than or equal to 2.00 to 1

1.00%

2. 50%

0.62%

Category 5:

Less than 2.00 to 1 but greater than or equal to 1.50 to 1

0.75%

2.25%

0.56%

Category 6:

Less than 1.50 to 1

0.50%

2.00%

0.50%

 

For purposes of the foregoing, (a) the Total Debt Ratio shall be determined as
of the end of each fiscal quarter of MDC Partners’ fiscal year based upon the
combined financial statements of the Restricted Parties delivered pursuant to
Section 6.09(b) and (b) each change in the Applicable Margin resulting from a
change in the Total Debt Ratio shall be effective during the period commencing
on and including the date three Business Days after delivery to the U.S.
Administrative Agent of such combined financial statements indicating such
change and ending on the date immediately preceding the effective date of the
next such change; provided that the Total Debt Ratio shall be deemed to be in
Category 1 at any time that an Event of Default has occurred and is continuing.

 

 

 

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“Capital Expenditures” means, for any period, expenditures (including the
aggregate amount of Capital Lease Obligations incurred during such period but
excluding the interest component thereof) made by the Restricted Parties during
such period to acquire or construct fixed assets, plant and equipment (including
renewals, improvements and replacements, but excluding normal replacements and
maintenance which are properly charged to current operations) that is required
to be capitalized for financial reporting purposes in accordance with U.S. GAAP,
provided that Capital Expenditures for any period shall not include Capital
Expenditures (in an aggregate amount not to exceed U.S. $2,000,000 for any
fiscal year) required to be reported on the statement of cash flows of MDC
Partners in accordance with U.S. GAAP to the extent such Capital Expenditures
have been funded during such period by a landlord of MDC Partners or any of its
Subsidiaries (including the Minority-Owned Obligors) with respect to any
improvements to property leased from such landlord by MDC Partners or any of its
Subsidiaries (including the Minority-Owned Obligors).”

2.03. Section 4.02 of the Credit Agreement is hereby amended by (a) inserting
the word “and” at the end of clause (a) thereof, (b) replacing the word “and” at
the end of clause (b) thereof with a period and (c) deleting clause (c) thereof
in its entirety (with a corresponding change in Exhibits B-1 and B-2).

 

2.04. Clauses (a), (b) and (c) of Section 6.09 of the Credit Agreement are
hereby amended in their entirety as follows:

 

“(a) as soon as available and in any event within 55 days after the end of each
of the first three fiscal quarters of MDC Partners, and within 90 days after the
end of the fourth fiscal quarter of each fiscal year of MDC Partners, unaudited
Consolidated and consolidating balance sheets of MDC Partners and its
Subsidiaries as of the end of such fiscal quarter and unaudited Consolidated and
consolidating statements of earnings and retained earnings and cash flows of MDC
Partners and its Subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such fiscal quarter, setting
forth in each case in comparative form the figures for the corresponding period
or periods of (or, in the case of the balance sheet, as of the end of) the
previous fiscal year (and, in the case of such financial statements for each
such fiscal quarter during fiscal year 2004 and the comparative figures for the
corresponding period in fiscal year 2003, a reconciliation of the material
differences between U.S. GAAP and Canadian GAAP), all certified by the Chief
Financial Officer of MDC Partners as presenting fairly in all material respects
the financial condition and results of operations of MDC Partners and its
Consolidated Subsidiaries on a Consolidated basis or of each of MDC Partners and
its Subsidiaries on an unconsolidated basis, as applicable, and in each case in
accordance with U.S. GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes, together with (i) a certificate of the
Chief Financial Officer stating that no Default has occurred and is continuing
or, if a Default has occurred and is continuing, a statement as to the nature
thereof and (ii) a schedule in form and substance satisfactory to the
Administrative Agents of the computations used by MDC Partners in determining
compliance with the covenants contained in Article VIII;

 

 

 

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(b) as soon as available and in any event within 55 days after the end of each
of the first three fiscal quarters of MDC Partners, and within 90 days after the
end of the fourth fiscal quarter of each fiscal year of MDC Partners, an
unaudited combined balance sheet of each of the Qualifying Restricted Parties
and the Restricted Parties as of the end of such fiscal quarter and statements
of earnings and retained earnings of each of the Qualifying Restricted Parties
and the Restricted Parties for the period commencing at the end of the previous
fiscal year and ending with the end of such fiscal quarter, setting forth in
each case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the previous
fiscal year (and, in the case of such financial statements for fiscal year 2004
and the comparative figures for fiscal year 2003, a reconciliation of the
material differences between U.S. GAAP and Canadian GAAP), all certified by the
Chief Financial Officer of MDC Partners as presenting fairly in all material
respects the financial condition and results of operations of the Qualifying
Restricted Parties or of the Restricted Parties, as the case may be, on a
combined basis and in accordance with U.S. GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;

(c) as soon as available and in any event within 90 days after the end of each
fiscal year of MDC Partners, audited Consolidated balance sheets of MDC Partners
and its Subsidiaries as at the end of such fiscal year and audited Consolidated
statements of earnings and retained earnings and cash flows of MDC Partners and
its Subsidiaries for such fiscal year, setting forth in each case in comparative
form the figures for the previous fiscal year (and, in the case of such
financial statements for fiscal year 2004 and the comparative figures for fiscal
year 2003, a reconciliation of the material differences between U.S. GAAP and
Canadian GAAP), in each case accompanied by an opinion (without a “going
concern” or like qualification or exception and without any qualification or
exception as to the scope of such audit) by KPMG LLP (with respect to financial
statements for periods ending after December 31, 2003) or BDO Dunwoody LLP (with
respect to financial statements for periods ending on or before December 31,
2003) or other independent public accountants of recognized national standing,
together with (i) a certificate of the Chief Financial Officer of MDC Partners
stating that no Default has occurred and is continuing or, if a Default has
occurred and is continuing, a statement as to the nature thereof and (ii) a
schedule in form and substance satisfactory to the Administrative Agents of the
computations used by MDC Partners in determining compliance with the covenants
contained in Article VIII;”

2.05. Clause (3) of Section 7.06(i) of the Credit Agreement is hereby amended in
its entirety to read as follows:

 

“(3) as of the date of the consummation of each such Subject Investment, the
Total Debt Ratio as of the last day of the most recently ended Test Period shall
not exceed the ratio specified below for the relevant period during which such
Subject Investment is consummated (which ratio shall, for purposes of this
subclause (3), be calculated on a pro forma basis under the assumption that such
Subject Investment shall have occurred at the beginning of the applicable Test
Period and that Total Debt shall be adjusted to reflect any Debt incurred or
assumed in connection with the consummation of

 

 

 

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such Subject Investment and (without duplication) the aggregate Revolving Credit
Exposure as of such date):

 

Period

Total Debt Ratio

December 31, 2004-March 30, 2005

3.00 to 1.00

March 31, 2005-June 29, 2005

3.25 to 1.00

June 30, 2005-September 29, 2005

3.00 to 1.00

September 30, 2005-December 30, 2005

2.50 to 1.00

December 31, 2005 and thereafter

2.25 to 1.00

 

; and”

 

2.06        Section 8.01 of the Credit Agreement is hereby amended in its
entirety to read as follows:

 

“8.01 Total Debt Ratio. MDC Partners will not permit the Total Debt Ratio as of
the last day of any Test Period ending on or, as applicable, after the dates set
forth below to exceed the ratio set forth opposite such Test Period:

 

Test Period Ending

Total Debt Ratio

December 31, 2004

3.25 to 1.00

March 31, 2005

3.50 to 1.00

June 30, 2005

3.25 to 1.00

September 30, 2005

2.75 to 1.00

December 31, 2005 and thereafter

2.50 to 1.00”

 

2.07        Section 8.03 of the Credit Agreement is hereby amended in its
entirety to read as follows:

 

“8.03 Fixed Charges Ratio. MDC Partners will not permit the Fixed Charges Ratio
as of the last day of any Test Period ending on or, as applicable, after the
dates set forth below to be less than the ratio set forth opposite such Test
Period:

 

Test Period Ending

Fixed Charges Ratio

December 31, 2004

0.40 to 1.00

March 31, 2005

0.00 to 1.00

June 30, 2005

0.25 to 1.00

September 30, 2005

0.75 to 1.00

 

 

 

 

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December 31, 2005 and thereafter

1.25 to 1.00”

 

2.08        Section 8.06 of the Credit Agreement is hereby amended in its
entirety to read as follows:

 

“8.06 Capital Expenditures. MDC Partners will not permit the aggregate amount of
Capital Expenditures by the Restricted Parties in respect of the Marketing
Communications Business and the Secure Products Business to exceed the following
respective amounts with respect to such business for any fiscal year ending on
the dates set forth below:

 

Fiscal Year Ending

Amount (U.S. $)

 

           Marketing Communications

Secure Products

 

December 31, 2004

10,000,000

8,000,000

December 31, 2005

10,000,000

3,500,000

December 31, 2006

10,000,000

3,500,000

December 31, 2007

10,000,000

3,500,000

 

If the aggregate amount of Capital Expenditures with respect to any such
business for any period set forth in the schedule above shall be less than the
amount with respect to such business set forth opposite such period in the
schedule above, then 100% of such shortfall shall be added to the amount of
Capital Expenditures with respect to such business permitted for the immediately
succeeding (but not any other) period and, for purposes hereof, the amount of
Capital Expenditures made during any period shall be deemed to have been made
first from the permitted amount for such period set forth in the schedule above
and last from the amount of any carryover from any previous period.

If during any fiscal year specified in the table above (commencing with the
fiscal year ending December 31, 2005) any Restricted Party shall consummate an
acquisition of more than 50% of the Capital Stock of a Person principally and
directly engaged in the Marketing Communications Business, the permitted amount
of Capital Expenditures for “Marketing Communications” specified in such table
for the current fiscal year and each successive fiscal year shall be increased
by an amount equal to 10% of the “EBITDA” of such Person (calculated on the same
basis as set forth in the definition of “EBITDA”) for the most recently
completed fiscal year of such Person (which amount shall be determined in good
faith by MDC Partners and certified to the Administrative Agent, based upon the
audited financial statements (or, to the extent audited financial statements are
not available, unaudited financial statements) of such Person for such fiscal
year as furnished with such certification to the Administrative Agent).”

Section 3. Waivers. Subject to the satisfaction of the conditions precedent
specified in Section 6 hereof, but with effect on and after the date hereof, the
Lenders hereby

 

 

 

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waive any Default that may have occurred and be continuing solely as a result of
(a) the Borrowers’ failure to comply, at any time during the period from January
1, 2005 until the date on which such conditions precedent shall have been
satisfied, with the requirements of Sections 4.02(c), 8.01 and 8.03 of the
Credit Agreement and (b) any breach of any representation or warranty made or
deemed made by Borrowers during such period with respect to such compliance.

 

Section 4. Representations and Warranties. Each Borrower represents and warrants
(as to itself and each of its Subsidiaries) to the Agents and Lenders that (a)
the representations and warranties set forth in Article V of the Credit
Agreement and in each of the other Loan Documents are complete and correct on
the date hereof as if made on and as of the date hereof and as if each reference
in said Article V to “this Agreement” included reference to this Amendment No. 2
and (b) (after giving effect to the waivers under Section 3 hereof) no Default
shall have occurred and be continuing.

 

Section 5. Confirmation of Security Documents. Each of the Borrowers hereby
confirms and ratifies all of its obligations under the Loan Documents to which
it is a party, including its obligations as a guarantor under Article III of the
Credit Agreement as amended hereby. By its execution on the respective signature
lines provided below, each of the Guarantors hereby confirms and ratifies all of
its obligations and the Liens granted by it under the Security Documents to
which it is a party, represents and warrants that the representations and
warranties set forth in such Security Documents are complete and correct on the
date hereof as if made on and as of the date hereof and confirms that all
references in such Security Documents to the “Credit Agreement” (or words of
similar import) refer to the Credit Agreement as amended hereby without
impairing any such obligations or liens in any respect.

 

Section 6. Conditions Precedent to Effectiveness. The amendments set forth in
Section 2 hereof shall become effective as of December 31, 2004, and the waivers
set forth in Section 3 hereof shall become effective as of the date hereof, upon
(a) receipt by the U.S. Administrative Agent of one or more counterparts of this
Amendment No. 2 executed by the Borrowers and the Required Lenders and (b) the
payment of an amendment fee to the U.S. Administrative Agent for the account of
each Lender that has approved this Amendment No. 2 on or before 5:00 p.m., New
York City time, on March 14, 2005, such amendment fee to be in an amount equal
to 0.25% of the Commitment of such Lender.

 

Section 7. Miscellaneous. Except as herein provided, the Credit Agreement shall
remain unchanged and in full force and effect. This Amendment No. 2 may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same agreement and any of the parties hereto may execute
this Amendment No. 2 by signing any such counterpart. This Amendment No. 2 shall
be governed by, and construed in accordance with, the law of the State of New
York.

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to be
duly executed and delivered as of the day and year first above written.

 

MDC PARTNERS INC.

 

By:________________________________

Name:

Title: Authorized Signatory

 

By:________________________________

Name:

Title: Authorized Signatory

 

MAXXCOM INC., an Ontario corporation

 

By:________________________________

Name:

Title: Authorized Signatory

 

By:________________________________

Name:

Title: Authorized Signatory

 

MAXXCOM INC., a Delaware corporation

 

By:________________________________

Name:

Title: Authorized Signatory

 

By:________________________________

Name:

Title: Authorized Signatory

 

 

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Agreed as set forth in Section 5 above:

 

GUARANTORS

Signed sealed and delivered by the attorney of Placard Pty Ltd ACN 074 646 343
under power of attorney and who has received no notice of the revocation of the
power, in the presence of:

 

............................
Signature of witness

.............................
Signature of attorney

Name of witness: Ray Forzley

Name of attorney: Walter Campbell

 

 

 

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1208075 ONTARIO LIMITED

1220777 ONTARIO LIMITED

1385544 ONTARIO LIMITED

2026646 ONTARIO LIMITED

656712 ONTARIO LIMITED

AMBROSE CARR LINTON CARROLL INC.

ASHTON POTTER CANADA INC.

ASHTON-POTTER CANADA LTD.

BRUCE MAU DESIGN INC.

BRUCE MAU HOLDINGS LTD.

CAMPBELL + PARTNERS COMMUNICATIONS LTD.

COMPUTER COMPOSITION OF CANADA INC.

HENDERSON BAS

MAXXCOM (NOVA SCOTIA) CORP.

MAXXCOM INTERACTIVE INC.

METACA CORPORATION

STUDIOTYPE INC.

TREE CITY INC.

 

 

By: ________________________________

 

Name:

 

Title: Authorized Signatory

 

By: ________________________________

 

Name:

 

Title: Authorized Signatory

 

 

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ACCENT ACQUISITION CO.

ACCENT INTERNATIONAL, INC.

ACCENT MARKETING SERVICES, L.L.C.

ASHTON-POTTER (USA) LTD.

BRATSKEIR & COMPANY, INC.

CHINNICI DIRECT, INC.

CMS U.S. HOLDCO, INC.

COLLE & MCVOY, INC.

CPB ACQUISITION INC.

CRISPIN PORTER & BOGUSKY LLC

DOTGLU LLC

FLETCHER MARTIN EWING LLC

FMA ACQUISITION CO.

HELLO ACQUISITION INC.

KBP HOLDINGS LLC

KIRSHENBAUM BOND & PARTNERS LLC

KIRSHENBAUM BOND & PARTNERS WEST LLC

LAFAYETTE PRODUCTIONS LLC

MACKENZIE MARKETING, INC.

MARGEOTES/FERTITTA + PARTNERS LLC

MAXXCOM (USA) FINANCE COMPANY

MAXXCOM (USA) HOLDINGS INC.

MDC USA HOLDINGS INC.

MDC/KBP ACQUISITION INC.

MF+P ACQUISITION CO.

MONO ADVERTISING, LLC

PRO-IMAGE CORPORATION

SABLE ADVERTISING SYSTEMS, INC.

SMI ACQUISITION CO.

SOURCE MARKETING LLC

TARGETCOM LLC

VITROROBERTSON LLC

 

 

By: ________________________________

 

Name:

 

Title: Authorized Signatory

 

By: ________________________________

 

Name:

 

Title: Authorized Signatory

 

 

 

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LENDERS

 

JPMORGAN CHASE BANK, N.A.

 

By:________________________________

Name:

Title:

 

JPMORGAN CHASE BANK, N.A., TORONTO

BRANCH

 

By:________________________________

Name:

Title:

 

BANK OF MONTREAL (CHICAGO BRANCH)

 

By:________________________________

Name:

Title:

 

BANK OF MONTREAL

 

By:________________________________

Name:

Title:

 

THE BANK OF NOVA SCOTIA, by its Atlanta Agency

 

By:________________________________

Name:

Title:

 

 

 

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THE BANK OF NOVA SCOTIA

 

By:________________________________

Name:

Title:

 

By:________________________________

Name:

Title:

 

TORONTO DOMINION (TEXAS) INC.

 

By:________________________________

Name:

Title:

 

THE TORONTO-DOMINION BANK

 

By:________________________________

Name:

Title:

 

CIBC INC.

 

By:________________________________

Name:

Title:

 

 

 

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CANADIAN IMPERIAL BANK OF COMMERCE

 

By:________________________________

Name:

Title:

 

By:________________________________

Name:

Title: